Apr 07, 2016

With spending down and tax revenues up, Q1 deficit lowest in fifteen years

Thanks to Hungarian reforms and a prudent fiscal policy, the accumulated deficit of the central sub sector of the state budget fell to 125.8 billion HUF at the end of March 2016. In the same period one year ago, the deficit reached 536.7 billion HUF. The difference between the balance at the end of March 2016 and 2015 was the consequence of higher tax revenues and lower expenditures this year.

The central sub sector closed the first quarter of 2016 was a deficit of 158.2 billion HUF, while Social Security Funds and Extra Budgetary State Funds posted surpluses of 29.9 billion HUF and 2.5 billion HUF, respectively. The balance in the month of March showed a deficit of 140.8 billion HUF at the central sub sector, well below the 226.0 billion HUF figure registered in March 2015.

As a result of a favourable economic environment and employment growth, payments of both wage-related and consumption-related levies (e.g.: corporate tax, VAT, personal income tax, social taxes and contributions) have been rising steadily. Government measures designed to combat the black economy (e.g.: EKÁER, on-line cash registers) have substantially improved taxpayer morale.

In comparison to the corresponding period of the previous year, expenditures related to EU programmes and interest payments decreased. The former is the consequence of the closing of operative programs in the period 2007-2013 and the delayed payment of disbursements for the period 2014-2020, while the latter is due to the varying amounts of interest payments during the course of the year.

The ESA deficit target for this year continues to be 2 percent of GDP. Stable fiscal revenue flows, the performance of the domestic economy and pro-transparency measures can guarantee this goal.