Favourable preliminary fiscal data for full-year 2024

HUNGARY - In Brief 09 Jan 2025 by Istvan Racz

---

The Economy Ministry, which the former Finance Ministry has been merged into since the start of January, issued their first preliminary estimate of full-year 2024 fiscal balances this morning.The cash deficit of the central government came out at HUF4096bn or 5.0% of GDP, much higher than the original projection of 3.1% of GDP (set around mid-2023), slightly higher than the first-time amended 4.9% of GDP (which the early-2024 revision of the budget foresaw), but substantially less than the second-time amended 5.9%, predicted early last autumn. As the following chart shows, 2024 was the fourth consecutive year that the cash deficit fell as a ratio, from 6.1% of GDP in 2023 and an initial 10.9% in the Covid-hit year of 2020.Simultaneously, the Ministry predicted that the Eurostat-methodology deficit number for the general government sector, the key fiscal target variable, will most likely come out at 4.8% of GDP in 2024, sharply down from 6.7% in 2023 but moderately exceeding the 4.5% annual target. This matches our own long-time expectation: the figure we have had in our forecast table for quite a while is a 4.7% deficit ratio, and we always considered that as one of the safest possible bet an analyst can make, knowing the circumstances and the way of decision-makers' thinking on the subject. Just as a reminder, the deficit target set for 2025 remains 3.7% of GDP, and the moderate overshooting of last year's target will actually help the government achieve that further moderate tightening this year.Previously, both the Ministry and the MNB indicated that in the very last days of December, the Treasury bought government bonds back from the MNB, in an amount of HUF615bn (...