Fiscal data of recent months have repeatedly confirmed the adequacy of the Government’s responsible budget policy. Thanks to that, by the end of August 2016 the deficit of the central sub sector of the state budget fell to HUF 274.0bn, the lowest level in fifteen years. This favourable trend shows that Hungarian reforms are working.

Within the above figure, the central budget had a deficit of HUF 371.7bn, while Social Security Funds and Extra-Budgetary State Funds posted surpluses of HUF 25.7bn and HUF 72.0bn, respectively. At the end of August 2015, the deficit of the central sub sector of the state budget totalled HUF 914.9bn, mainly as a consequence of the high volume of payments related to EU funding which were aimed at facilitating the timely completion of supported projects related to the 2007-2013 programming period.

The central sub system posted a surplus of HUF 190.8bn in the month of August 2016, while in the corresponding period of the previous year a deficit of HUF 20.8bn was registered. This difference is also attributable to the flow of EU funds: in August 2015 pre-financing requirements added to the cash-flow deficit whereas this year’s surplus stemmed primarily from massive inflows, totalling HUF 153.1bn, to the state budget by the European Commission.

Analysing the same periods of 2016 and 2015 it can be generally concluded that this year’s favourable processes are the result of a different revenue-expenditure structure of EU funding as well as higher tax revenues due to anti-fraud Government measures.

Real economic processes – such as employment, real wage and consumption growth – are substantially contributing to fiscal stability. This year’s ESA deficit target of 2 percent of GDP appears to be within reach.

(Ministry for National Economy)