The Government has been committed to implementing the state budget in a predictable and prudent manner and providing a sound financial framework required for the implementation of social policy measures aiming to increase the well-being of Hungarians. Fiscal data from January 2018 reflect a robust economy and the prepayment of EU funds.

The central sub sector of the state budget closed the month of January 2018 with a deficit of HUF 192.8bn. Within that, the central government budget had a deficit of HUF 258.9bn, while Social Security Funds and Extra-Budgetary State Funds posted surpluses of HUF 49.8bn and HUF 16.3bn, respectively.

Among expenditures, disbursements related to the pre-financing of EU funds totalled HUF 327.9bn, while there were no EU fund inflows. Expenditures related to the Family Housing Programme totalled HUF 17.2bn in the observed period; the amount earmarked for the financing of the programme this year is HUF 236.3bn.

In comparison to prior years, revenues from VAT, personal income tax and payroll taxes increased substantially. Higher revenues have been the result of Government measures instead of higher tax rates. The number of people in employment has hit some 4 million 500 thousand, and the unemployment rate has decreased to 3.8 percent.

The minimum wage and the guaranteed minimum wage were increased, in accordance with the six-year wage agreement of November 2016, to HUF 138 000 (EUR 445), by 8 percent, and to HUF 180 500 (EUR 582), by 12 percent, respectively. Concurrently, the rate of payroll taxes was cut as of this year by 2.5 percentage points, to 19.5 percent, down by 7.5 percentage points compared to 2016.

Thanks to the 15 percent flat-rate personal income tax, one of the lowest within the EU, the HUF 35 000 per month tax allowance for families with two children, the increase of state pensions by 3 percent and robust wage hikes in various sectors, consumption is expected to be driven higher this year.

For the year 2018, the Government predicts GDP growth of 4.3 percent and a government budget deficit of 2.4 percent.

(Ministry for National Economy)