According to the Minister of State of the Ministry of National Economy, Hungary demonstrated an outstanding economic performance in 2014: the growth rate of the gross domestic product accelerated by 3.7 per cent, and as a result, the performance of the economy reached the pre-crisis level.

Upon opening the debate of the final report on the 2014 budget, András Tállai stated in summary that the sectors of the Hungarian economy gained in strength last year, the growth rate reached a sustainable level already in 2013, and thanks to this, the economy gained further momentum in 2014.

The Minister of State told Parliament: there was a surplus in the balance of payments last year, and the deficit of the budget remained well below 3 per cent. Investments increased by a record-breaking 14 per cent, and retail consumption increased by 1.8 per cent in 2014, Mr Tállai added.

He highlighted: the level of employment within the national economy increased very significantly, by 208,000 persons compared with 2013. The Minister of State pointed out that last year’s employment rate reaching 61.8% was the highest in 16 years. The number of those in employment increased in Hungary at the third highest rate among EU Member States, and regarding the number of active workers, Hungary boasted the highest increase among the Visegrád countries, he explained.

He also said that retail consumption increased in 2014 by 1.8 per cent compared with the year before, there was a 14 per cent increase in agricultural production, and the construction industry, too, underwent a dynamic growth last year.

Mr Tállai further stated that the before- and after-tax average earnings increased by 3 per cent in the whole of the national economy, while real wages increased by 3.2 per cent due to the restrained rise in consumer prices.

He said that the external balance, too, was favourable last year; the country’s exports increased considerably once again. As part of this, the excess exports arising from the new automobile industry capacities resulted in a significant increase in the balance of trade, he added.

The Minister of State pointed out that a 0.2 per cent average price reduction was registered in Hungary in 2014. The reasons being the global decrease in the prices of oil and food industry products, the low foreign inflationary environment and the reduction of household utility bills.

He also explained that the Government introduced measures in 2014 with a view to improving the balance of state finances which served to reduce the operating expenditures of the State. These were revoked in the second half of the year, he continued, and in the wake of the economic growth, further excess expenditures were approved. These included the expenditures of the maintenance of public roads, the introduction of the Electronic Public Road Trade Control System, and the capital increase made in Eximbank.

Mr Tállai said that, in contrast to the amended statutory estimate of HUF 1,121.5 billion regarding the deficit of the budget, the actual deficit amounted to HUF 713.5 billion last year, which represents 2.2 per cent of GDP. He added: the so-called government deficit calculated under the EU methodology, too, remained below the target, and reached 2.5 per cent of GDP, instead of the contemplated 2.9 per cent of GDP, and the debt rate calculated on the basis of the same methodology decreased to 76.2 per cent compared with 76.8 per cent the year before.

The Minister of State of the Ministry of National Economy stated that the funding of municipalities continued within the assignment-based grant system introduced in 2013, which was fine-tuned during the course of the year, and in consequence, the grants which were based on the needs and feedback of municipalities and which serve the purpose of structural equalisation were integrated into the core funding in 2014.

He further pointed out that, thanks to the completed debt consolidation process, the debt portfolio of municipalities decreased to an effectively “insignificant level”, to HUF 31.2 billion by the end of 2014, which is some 6.8 per cent of the debt recorded in the year before.

Mr Tállai also reported that the 2014 balance of EU fiscal relations had a significant surplus once again, similar to the years before. The balance of Hungary’s net position amounted to some HUF 1,635 billion which corresponds in its magnitude to the amount recorded in 2013, he said.

Both the Pension Insurance Fund and the Health Insurance Fund closed 2014 with a surplus. In the case of the Pension Insurance Fund, the Minister of State pointed out that the reasons for the surplus of HUF 7.5 billion were the favourable development of the processes inducing economic growth and the excess revenues derived from the expansion of employment.

The Minister of State explained that pension payments accounted for the largest item of expenditure which amounted to HUF 2,915 billion in total. He highlighted that the Government spent some HUF 164 billion in 2014 on the option of eligibility for retirement available to women upon the completion of 40 years in employment.

As he pointed out, pension expenditures permitted a 2.4 per cent pension increase for 2,207,000 people last year which – also with regard to the minus 0.6 per cent rate of inflation calculated with respect to the pensioner consumer basket – resulted in a 3 per cent increase in the purchasing power of pensions.

The fiscal balance of the Health Insurance Fund stands at a surplus of HUF 0.4 billion, Mr Tállai said. By his account, payments amounting to HUF 896.9 billion were received from employment-related contributions which were substantially higher than planned, the main reason being the higher-than-expected increase in the pre-tax wages and earnings.

The Minister of State further reported that HUF 13.8 billion more was spent on curative and preventive care than planned, and as a result of the measures of the Government, health care was given another HUF 10 billion extra funding.

(Ministry for National Economy/MTI)