Economy 12 May 2025, 11:55am

Hungary posts another hefty budget deficit in April

Portfolio

In April, the general government accumulated a HUF 376.4 billion deficit in cash terms, according to the preliminary budget report of the Economy Ministry. This is the second highest April shortfall in the last 24 years.

The Economy Ministry issued its usual statement on the monthly performance of the public finances, entitled "Budget revenues are as planned". The details show that in the fourth month of the year, the deficit in the central subsystem was HUF 376.4 billion, and according to our data, the fourth-month deficit has been higher than this only once in recent years, in 2023.

Hungary's general govt balance in April each year

Here's how the budget stands so far

This brings the deficit to over HUF 2,930 billion in four months, worse than in any previous first four months.

Within this, the central budget recorded a deficit of HUF 2 851.5 billion, while extra-budgetary funds showed a surplus of HUF 44.0 billion and the social security funds a deficit of HUF 123.0 billion.

Hungary's y-t-d general govt balance April2025

This means that by the end of April, more than 71% of the annual cash deficit target had been met.

On the face of it, this is very high and means that the fiscal deficit path is still top-heavy,

but the January-April ratios have been even higher over the past three years.

The ministry also provided some details on the first four months of the year:

Compared to the same period of the previous year, tax and contribution revenue of the central subsystem was 10.9% higher.
Within this, consumption-related taxes continued to be the main contributor, with an increase of around 13% compared to the same period last year.
By the end of April, the budget had made interest payments of HUF 1,916.5 billion, which is HUF 408.7 billion higher than in the same period last year. The ministry explains that this is due to the different structure of public debt and the different interest payment dates of each maturity.
Payments for retirement benefits are also higher than a year earlier. In the first four months, a total of HUF 2.738.1 billion was paid out, including the 13th month pension and benefits.
On the expenditure side, subsidies for utility services amounted to HUF 569.9 billion, an increase of almost HUF 30 billion compared to the same period last year, partly due to the different timing of payments and partly to increased payment claims from the Water Utility Development and Compensation Fund to water utility companies.

No wonder that action had to be taken

This year's budget is therefore off the mark due to a worse-than-expected macroeconomic environment and situation, which is not surprising (the government expects GDP growth of 2.5% instead of the 4.1% originally planned). The government recently raised this year's budget deficit target to 4.1% of GDP from 3.7%, and Kornél Kisgergely, a state secretary at the Economy Ministry, revealed in an interview with Portfolio that significant budgetary restraints have been implemented this year.

This means that the government recognised that this year's budget was off track and acted early, but it also raises questions about the soundness of next year's budget (which is in the planning stage).

Cover photo (for illustration purposes only): Getty Images