Hungary has protected itself successfully against the epidemic, including in European Union comparison, and the slowdown of the Hungarian economy has developed more favourably than the European Union average. However, protecting against the epidemic and the government’s economy protection measures continue to require major resources from the budget. As a result, the deficit of the central subsystem of public finances totalled 2261 billion forints (EUR 6.29 billion) at the end of August.

The central subsystem of public finances closed the first eight months of 2020 with a deficit of 2261.3 billion forints (EUR 6.289 billion), within which the central budget produced a deficit of 1873.1 billion forints (EUR 5.213 billion), while separate state funds and the social security fund posted deficits of 2.3 billion forints (EUR 6.40 million) and 385.9 billion forints (EUR 1.074 billion), respectively.

Central subsystem revenues indicate that the economic effects of the coronavirus epidemic and the tax concessions introduced with relation to the epidemic have been felt for several months now. In the case of general consumer tax (VAT), revenues corresponded to 56.6% of the annual target by the end of August, while in the case of personal income tax, revenues totalled 63.2% of the annual target. In the case of social contribution tax, pension and health insurance contributions, and job market contributions, some 62.4% of the annual target was realised by the end of August.
Almost 283 billion forints (EUR 787.6 million) in EU development funding arrived in the budget in August 2020, bringing total EU-related revenues for the first eight months of 2020 to 772.4 billion forints (EUR 2.149 billion). However, total EU expenditure for the period 1 January to 31 August exceeded 1374 billion forints (EUR 3.824 billion).

During the first eight months of the year, the cost of procuring healthcare protective equipment relating to the coronavirus epidemic totalled 553 billion forints (EUR 1.483 billion). In addition, the resources spent on the competitiveness-increasing funding made necessary as a result of the coronavirus epidemic (150.6 billion forints / EUR 419.1 million) and on priority public road projects (140.0 billion forints / EUR 398.6 million) may be highlighted from among domestic expenditure until the end of August 2020. Additional important expenditure includes the monies paid out from the tourism development target fund (122.2 billion forints / EUR 340.0 million), for the maintenance and operation of the public road network (75.0 billion forints / EUR 208.7 million), and from the Village Road Fund (57.0 billion forints / EUR 158.6 million), for the repair of the public road network (37.4 billion forints / EUR 104.1 million), and for the purpose of the Modern Cities Program (33.6 billion forints / EUR 93.5 million). In the interests of making the beginning of the school year easier, family benefits due to be paid out in September were also paid out earlier to parents in August (in addition to the payments otherwise due in August), at a total cost of some 32.1 billion forints (EUR 89.3 million).

Based on the slower than expected performance of the economy during the second quarter of the year, the public finance data for the year so far, and the latest economy protection measures, the budget deficit is estimated to be 7-9% of the gross national product (GDP), which is in line with the European average.

(Ministry of Finance/MTI)