August Budget Deficit Among Lowest in Recent Years

In August, the budget recorded one of the lowest deficits in recent years, after the deficit had risen by 239.1 billion forints (607.9 million euros / 1 euro = 393.43 forints) during the month. This brings the cumulative deficit after eight months to 3,025.5 billion forints, that is 63.4 percent of the revised annual plan.

By the end of August, the central subsystem of public finances closed with a deficit of 3,025.5 billion forints (7.7 billion euros). This corresponds to 63.4 percent of the cash flow deficit expected for the entire year (4774.0 billion forints), which means that the year-to-date deficit is lower than the time-proportional deficit (66.6 percent), revealed the Ministry for National Economy.

The development of the deficit continues to follow the pattern of previous years, with a large part of the budget deficit occurring in the first three to four months of the year, followed by stagnation in the summer months and a renewed increase.

The current deficit is one of the most favorable August deficits in recent years, with the last lower deficit occurring in 2022,

Világgazdaság points out.

Last year, the deficit rose by 414 billion forints in the eighth month, and by 358 billion forints before that, with the budget exceeding the 3,000 billion forint mark at the end of August only once before, in 2023.

All this means that the government still has a lot of leeway in the budget, writes the portal, adding that

if the government fully utilizes the target cash flow deficit of 4,773 billion forints, it can increase the deficit by more than 1,700 billion forints.

In its announcement, the Ministry emphasized that tax and contribution revenues of the central subsystem increased by 8.7 percent compared to the same period last year. There was an increase of almost 10 percent in consumption-related taxes.

By the end of August, interest expenses of 2,928.3 billion forints had been paid, representing an increase of 514.5 billion forints compared to the same period last year. This is due to different interest payment dates for certain maturities and the different structure of government debt.

Expenditure on government transport and utility services totaled 1,654.5 billion forints, that was 172.8 billion forints higher than in the same period last year.

Expenditure on pensions and medical care and treatment also exceeded the previous year’s figure.

By the end of August, a total of 4,954.6 billion forints had been paid out for pensions and pension-related benefits, including the 13th month’s pension and social benefits, and 1,969.5 billion forints for medical and preventive services.

Budget revenues from EU programs rose by 311.3 billion forints to 436.8 billion forints this month. According to the Ministry, this is mainly due to that the European Commission

• transferred the funds earmarked for the fulfillment of milestones related to the increase in teachers’ salaries, amounting to approximately 587 million euros, and
• repaid the EU share of expenditure on rural development measures under the CAP Strategic Plan for the second quarter of 2025, amounting to 131 million euros.

This year’s budget was passed by parliament last fall with a planned economic growth of 3.4 percent and an inflation rate of 3.2 percent. Minister for National Economy Márton Nagy previously acknowledged that the actual deficit could be between 4 and 4.5 percent this year, that is higher than the government’s previous forecast, but he expects the deficit to decline.

In 2024, Hungary’s budget deficit was 4.9 percent of GDP, which seems high at first glance, but is not so bad compared to other countries in the region: Poland’s budget deficit was 6.6 percent, Romania’s was 9.3 percent, and even Austria’s was 4.5 percent.

Via MTI, Világgazdaság; Featured image: Pixabay 

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