The main factors that characterized the budget in the first quarter were higher revenues generated by economic trends that had offset the effect of tax reductions and higher state expenditures for domestic and EU projects. As a result, the budget closed the quarter with a deficit of HUF 141.9bn. The year-end deficit target and a lower government debt-to-GDP ratio are to be attainable.

The amount of minimum wage (for unskilled workers) and guaranteed minimum wage (for skilled workers) continued to rise this year, and this has also raised the amount of average earnings within the national economy. In January, earnings grew on average by 10.6 percent year-on-year, and the number of people in employment was up by 56 thousand in the same period. Tax reductions and allowances have left more money at families with children, and this has boosted consumption. The Government’s labour market and tax measures as well as economic growth, which is seen to beat the EU average, are expected to help maintain the fiscal balance. In the period January-March 2019, revenues from VAT, PIT, payroll taxes (pension, healthcare and labour market contributions) as well as excise taxes increased by HUF 305.4bn, HUF 41.2bn, HUF 64.1bn and HUF 28.1bn, respectively, year-on-year.

Due to pre-financing, EU-funded projects continued to have a substantial impact on the balance. By the end of March 2019, revenues from EU transfers totalled HUF 283.7bn, while expenditures were as high as HUF 344.3bn. Compared to the first quarter of 2018, a higher amount of subsidies was transferred for the funding of economic and social programmes, projects of the Modern Cities Programme, the modernization of railway network and pro-efficiency projects of enterprises.

In the month of March, the central sub sector of the state budget had a deficit of HUF 209.3. As a result, at the end of Q1 2019, the central budget and Social Security Funds accumulated deficits of HUF 139.6bn and HUF 3.7bn, respectively, while Extra-Budgetary State Funds posted a surplus of HUF 1.4bn.

(Ministry fof Finance)