Economy 9 January 2025, 1:15pm

Hungary's 2024 budget deficit both better and worse than planned

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The deficit of the central sub-system of general government was lower than the annual cash deficit plan raised last October and due since then, reaching HUF 4095.8 billion for the whole of 2024. For the first time, the Ministry of National Economy (NGM) published the preliminary deficit figure for December, which was HUF 811 billion negative. Despite the improved cash flow figure, the accrual deficit could be 4.8% of GDP, according to the ministry, which is higher than the target of 4.5%.

According to the NGM, the central budget closed with a deficit of EUR 811 billion in December. Compared to December in recent years, this is not an extraordinary deficit.

The whole year in cash flow terms

By the end of December, the central government sub-system closed with a deficit of HUF 4095.8 billion. Within this, the central budget showed a deficit of HUF 4003.9 billion, the state funds showed a surplus of HUF 138.2 billion and the social security funds showed a deficit of HUF 230.1 billion, the NGM said.

It is worth recalling that in October the government raised its full-year cash deficit target to HUF 4790 billion. In this respect, the budget has performed better than planned, by almost HUF 700 billion.

The annual deficit outturn is therefore below the revised plan, but if we compare the nominal deficit of over HUF 4,000 billion with the original deficit plan for 2024, we can talk about a 160% outturn.

Missed 2024 ESA deficit target

However, the NGM's preliminary announcement also shows that

the accrual deficit is expected to be around 4.8% of GDP in 2024.

This is the first time that the government has formally acknowledged that it will miss the deficit target, which has been raised to 4.5%, but only by a marginal 0.3 percentage points. In this context, the NGM pointed out that

the general government deficit in 2024 would be significantly lower than the 6.7% in 2023.

It then reiterates that the deficit will be further reduced this year, with a target of 3.7% of GDP.

The deficit on an accruals basis (which is much more closely watched by the EU, rating agencies and markets) has therefore been higher in 2024 while the cash-flow methodology has resulted in a better budget than planned.

Some preliminary information

The factsheet also shows some of the main trends for last year.

Tax and contribution revenue for the central subsystem was 8.7% higher than in the previous year.
Among the expenditure, the state spent a total of HUF 6,853.9 billion on pensions and pension-like benefits last year, HUF 474.2 billion more than in 2023.
Of the total expenditure, the amount spent on the 13th month pension and benefits amounted to HUF 520.2 billion.
The government spent a total of HUF 208.3 billion on baby loans in 2024, which is HUF 31.3 billion more than in 2023.
The amount spent on preventive health care exceeds the previous year's figure. In 2024, the government spent an extra HUF 274 billion on this, HUF 2 684.1 billion altogether, which includes the additional expenditure on the pay rise for nurses from March 2024.
Teachers' salaries in education and vocational training increased by an average of 32.2%, which meant an additional expenditure of HUF 406.1 billion.

Cover photo (for illustration purposes only): Getty Images