The state budget according to EU methodology had for 2011 a surplus of 1204.6bn HUF which corresponds to the 4.3 percent of GDP. The budget deficit excluding one-off items was 2.43 percent instead of the 2.94 percent which had been assumed. This is an outstanding achievement considering prior domestic results and data of other countries as well.
Ever since the regime change had taken place in Hungary no government managed to have a budget in surplus. We therefore consider it a special occasion that in 2011 the government closed the budget year with a surplus, even if some exceptional measures had contributed to this outcome.
When the government endorsed the budget for last year it undertook to bring the deficit to 2.94 percent excluding one-off items. In this light the achievement that the budget ended the year with a deficit half a percent below the original target is even more significant. This was the first year since 2004 that the state budget deficit could be held at below the 3 percent threshold subscribed by the EU.
The much better than anticipated deficit figure is indisputably the consequence of the proportionate flat rate tax system. The new system resulted in 40 000 new jobs, an increase of almost 6 percent in real wages, improvement in the welfare of families with children and contributed to combating the black economy. The 60bn HUF in extra revenues which the proportionate, flat rate tax system had produced also supported financial consolidation.
The better than anticipated state budget deficit figure we also consider a significant improvement because neither international financial institutions nor the majority of domestic experts trusted that the Hungarian government could keep the budget deficit below 3 percent excluding one-off items. The deficit figure of 2.43 percent achieved in 2011 is also a telling signal that via a tight, disciplined fiscal policy the Hungarian government will manage to reach the deficit target of 2.5 percent for 2012 and 2.2 percent for 2013.
(Nemzetgazdasági Minisztérium)
