The Finance Ministry confirmed a series of good news on 2018 fiscal results

HUNGARY - In Brief 12 Jan 2019 by Istvan Racz

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Over the last few weeks, a series of good news on the 2018 government budget results were announced, leaked, rumoured or suggested by various sources. Yesterday, the Finance Ministry confirmed a few of them, minister Varga and state secretary Banai having been the speakers. In the main, they said the following:- The full-year ESA-2010 (accrual terms) government sector deficit, the single most important fiscal indicator, is estimated around 2% of GDP, down from 2.2% in 2017 and also less than the 2.4% target set for last year.- The government's gross debt ratio is estimated to have decreased to around 71% of GDP by end-2018 from 73.3% at the end of 2017. This is a markedly steeper cut than the 0.4 percentage point reduction set forth in the Convergence Report released in April 2018.- In cash terms, there was a HUF397bn surplus reached by the central government in December, quite unusually for the last month of the year. As a result, the full-year cash deficit came out to 3.4% of GDP, 0.2 percentage point above the original target but substantially less than the 4.7% deficit expected by minister Varga a few months ago.- Importantly, the cash flow success of late 2018 (but not the accrual-terms success, of course) was due to an unusually big payment of pending EU transfers (reimbursements) by the EU Commission. Total reimbursements reached HUF1430bn (3.4% of GDP) in 2018, implying the payment of HUF855bn in December alone.At this point, we would instantly add the following:- The ability to reduce the fiscal deficit in an election year is quite impressive, especially in light of the fallout of a HUF270bn or 0.7% of GDP extraordinary revenue that was available in 2017 but n...