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Jan 10, 2020

Hungary closed 2019 with stable public finances and reduced sovereign debt

Initiatives introduced last year are expected to have resulted in a rate of growth of around 5 percent for the whole year.

The ministry of finance has announced that the deficit to GDP ratio of public finances remained well under the level required by the European Union for the eighth year in succession, thanks to which the debt rate produced its most dynamic reduction of the past two decades.

According to the ministry, the wage increases that are continuing as a result of the six-year wage agreement, the increase in the number of people in employment, the dynamic increase in consumption, the government measures introduced in the interests of whitening the economy and the elements of the Economy Protection Action Plan introduced last year are expected to have resulted in a rate of growth of around 5 percent for the whole year.

As a result, an additional HUF 603.7 billion (EUR 1.82 billion) in consumer tax (VAT) revenues, HUF 247.2 billion (EUR 746.8 million) in personal income tax revenues, HUF 466 billion (EUR 1.4 billion) in pension, health insurance and job market contributions, and HUF 64.5 billion (EUR 194.6 million) in additional excise duty revenues flowed into the state treasury compared to 2018.

While the budget saw an influx of HUF 1468.6 billion (EUR 4.43 billion) in European Union revenue, total expenditure on development projects was HUF 1556.8 billion (EUR 4.69 billion). In 2019, major domestic funding was provided for the Modern Cities Program and the Modern Village Program, the modernization of the road and rail system, and to improve the competitiveness of enterprises.

The ministry said that in addition to these measures, resources provided for the realization of various social goals may be highlighted, and particularly the launch of the Family Protection Action Plan. The Home Creation Scheme (CSOK) also continued in an expanded form and pension perks were received across the country.

The central subsystem of public finances ended December with a deficit of HUF 452.7 billion (EUR 1.37 billion), resulting in a deficit of HUF 1219 billion (EUR 3.67 billion billion) for the whole year. Of this, the central budget and the social security fund ended the year with a deficit of HUF 1023.8 billion (EUR 3.01 billion) and HUF 234.8 billion (EUR 708 million), respectively, which separate state funds achieved a surplus of HUF 39.4 billion (EUR 119 million).