Central government cash deficit slightly below target in full-year 2019

HUNGARY - In Brief 09 Jan 2020 by Istvan Racz
The central government's cash deficit was announced by the Finance Ministry today at HUF 453bn for December and HUF 1219bn for full-year 2019, the latter down from HUF 1445bn in 2018. This means a deficit of 2.6% of GDP last year, just slightly below the 2.7% target figure and more significantly down from the 3.4% of GDP actual in 2018. This result seems to substantiate the recent claims by finance minister Varga and cabinet minister Gulyás that the ESA-2010 (accrual) deficit of the general government may have ended up also slightly below the 1.8% of GDP target in 2019, down from the 2.3% actual recorded in 2018. By the way, the ESA-2010 deficit was 0.1% of GDP in January-September, down from 1% of GDP one year earlier, but as usual, a relatively big fiscal gap is expected for Q4, just as was the case for the central government's cash deficit, which went up in Q4 significantly from only 0.9% of GDP in the first three quarters.Based on our own forecast of a 1.7% of GDP ESA-2010 deficit for full-year 2019, we expect the government debt ratio to have fallen to 67.5% of GDP by end-December, down from 70.2% at end-2018.All this sounds quite positive but also largely in line with market expectation.

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