Hungary: September budget deficit below expectations

The cash-flow based general government deficit stood at HUF 70.2bn in September, which is significantly below the HUF 142.7bn forecast of the finance ministry. Thus the nine-month budget deficit reached HUF 1,457bn (6.3% of projected GDP) or 82.8% of the full-year target.

Our view: Although the September gap is better than the respective target and also below the August's HUF 134.9bn figure, it is still above the HUF 64.5bn deficit recorded in September 2005. According to the Finance Ministry higher-than-expected revenues from indirect taxes (VAT and excise tax) were the main reason for the better than projected balance, but lower-than-forecasted expenditures of budget-funded institutions also helped.