In the first seven months of the year, trends which had led to higher budget revenues parallel to tax cuts persisted. Projects aiming to reach social policy targets and investment programmes are set to help achieve economic growth of above 4 percent and a deficit target of 2.4 percent of GDP.

Until the end of July 2018, the central sub sector of the state budget accumulated a deficit of HUF 1491.0bn. Within that, the deficit of the central government budget was HUF 1557.0bn, while Extra-Budgetary State Funds and Social Security Funds posted surpluses of HUF 19.1bn and HUF 46.9bn, respectively. In July 2018, the central sub sector closed the month with a shortfall of HUF 70.4bn, well below the monthly deficits seen recently.

Thanks to the successful consolidation policy implemented since 2010, the Hungarian economy has entered a phase of balanced and dynamic growth. The six-year wage agreement, the Government’s housing incentives, various measures aiming for job growth and addressing the grey economy were among the factors that have facilitated this change. The Government’s intention is to support Hungarian families and promote economic growth instead of raising taxes. The number of people with a job has recently reached an unprecedented figure in Hungary and this enables people to prepare for a predictable future with stable finances.

In the period January-July 2018, revenues from VAT, PIT and payroll taxes increased by HUF 258.7bn, HUF 149.0bn and HUF 163.7bn, respectively, year-on-year. On the expenditure side, transfers for the financing of development projects -- for example the Government’s housing programme, public road construction and reconstruction programmes, the Modern Cities Programme and the Healthy Budapest Programme – increased markedly. Expenditures related to the pre-financing of EU-funded projects were more than 20 percent higher year-on-year in the observed period, while incoming EU transfers totalled only some HUF 162bn.

(Ministry of Finance)