MNB: Government deficit in 2014 around 2.3-2.4% of GDP
The 2014 general government deficit may have been around 2.3-2.4% of GDP, 0.1-0.2 percentage points lower than forecast in December, the National Bank of Hungary (MNB) said in its quarterly Inflation Report released today.
Stronger than expected economic growth resulted in tax revenues exceeding the target by 0.1% of GDP at the end of the year. In the case of some of the central governmentʼs primary expenditures, several items fell marginally short of expectations.
According to the forecast, the general government deficit may be 2.4% of GDP in 2015, assuming the available free reserves in the budget bill will be cancelled.
The MNB report also cited investment figures with the investment rate remaining stable in 2015 at above 20%, while the share of private capital formation could increase within total investment.
The growth in economic activity and the extension of the MNBʼs Funding for Growth Scheme supports the increase in corporate investment.
The developments in public sector investments are however primarily determined by the drawdown of European Union funds and based on the information received since the December forecast, the utilization of EU funds may be more exhaustive in 2015 than previously expected.
Public sector investment activity could remain strong in 2015, followed by a downward shift in 2016 with the depletion of the EU funds provided under the 2007-2013 budget cycle.
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