Hungary’s economy minister: The year was closed with stable public finances

Thanks to the Government’s tax reductions and a successful fiscal policy, the deficit of the general government budget was low in 2016 and the government debt-GDP ratio could also be substantially reduced, Minister for National Economy Mihály Varga said at a press conference. Speaking of headline figures, Mihály Varga said that the central sub sector of the state budget accumulated a preliminary deficit of HUF 848.3bn, down by HUF 389bn compared to the year 2015.

Within that, the deficit of the central budget, Social Security Funds and Extra-Budgetary State Funds was HUF 771.6bn, HUF 75.2bn and HUF 1.5bn, respectively, at the end of 2016. In 2015, the central sub sector recorded a shortfall of HUF 1237.2bn.

Compared to the previous year, data from 2016 are better due to some favourable trends, the Minister stated. The main positive factor was that – thanks to economic performance and Government measures – tax revenues rose by HUF 490bn. More and more people are economically active and wages increased in both the private and public sectors, he added. For example, despite the 1 percentage point reduction in the rate of personal income tax and the increase of family tax allowances, labour-related tax revenues rose by HUF 262bn.

Payments by enterprises were also higher. On the expenditure side, on the other hand, the cyclicality of the inflow of EU funds had a major impact on the budget last year, as these were HUF 700bn lower than in 2015, which was the closing year of the programming period 2007-2013.