Economy 9 December 2024, 12:35pm

Hungary posts surprisingly small budget deficit in November

Portfolio

The central sub-system of Hungary's general government recorded a deficit of 233.8 billion forints in November 2024, the lowest gap for the month since 2019. This also means that the deficit might as well go as high as HUF 1,500 billion in the last month of the year, which seems significant.

Nice November

Hungary's budget incurred a shortfall of HUF 233.8 billion in November, according to preliminary data published by the Finance Ministry on Monday. Even the ministry underlined that

the november deficit was last lower than this in 2019.

The ministry also said that by the end of November, the central sub-system of the general government closed with a deficit of HUF 3 284.3 billion. This included a deficit of HUF 3 257.5 billion in the central budget, a surplus of HUF 200.0 billion in the extra-budgetary funds, and a shortfall of HUF 226.8 billion in the social security funds.

In nominal terms, the Hungarian budget can have largely the same deficit trajectory as in 2022.

Interest expenditure amounted to HUF 3 412.7 billion by the end of November, which is HUF 798.1 billion higher than the same period last year, the ministry said. Spending on pensioner benefits (HUF 5,727.7 bn) and curative and preventive medical care (HUF 2,434.3 bn) also continues exceed the base period's data.

The ministry noted in its statement that

the government has stabilised the budget balance this year and is also continuously monitoring the deficit.

Will there be a surprise in the end-year balance?

With the first 11 months of the cash deficit data available, it is easy to calculate how much deficit the budget can still run in December to reach the annual deficit target, which has been raised to HUF 4,790 billion.

This is more than HUF 1 500 billion, i.e. this is how big the budget deficit may be in the last month of the year.

The average of the last three years shows a December deficit of HUF 1,000 billion, and a gap greater than HUF 1,500 billion was only recorded in the last month of 2020.

In view of this, we do not rule out that the government will be able to achieve a better cash deficit than the annual plan, which has been revised upwardly to HUF 4,790 billion.

This could obviously be influenced by whether the government is preparing for its usual end-of-year spending spree, which usually means extra money for specific purposes.

Cover photo: Finance Minister Mihály Varga, Source: MTI Photo/Tamás Purger