The year 2023 has left its mark on Hungary, shaped by the effects of war, an energy crisis due to the sanctions imposed on Russia, and a precarious global economic environment. Despite these external pressures, the Hungarian budget, as outlined in a detailed report by the Ministry of Finance (PM) on the central subsystem of public finances at the end of December, has managed to ensure the preservation of pension values, sustain family support, and uphold cost-of-living protections.

The government’s primary focus for the current year is the restoration of economic growth while continuing to reduce the budget deficit and national debt. The report confirmed that by the end of December last year, the budget closed with a deficit of HUF 4,593.4 billion. This comprised a deficit of HUF 4,293.3 billion for the central budget, a surplus of HUF 112.3 billion for earmarked state funds, and a deficit of HUF 412.3 billion for social insurance financial funds.

Notably, the 2023 cash flow deficit was lower than that of 2022, amounting to HUF 4,672.1 billion.

The report underlined significant one-time expenditures incurred in 2022 aimed at enhancing state assets for long-term growth.

Expenditures related to utility costs protection totalled HUF 1,373.5 billion throughout the year, nearly double the amount spent in 2022 for the same purpose. Costs for national and suburban public transportation services amounted to HUF 744.2 billion in 2023, marking an increase of HUF 155.4 billion from the previous year. In 2023, pre-financing of EU programmes reached HUF 2,812.2 billion, with HUF 2,229.2 billion in EU revenue entering the budget. Government spending on pensions reached HUF 5,759.9 billion in 2023, while the health sector received HUF 2,410.1 billion for therapeutic and preventive care, both surpassing the previous year’s allocations.

By the end of December 2023, the central subsystem’s revenues amounted to HUF 36,515.7 billion, representing a 22.2 per cent increase of HUF 6,622.7 billion compared to the same period the previous year. Revenue from the general sales tax (VAT) contributed HUF 6,981.9 billion, surpassing the previous year by HUF 121.6 billion. Excise tax revenue amounted to HUF 1,359.8 billion, reflecting a growth of HUF 130.3 billion from the previous year. State-level personal income tax revenue in 2023 was HUF 3,996.3 billion, an increase of HUF 1,210.3 billion from the previous year.

Corporate tax payments reached HUF 1,013.8 billion, an increase of HUF 267.2 billion from the previous year.

Expenditures for the central subsystem in December 2023 totalled HUF 41,109.1 billion, exceeding the previous year’s figures by HUF 6,544.0 billion or 18.9 per cent. Unique and normative support, guarantee enforcement, interest expenses, and state asset-related expenditures significantly exceeded the previous year’s figures. The net interest expense of HUF 2,321.4 billion increased by HUF 476.8 billion compared to the previous year. The central budget’s debt by the end of December 2023 increased by HUF 5,302.8 billion, with net forint issuance contributing HUF 3,112.4 billion, foreign exchange HUF 2,848.5 billion, forint exchange rate changes decreasing it by HUF 567.5 billion, resulting in a total state debt of HUF 36,888.0 billion.

The foreign currency debt increased by HUF 2,281.0 billion to HUF 13,678.3 billion in 2023, constituting 26.9 per cent of the total debt, up from 25 per cent at the end of 2022. Despite the challenges, the forint debt by the end of December 2023 rose to HUF 36,888.0 billion, accounting for 72.5 per cent of the total state debt, a slight decrease from 74.1 per cent at the end of December 2022.

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Sources: Hungarian Conservative/PM/MTI