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BUDGET DEFICIT REACHES HUF 1,051.5 BN AT END-MAY

 

Hungary’s cash flow-based budget, excluding local councils, ran a deficit of 1,051.5 billion forints (EUR 3.04bn) at the end of May on the back of epidemic response spending, a second reading from the Finance Ministry showed. The ministry noted that the government had taken decisions on 590 billion forints’ worth of procurements related to the Covid-19 pandemic by the end of May and 450 billion forints of that amount had already been paid. “The government – in the course of pandemic preparedness, just as under the state of emergency – will ensure all necessary resources for defence,” the ministry said. It noted that pre-financing for European Union-funded investments continued to impact the budget balance. While expenditures related to such investments reached 967.6 billion forints by the end of May, transfers from Brussels came to just 486.7 billion forints. Hungary has long pre-financed EU-supported projects to avoid any backups at the end of funding periods. The practice affects the cash flow-based budget balance but not the accrual-based ESA balance.
The ministry said expenditures were also raised during the period by 55.8 billion forints in spending for maintaining roads, 26.3 billion forints for road renovations, 53.0 billion for upgrading roads in villages, 29.1 billion for investments made in the framework of the Modern Cities Programme and 24.4 billion forints for investment incentives for businesses.
The central budget ran a 910 billion forint deficit at the end of May, the social insurance funds were 154.3 billion forints in the red and the separate state funds had a surplus of 12.8 billion forints. In May alone, the central budget’s deficit was 324.1 billion forints compared with a 137.4 billion forint deficit in May 2019. The ministry said the ESA deficit target of 3.8% of GDP remains achievable.