Weekly newsletter

Hungary’s cash flow-based budget deficit, excluding local councils, reached 831.9 billion forints (EUR 2.3bn) at the end of March, swelling on the impact of pandemic measures, the finance ministry said on Wednesday.

Hungary’s deficit in February was already at 69.37 percent of the (then) 367.0 billion forint full-year target, reaching 283.7 billion forints.

Due to the coronavirus pandemic, the Orbán government decided to revision its full-year deficit target and has raised it from 1 percent to 2.7 percent of GDP this year.

The fresh data is the highest March deficit in many years.

Measures the government has taken so far to contain the spread of the novel coronavirus and protect the economy, such as a moratorium on repayments of corporate and retail loans and support for sectors of the economy hardest hit by the pandemic, “have impacted the revenue and expenditure sides of the budget to a significant degree”, the ministry said.

The ministry noted that government expenditures on procurements of personal protective equipment and ventilators came close to 190 billion forints in March.

The central budget deficit reached 746.7 billion forints at the end of March and the social insurance funds were 86.9 billion forints in the red. Separate state funds had a surplus of 1.7 billion forints.

On the revenue side, VAT payments were up by 90.3 billion forints from the base period, PIT revenue rose by 55.0 billion forints and corporate tax revenue climbed by 37.9 billion forints. VAT revenue stood at 22.7 percent of the full-year target, PIT revenue at 24.1 percent and revenue from payroll taxes at 24.2 percent.

The ministry noted that government efforts to pre-finance European Union-funded projects continued to impact the budget: while payouts for such projects came to 691.2 billion forints by the end of March, transfers from Brussels reached just 63.4 billion forints.

In the featured photo: Finance Minister Mihály Varga. Photo by Zoltán Máthé/MTI