Hungary’s budget is expected to post a shortfall of 7-9 percent of GDP in 2020, in view of the slower-than-expected recovery in the second quarter and planned measures to protect the economy, the finance ministry said on Monday.
Although the economic fallout due to the coronavirus epidemic was not as serious as that in the rest of the European Union, Hungary’s economy shrank substantially, by 13.6 percent, in the second quarter of 2020, the statement said. The decline combined with tax cuts have set the economy back by 1,400 billion forints (EUR 4.0bn), it said.
Due to the government’s economy and job-protection measures, the cash flow-based budget deficit came close to 2,165 billion forints at the end of July, the statement said.
The ministry said that an adjustment of the deficit target is warranted in view of the epidemic protection plan and measures to protect the economy expected later in the year.
The average planned deficit in EU countries is 9 percent of GDP this year, the statement noted.
In the spring, the government had estimated the 2020 general government deficit could reach 3.8-4.0 percent of GDP. Finance Minister Mihály Varga said in July that the gap would have to be recalculated.
The calculations of the 2020 national budget plan accepted in 2019 featured an estimated annual deficit of HUF 367 billion, 1 percent of the GDP.
In the featured photo illustration: Finance Minister Mihály Varga. Photo by Tibor Illyés/MTI