Hungary records 3rd smallest budget deficit in Q314

Jan 06, 2015 12:00 AM

Hungary’s general government deficit in the third quarter of 2014 was HUF 108.6 billion, 1.4% of GDP, the Central Statistical Office (KSH) has reported on Tuesday. According to Portfolio’s database going back to 1999, the Q3 gap was smaller than this only twice before. In January-September, the budget shortfall totalled 2.6% of GDP. The full-year target is 2.9%. The four-quarter trailing average dropped as a result of the latest reading and it stood at -2.1% of GDP at the end of Q3.

The third quarter of 2014

In Q3 last year, revenues of the general government sector amounted to HUF 3,797.2 billion, expenditures to HUF 3,905.9 billion and the deficit to HUF 108.6 billion. This corresponds to a deficit of 1.4% of GDP, which is the third-smallest shortfall on record since 1999. The Q3 gap was 1.1% of GDP in 2001 and 1.2% in 2012.


Revenues grew by 9.4% in the 3rd quarter of 2014 year on year. The increase stemmed predominantly from the 8.4% growth of taxes on production and imports - within which the 16.9% expansion of VAT revenues -, the 7.0% increase of taxes on income and the 6.8% growth of social contributions.

Expenditures were up by 6.5% in the 3rd quarter of 2014 compared to the same period of the previous year. Gross fixed capital formation (27.4%), the compensation of employees (13.3%) and intermediate consumption (6.0%) were up, while interests decreased by 5.1%. The value of social benefits other than social transfers in kind remained unchanged.

Gov’t can lay back
The four-quarter trailing average deficit dropped to 2.1%, which shows the cabinet is in a pleasant place as regards the goal of reaching its 2.9% of GDP full-year target.


First three quarters
In the first three quarters of 2014 - according to data compiled in compliance with the methodological guideline of the system of national accounts (ESA2010) - the revenues of the general government sector amounted to HUF 10,937.6 billion, expenditures to HUF 11,511.0 billion and the deficit to HUF 573.4 billion.

This corresponds to 2.6% of GDP. This deficit is HUF 96.6 bn or 0.4 percentage points lower than in the same period of 2013.

Revenues rose by 7.2% compared to the first three quarters of 2013. Social contributions (7.9%), revenues from taxes on income (7.6%) and taxes on production and imports (7.1%) - within which VAT revenues by 10.6% - all went up.

Expenditures expanded by 5.9% in the first three quarters of 2014 compared to the corresponding period of the previous year. Gross fixed capital formation was up at the highest rate (25.3%), principally consistent with the renovation of public buildings, the construction of public parks and developments in disaster management and law enforcement. The compensation of employees (9.5%) and intermediate consumption (6.9%) also grew, while interests decreased by 4.6% and social benefits other than social transfers in kind by 0.3%.

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