By the end of the first half of the year the consolidated budget deficit reached 391.2 billion forints, 89.3 percent of the amount scheduled for the entire year or 3.4 percent of the planned GDP. The excess deficit mainly comes from financial settlements which are not rooted in actual economic developments and most of which level off over the year. This seems to be supported by the July figures which show only a slight additional increase of the debt. At the same time, it is expected that the total budgetary debt will still exceed the 4 percent scheduled in the original budget, because of the huge deficit of the social security system.
The current account deficit amounted to 1,218 million dollars in the first half of the year, that is, about 300 million dollars more than during the same period last year. The key difference between the two periods appears in the flow of goods, the deficit of which was 350 million dollars over the base in the first six months of 1999. This is countered to some degree by this year’s higher revenue from tourism and the fact that a smaller proportion of capital revenue was withdrawn from the country.
There was a notable shift in the financing the balance of payments form direct investment and participation to portfolio investment. If this trend continues in the second half of the year, then the influx capital for direct investment will be substantially behind the previously expected 1.5 billion dollars. At the same time the continuing intensive growth of portfolio investment allowed to increase international reserves by 670 million dollars and to decrease the net foreign debt by a similar amount.
The current account deficit at the end of the year is likely to be in the range of 2.5 to 2.7 billion dollars, depending on whether the trend of capital revenue transfer seen in June continues, or the amount of revenue withdrawn will leap in December. –
