Thanks to the performance of the Hungarian economy and the Government’s economic policy, the central sub sector of the state budget accumulated a deficit of HUF 13.2bn at the end of May 2016. This has been the lowest fiscal deficit figure in more than one-and-a-half decades. This clearly shows that Hungarian reforms are working, and state finances have been stable and predictable.

In the initial five months of this year, the central budget had a deficit of HUF 98.9bn, while Social Security Funds and the Extrabudgetary Funds closed this period with surpluses of HUF 48.9bn and HUF 36.8bn, respectively.  Central sub sector data from the month of May show a surplus of HUF 131.7bn, and within that central budget, Extrabudgetary Funds and Social Security Funds have all posted surpluses.

In the corresponding period of the previous year, the accumulated deficit of the central sub sector of the state budget was HUF 500bn higher. The more favourable balance this year is attributable to lower disbursements of EU funding-related payments and higher revenues from major tax categories (e.g.: corporate tax, VAT, personal income tax, social contribution tax and other contributions).

A favourable economic environment, dynamic job growth and measures combating the black economy (e.g.: EKÁER, on-line cash registers) have also been behind rising fiscal revenues and the improvement of taxpayer morale. Compared to the same period of the previous year, expenditures related to EU funding fell considerably, due to the closing of the operative programmes of the 2007-2013 programming period, and the later pick-up of disbursements related to the 2014-2020 period.

In light of recent processes it can be concluded that the Government’s deficit target of 2 percent of GDP – thanks to fiscal amendments – continues to be realistic.

(Ministry for National Economy)