The Government’s fiscal policy continues to be characterized by predictability and stability. The amounts of revenues and expenditures are in line with prior estimates. Although the central sub sector of the state budget saw an accumulated cash-flow deficit of HUF 1418.2 at the end of October 2017, the ESA deficit target of 2.4 percent of GDP is expected to be met as planned.

In the period January-October 2017, the central budget and Social Security Funds had a deficit of HUF 1491.9bn and HUF 49.0bn, respectively, while Extra-Budgetary State Funds posted a surplus of HUF 122.7bn. The October deficit was HUF 181.9bn.

In the analysis of the end-of-October balance one must underline – as it was the case in previous months – the role of rising disbursements related to EU-backed projects, which have totalled HUF 1702.3bn already this year. In order to ensure the timely and orderly implementation of these projects, they are pre-financed from the state budget and this partly affects the ESA deficit. However, the European Union has hitherto transferred only HUF 326.0bn out of the requested funding.

Revenues from VAT and personal income tax, pension and health insurance payments as well as labour market contributions constitute a large share of total state revenues. The amount of these revenues has increased year-on-year driven by a higher number of people employed instead of higher tax rates. Currently, the number of people employed in Hungary is 4 million 450 thousand, up by 741 thousand compared to the change of government in 2010. Concurrently, labour wages have also been raised, and it is improving the financial situation of Hungarian families and underpinning fiscal stability.

(Ministry for National Economy)