Thanks to the improving performance of the Hungarian economy and prudent fiscal management, the government debt-to-gross GDP ratio declined from 73.4 percent to 70.8 percent, while the government budget deficit has come to 2.2 percent instead of the prior estimate of 2.4 percent last year, Minister of Finance Mihály Varga said at a press conference in Budapest. The decrease of 10 percentage points in the debt-to-GDP ratio since 2010 was the fifth largest drop within the European Union, he added.

Several economic indicators were better than anticipated last year, the Minister of Finance said: the rate of growth was 4.9 percent, more than two-and-a-half times higher than the EU average and the best figure of the past fifteen years in Hungary. The fundaments of growth are firm, as it has not been driven by loans but rising wages and the rising number of jobs, consumption and investment growth, as well as the steady performance of the industrial and construction sectors. That is how fiscal revenues could rise despite tax reductions, and thus fiscal balance could be maintained, he said. Evaluating fiscal trends, the Minister of Finance pointed out that last year’s budget deficit was 2.4 percent of GDP instead of the prior estimate of 2.4 percent, which proves the predictability of public finance management. Without government debt, the budget would have posted a surplus, he noted. By the end of 2018, the debt-to-GDP ratio eased by 2.6 percentage points to 70.8 percent. The downward trend is seen to continue year and next: the deficit is predicted to be 1.8 percent of GDP in 2019 and the ratio is expected to decline below the 70 percent mark.

Minister of State for Public Finances Péter Benő Banai said that the Hungarian Central Statistical Office sends these two major fiscal indicators, the deficit of the state budget and the debt-to-GDP ratio, twice annually – in spring and autumn -- to Eurostat. The debt indicator has been gradually edging lower since 2012, and now it is below the EU average. The deficit, in line with annual targets, has been repeatedly below the Maastricht criterion of 3 percent.

(Ministry for National Economy/MTI)