Economy 22 April 2024, 2:18pm

Hungary officially had the second highest budget deficit in 2023

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Hungary's general government deficit was the second highest in the European Union in 2023, according to data published by Eurostat, the statistical office of the European Union, on Monday.

It surprises no one that the Hungarian budget deficit has been high for years. Moreover, last year the deficit failed to be reduced, rising to 6.7% of GDP from 6.2% in 2022. But now Hungary has officially become one of the countries with the largest deficits in the European Union.

General government balance

In 2023, all Member States, except Cyprus and Denmark (both reported a surplus of +3.1 %), Ireland (+1.7 %) and Portugal (+1.2 %), reported a deficit.

In 2023, the highest deficits were recorded in Italy (-7.4 %), Hungary (-6.7 %) and Romania (-6.6 %), Eurostat reported. In total, eleven Member States had deficits higher than 3 % of GDP: Italy, Hungary, Romania, France, Poland, Malta, Slovakia, Belgium, Czechia, Spain and Estonia.

The EU's government deficit-to-GDP ratio increased to -3.5% in 2023 from -3.4% in 2022, while this ratio decreased in the euro area to -3.6% from -3.7% .

General government gross debt

In the EU, the government debt-to-GDP ratio decreased from 83.4 % at the end of 2022 to 81.7 % at the end of 2023, while in the euro area it decreased from 90.8 % to 88.6 % (see Figure 2).

At the end of 2023, the lowest ratios of government debt to GDP were recorded in Estonia (19.6 %), Bulgaria (23.1 %), Luxembourg (25.7 %), Denmark (29.3 %), Sweden (31.2 %) and Lithuania (38.3 %).

13 Member States had government debt ratios higher than 60 % of GDP, with the highest registered in Greece (161.9 %), Italy (137.3 %), France (110.6 %), Spain (107.7 %) and Belgium (105.2 %). Hungary's debt-to-GDP ratio dropped to 73.5% from 74.1%.

The importance of the general government sector in the economy may be measured in terms of total general government revenue and expenditure as a percentage of GDP. In 2023, government expenditure in the euro area was equivalent to 50.0 % of GDP and government revenue to 46.4 % of GDP. The figures for the EU were 49.4 % and 45.9 %, respectively. The government expenditure and revenue ratios decreased in the EU and the euro area compared with 2022.

Meanwhile, Hungary's government expenditure widened to 49.1% in 2023 from 48.9% in 2022, while government revenue declined to 42.4% of GDP from 42.7%.