Public finances continue to be characterized by stability in Hungary and the central government budget is capable of providing sufficient funding required for the realization of the Government’s economic and social policy goals. The deficit of the central sub sector of the state budget was HUF 1 236bn at the end of September 2017, in line with prior expectations.

Within that, the Central Budget and Social Security Funds closed the month with deficits of HUF 1 281.2bn and HUF 62.0bn, respectively, while Extra-Budgetary State Funds posted a surplus of HUF 106.9bn. In the month of September 2017, the deficit totalled HUF 256.4 bn, while in September 2016 there was a surplus of HUF 271.6bn.

The rising amount of disbursements related to EU-funded projects had a visible impact on the balance in the period January-September 2017, when the respective amount transferred from the state budget was HUF 1 484.3bn, against HUF 1 035.3bn in the previous year. The inflow of EU funds, HUF 297.5bn, was well below that amount. The main cause behind this phenomenon is that cohesion funds due to Hungary, as a consequence of regulatory peculiarities, are exclusively post-financed.  VAT refunds in the month of September were also higher, as currently effective regulations maximize the refund period at 45 days instead of the former 75 days for “reliable taxpayers”.

According to official statistics, the number of people employed in Hungary is 4 million 444 thousand in Hungary, up by 58 thousand year-on-year. Accordingly, the unemployment rate has declined to 4.2 percent. Wage hikes and tax incentives leave more money at families, and this is also being reflected in consumption data. Compared to the corresponding period of the previous year, fiscal revenues stemming from VAT and personal income tax have increased, along with pension, health insurance and labour market contributions. These are the indisputable results of the Government’s pro-transparency and employment policy measures.

The ESA budget deficit of 2.4 percent predicted for the year 2017 remains to be an attainable target.

(Ministry for National Economy)