Monday, June 06, 2005

Hungary's President, and its budget deficit

In Hungary it isn’t the EU that is top of the agenda today it is the election by MPs of a new President – the process starts later today. The Politics section of Hungary Around the Clock gives a good overview on this as well as other matters of concern here in the heart of the Carpathian Basin.

On matters economic. Finance Minister János Veres is due to reveal the extent of Hungary’s budget deficit as at the end of May later today. Portfolio.hu reports it this way

For May the ministry had expected HUF 130 billion from VAT revenues, HUF 51 billion from excise tax, HUF 35.6 billion from corporate tax and nearly HUF 68 billion from personal income tax.

On the expenditure side, interest payments may have declined to HUF 46.6 billion from HUF 123.5 billion in April, while expenditures of central budgetary organs might have been HUF 153.5 billion. This latter one could be the lowest value this year. Housing subsidies may be somewhat above HUF 10 billion.

Looking a bit further ahead, the ministry still considers the full-year budget deficit target achievable. At the same time the ministry has been heralding further measures aimed at preventing a budget deficit overshoot.

The National Bank of Hungary, market analysts and international organisations all say that deficit targets for the year are not achievable.
I am inclined to agree that the likelihood of the deficit targets being met is remote .... unless of course the Italian Ministry of Finance has been giving lessons in accountancy! As I have mentioned before the chances of any targets being met this side of next spring's general election are highly unlikely. However, with all the flak being heaped upon the €uro at present it may be that these targets are less important than they were; some in Hungary's Finance Ministry might well now be considering whether membership of the European single currency is really such a good idea ....