Fiscal data reflect the success of the Government’s economic policy: in the month of July 2017 the state budget posted a surplus of HUF 94.4bn, thanks mainly to higher-than-expected tax revenues. The six-year wage agreement concluded last year has proven to be an adequate scheme: the state budget has remained stable despite lower tax rates.

The central sub sector of the state budget accumulated a deficit of HUF 816.8bn by the end of July 2017. Within that, the central budget and Social Security Funds had a deficit of HUF 843.7bn and HUF 81.8bn, respectively, while Extra-Budgetary State Funds posted a surplus of HUF 108.7bn. In the initial seven months of 2016, the deficit of the central sub sector totalled HUF 464.8bn, while there was a deficit of HUF 62.7bn in July 2016.

Several factors caused the difference in the end-of-July balances of this year and last. On the revenue side, in 2017 VAT and personal income tax revenues were higher, as well as pension fund, health insurance and labour market contributions plus revenues from agricultural land sales. On the expenditure side, payments related to EU-funded projects were as much as HUF 1090bn, whereas last year HUF 601.7bn was paid for beneficiaries.  Hungary has optimized the system for the disbursement and clearing of EU funding in order to help end-users. Accordingly, aiming to help the timely launch and completion of EU-funded projects, the state budget disburses an advance payment for beneficiaries. The Government’s Housing Allowance Scheme is another programme with similarly favourable real economic effects. Due to this, the amount of housing subsidies rose by 37.9 percent year-on-year.

The aforementioned data confirms that the state budget has been stable and the full-year ESA deficit target of 2.4 percent of GDP will be reached.

(Ministry for National Economy)