Hungary’s cash flow-based budget, excluding local councils, ran a 1,219 billion forint deficit (EUR 3.6bn) at the end of December, the Finance Ministry has confirmed in a second reading. The shortfall was 122.1% of the full-year target. In December alone, the budget was 452.7 billion in the red. The ministry noted pre-financing for European Union funded projects came to 1,556.8 billion forints in 2019, while transfers from Brussels came to 1,468.6 billion.
With healthy consumption and GDP growth of around 5%, VAT revenue rose by 603.7 billion forints, while revenue from personal income tax increased by 247.2 billion, the ministry said.
Spending was lifted by investments as part of the Modern Cities and Hungarian Village schemes, road and railway upgrades, and incentives for business investments to improve competitiveness. Also, family support measures that included subsidised loans for expectant mothers and purchase subsidies for large families buying 7-seater vehicles and wage rises in the public sector boosted the spending side, it added.
Based on EU accrual-based accounting rules, the budget is likely to show a deficit well below 3% of GDP required under EU rules. The government targets a shortfall of 1.8%.