Hungarian budget data are positive even from an international perspective, as although 17 EU member states are currently under an excessive deficit procedure, Hungary is not among them and the Government expects fiscal deficit to be below 3 percent also this year, Deputy State Secretary for Budgetary Affairs Péter Benő Banai said at a press conference.
The Deputy State Secretary stated that the low Hungarian fiscal deficit figure has gone hand in hand with an auspicious economic growth figure as last year the economy expanded by 1 percent in Hungary.
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According to data compiled by Hungary’s Ministry for National Economy, the central sub sector of the state budget posted a deficit of HUF 929.2bn in 2013. Data from the end of December were even more positive than the Government’s former expectations, which confirms the anticipation that the below 3 percent of GDP deficit target, calculated by EU methodology, will be met.
Péter Benő Banai stressed that data are indicating a stringent fiscal policy with regard to the central sub sector of the state budget. Similarly to every other EU member state, Hungary will forward the final deficit figure, calculated in accordance with EU methodology, to the Eurostat at the end of March, and that report will also contain the fiscal account balance of local governments and certain state-owned enterprises, he added.
As Péter Benő Banai pointed out, in the first half of 2013 Hungary was still under the excessive deficit procedure and there was a significant discrepancy between the prognoses of the Government and the European Commission on Hungary. In May 2013, the European Commission still prognosticated economic growth of 0.2 percent and fiscal deficit of 3 percent for 2013, while for 2014 they forecast a budget shortfall of 3.3 percent.
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He emphasised that in order to get the EDP abrogated, the Government – although it had disagreed with the macroeconomic estimates of the European Commission – decided on fiscal adjustment measures. Two pivotal elements of these were the cutting of state administration costs (e.g. by freezing funds) and supplementing the revenue shortfall owing to lower than expected financial transaction fee revenues.
In the second half of this year, after the country had exited the EDP and on the basis of gradually improving macroeconomic data, the Government – while adhering to an economical fiscal policy – disbursed resources regarding several new expenditure accounts, such as the wage hike of teachers, higher tertiary education subsidies, establishment of a new EU Own Fund account) and certain restrictions on frozen accounts were eased.
He pointed out that the overall balance of the central sub sector of the state budget have changed much more favourably in comparison to the statutory amended estimate, as economic growth was significantly higher and inflation was considerably lower than formerly anticipated for 2013. He stressed that in the coming period low deficit will result in lower financing costs and higher growth will lead to more jobs and better employment figures.
(Ministry for National Economy)
