Hungary's 2011 Cash-Flow Budget Deficit 10% Wider Than Expected
January 23 2012 - 12:35PM
Dow Jones News
Hungary's cash-flow-based budget deficit was 10% wider than
expected in 2011, but the country is still likely to have met its
budget target as measured by European Union accounting rules, the
Economy Ministry said Monday.
The ministry attributed the overshoot in cash-flow-based data to
one-off items such as the state acquisition of a major stake in
energy company MOL Nyrt. (MOL.BU), the consolidation of debts at
state rail firm MAV Zrt., and a capital increase at state-owned
development bank MFB Zrt.
Excluding these one-off items, the ministry said the
cash-flow-based deficit--excluding local councils--came to 619.8
billion forints ($2.7 billion), narrower than the HUF687.4 billion
target.
According to EU accounting rules, Hungary expects to have made a
budget surplus of HUF976 billion, or 3.5% of gross domestic
product, the ministry said. These data usually become available by
March, when local councils' data are included.
"The state of finances in the state infrastructure--excluding
local councils--indicate that the [EU-norm] deficit target of 2.94%
of GDP will be met for the whole of 2011," the ministry said.
The gap between the two figures is caused by differences in how
the cash-flow-based and the EU-norm totals are calculated.
Differences aren't related solely to whether one-off items are
included or left out.
Hungary's government has made it a priority to keep its budget
deficit under 3% of GDP this year and next. The country has been
subject to an excessive deficit procedure by the European
Commission ever since its accession to the EU in 2004. An EDP is
triggered when an EU member state exceeds a specific debt ceiling.
Last week, Hungary's EDP entered a new stage, meaning that unless
it introduces tighter controls on its finances it may face
sanctions.
In 2010, Hungary had a cash-flow-based deficit--excluding local
councils--of HUF889.5 billion, or 3.2% of GDP.
-By Gergo Racz and Veronika Gulyas, Dow Jones Newswires;
+361-267-0622; gergo.racz@dowjones.com
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