In spite of the pressure that the April floods meant for the central budget, its deficit has not grown and gives this far into 2000 no reason for alarm. The general budget is in balance in spite of a 20-22 billion HUF surplus that was planned for April but did not happen: its deficit is at 36% of the total projected for the year, with revenues standing at 32%. Compared to the 153.4 billion HUF at the end of the first quarter, the deficit has grown only insubstantially. The unforeseen expenditures necessitated by the floods will not be an additional burden on the budget as they are financed through uniform budget cuts at all the ministries. The deficit of the social security funds is also within its set limits. And the fact that this year’s budget was written with an inflation rate of merely 6% in mind is yet another asset for meeting budgeted figures.
The deficits of the central and the general budgets – even taking into account the additional costs of highway construction and home-builders’ loans – could stay below their planned figures. On the other hand, the social security budget and welfare expenses – among other reasons because of the unavoidable end-of-the-year indexing of pensions – are likely to be higher than expected.
The first quarter figures of the current accounts balance make it likely that the deficit will be less than 2 billion euros at the end of the year. The 370 million euro figure for the first quarter is significantly better than the 538 million deficit for the same period of 1999. This improvement of the balance is mostly attributable to multi-nationals. The foreign trade deficit has been 489 million euros since the beginning of the year, foreign portfolio investments have come to a sudden drop in March. The amount of working capital arriving to Hungary has dropped to 232 million euros during the first quarter compared to the 405 million euros for the year before. Although this latter could be a warning sign, financing the current accounts balance deficit will go smoothly. –
