Thanks to a predictable and responsible fiscal policy, the general government budget deficit was – in line with prior estimates -- 1.7 percent of GDP in the year 2016, while the government debt-to-GDP ratio fell to 74.1 percent. These data are in accordance with Government efforts and confirm the adequacy of measures implemented.
In keeping with the EU directive on Excessive Deficit Procedure, the statistical offices of EU member states compile a report twice each year – in the spring and autumn – of changes in general government budget deficit and state debt, based on concepts defined in the European System of Accounts (ESA 2010).
According to preliminary data published by the Hungarian Central Statistical Office (KSH) for the year 2016, the deficit of the government sector was 1.7 percent of GDP, in line with the forecast of the Ministry for National Economy released last autumn, and it is slightly better than the 2 percent target set out in Budget Act 2016.
Besides higher than expected revenues from payroll taxes, excise taxes, and other levies on goods and services, certain one-off factors have also contributed to this low figure. On the other hand, several expenditures were lower than former estimates, of which savings of HUF 40bn and HUF 70bn related to interest payments and public work programme expenditures, respectively, must be noted. In 2016, two amendments have been made to the budget to shore up the education and healthcare sectors, and finance economic stimulus measures (e.g.: investment and housing programmes).
The general government debt-to-GDP ratio edged down by 0.6 percent, to 74.1 percent, compared to 2015, and this indicator is set to fall further in 2017.
There have been some indisputable economic policy achievements in recent years: in 2013, the EC lifted the EDP against Hungary which had been opened against the country ten years before; fiscal deficits have been below the 3 percent mark; the debt-to-GDP ratio has been falling and the investment grade rating of Hungary’s sovereign debt has been restored by all three major credit rating agencies in 2016. As a result, Hungary has gained more independence in terms of international finance. This has also facilitated the implementation of economic policy measures that result in more prosperity for Hungarian people, stronger families, business development and dynamic economic growth in the near future.
(Ministry for National Economy)
