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Stimulus lifts gen gov't deficit to HUF 1.901 tln in August

Debt

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Hungary's cash flow-based general government deficit, excluding local councils, reached almost HUF 1.901 tln at the end of August, widening on stimulus measures, the Finance Ministry said in a preliminary release on Wednesday.

"Hungary's economy grew by a record 17.9% in the second quarter of 2021 compared to the same period a year earlier, while the number of employed climbed over 4,700,000 people. These data also show that the supportive fiscal policy, built on tax cuts, job creation, investment incentives and family support, is successful," the ministry said.

The deficit widened by HUF 97 billion from a month earlier.

The central budget deficit reached HUF 1.717 tln at the end of August and the social insurance funds were HUF 221.2 bln in the red, but the separate state funds had a surplus of HUF 37.6 bln.

Among expenditures during the period, the ministry noted HUF 172.9 bln spent on road developments, HUF 134.7 bln on transport programmes and HUF 92.2 bln on subsidies to boost competitiveness amid the coronavirus pandemic. Other "significant" items were HUF 61.7 bln for the Hungarian Villages Program, HUF 60.2 bln for railway developments and HUF 51.1 bln for the Modern Cities Program, it added.

Some HUF 32.2 bln in family support for September was paid early, in August, to help cover start-of-school spending, the ministry said.

"The budget will continue to ensure the resources necessary to re-start the economy," it added.

Lawmakers earlier amended the full-year cash flow-based deficit target to HUF 2.288 tln for 2021, but Hungary's ESA general government deficit target is 7.5% for the year, equivalent to a cash flow-based deficit of HUF 3.99 tln.

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