The favourable fiscal trend observed in recent months has continued: the deficit registered at the end of July 2016 was the lowest figure in fifteen years, as the accumulated deficit of the central sub sector of the state budget totalled HUF 464.8bn.

In the initial seven months of the year, the central budget had a deficit of HUF 585.8bn, while Social Security Funds and Extra-Budgetary State Funds posted surpluses of HUF 52.2bn and HUF 68.5bn. In the corresponding period of 2015, the deficit of the central sub sector of the state budget was double the current figure, HUF 894.1bn. In the month of July alone, the deficit was HUF 62.7bn, whereas it was HUF 70.8bn one year ago.

Examining end-of-July data in 2015 and 2016 reveals that the mismatch stems from the difference in the payment schedule of the central sub sector (concerning, for example, payments related to EU programmes and debt servicing) as well as from higher tax revenues thanks to positive real economic processes and pro-transparency measures.

The unemployment rate has reached the lowest level since the regime change (5.1 percent), while the number of people in employment has hit a record high (4.3 million). Due to the steady upward real wage trend in place for three years and a half and tax reductions effective since 1 January 2016, more money is left at Hungarian families, and this – along with low inflation – has been underpinning dynamic consumption growth. This proves that Government measures have been successful and effective.

The Ministry also expects that the ESA deficit target of 2 percent is realistic and attainable for this year.

(Ministry for National Economy)