With the second half of 1999 the general budget started to show signs of improvement and closed the year with a relatively favorable 420.5 billion HUF deficit. This positive tendency was especially significant in the case of the budget which – not including privatization revenues – closed the year with a 331.6 billion HUF deficit, almost 50 billion less than planned. Taking into account local governments as well, the GDP-proportionate general budget deficit was 3.9 percent in 1999, i.e. less than the earlier planned 4 percent.
If these reassuring trends carry on this year (as they seem to do so far), the general budget deficit is likely to fall somewhere between 410 and 440 billion HUF in 2000. In case the general budget continues to become more balanced and the economy keeps growing, and if savings – and with that the internal financing ability of the economy – grow, the next few years may well set the Hungarian budget deficit on the road toward meeting the criteria of the Maastricht Treaty.
The current accounts balance ended 1999 with a deficit of 2.08 billion USD, about 220 million USD less than the basis figure. This positive change is partly due to a 175 million USD drop of the net goods deficit and a 180 million USD improvement of the income balance of debt-related investments. The net figure for capital revenue outflow was 1630 million USD in 1999, 240 million USD less than the year before.
The annual budget balance sheet total of local – communal and regional – governments is about 1400-1500 billion HUF. This amounts to roughly 12 percent of the GDP which, by international comparison, is quite high – however it goes with an exceptionally high level of public duties. The portion of the current expenditures of local governments covered by centrally regulated sources is at the same time continually receding.
