Another unusually big fiscal cash surplus in September

HUNGARY - In Brief 10 Oct 2016 by Istvan Racz

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The NGM has just reported a HUF 272 billion (9.4% of GDP) central government cash surplus for September. This reduced the cumulative Q1-Q3 deficit to just HUF 2 billion, meaning that on cash basis, the central government budget fully balanced over this period. The cumulative deficit fell from 3.8% of GDP in the corresponding period of 2015, and it fell from 1.2% of GDP in January-August of this year.As the Economy Ministry (NGM) provides no details on the occasion of its first monthly report, the source of this big monthly surplus is not immediately clear. The NGM said in its brief communiqué that sizable amounts arrived from the EU, in the form of reimbursements of the government's distribution of funds under EU-backed development programs, made last year. However, with due respect to the NGM, we would note here that there is absolutely no trace of any such payment made by the EU since the last one in July, which the government accounted for in its August budget report. Neither could the source of September's surplus be the government's infamous tax credit facility, as the next payment by GE will only become due in November. Accordingly, NGM did not even mention the GE payments in its press brief. In addition to making reference to EU payments, the NGM simply said that this year, revenue has come out higher and expenditure proved lower than planned, and that is it.But let us stop here for a moment. To the best of our recollection, this is the first occasion the NGM is speaking of below-plan expenditure, and this may not be accidental. We already saw in August that as the distribution of funds under EU-backed development programs accelerated, spending on non-EU-related...