Stimulus lifts budget deficit to HUF 1,900.7 billion in August, ministry confirms

Hungary's cash flow-based budget deficit, excluding local councils, reached 1,900.7 billion forints (EUR 5.4bn) at the end of August, widening on stimulus measures, the Finance Ministry confirmed in a second reading of data on Thursday.

“Hungary’s economy grew by a record 17.9 percent in the second quarter of 2021 compared to the same period a year earlier, while the number of employed climbed over 4,700,000 people. These data also show that the supportive fiscal policy, built on tax cuts, job creation, investment incentives and family support, is successful,” the ministry said.

The deficit widened by 97.0 billion forints from a month earlier.

The central budget deficit reached 1,717.1 billion forints at the end of August and social insurance funds were 221.2 billion in the red, but the separate state funds had a surplus of 37.6 billion.

Among expenditures during the period, the ministry noted 172.9 billion forints were spent on road developments, 134.7 billion on transport programmes and 92.2 billion on subsidies to boost competitiveness amid the coronavirus pandemic. Other “significant” items were 61.7 billion for the Hungarian Villages Programme, 60.2 billion for railway developments and 51.1 billion for the Modern Cities Programme, it added.

Some 32.2 billion in family support for September was paid early, in August, to help cover start-of-school spending, the ministry said.

“The budget will continue to ensure the resources necessary to re-start the economy,” it added.

Lawmakers earlier amended the full-year cash flow-based deficit target to 2,287.7 billion forints for 2021, but Hungary’s ESA general government deficit target is 7.5 percent for the year, equivalent to a cash flow-based deficit of 3,990 billion forints.

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