Hungary’s record budget shortfall widened sharply in August in a major fiscal challenge for Prime Minister Viktor Orban.
(Bloomberg) — Hungary’s record budget shortfall widened sharply in August in a major fiscal challenge for Prime Minister Viktor Orban.
The January-August deficit increased to 3.3 trillion forint forint ($9.2 billion), the Finance Ministry said in a statement on Friday. The August deficit was 358 billion forint, according to Bloomberg calculations based on ministry data.
The budget has been reeling since Orban’s record pre-election spending last year, which was followed by expenditure on projects including the acquisition of Vodafone Plc’s Hungarian business and a new stadium for the World Athletics Championships. The government is now eyeing a further big-ticket purchase in the form of a majority stake in Budapest Airport Zrt., estimated to cost several billion dollars.
While the government said it was committed to reducing the budget deficit, it has missed its fiscal goals for consecutive years and is on track to overshoot its 3.9% of gross domestic product target for this year as well. The ministry has dropped its deficit goal from the monthly budget statement, where it featured regularly until last month.
The ministry blamed the European Union for worsening Hungary’s budget woes by withholding more than $30 billion earmarked for Hungary due to corruption and rule-of-law concerns. That’s forcing the government to prefinance EU projects from its own budget, the statement said.
The budget has slid as the fastest inflation in the EU cut domestic demand, causing a miss in targeted value-added tax revenues while the bloc’s highest borrowing costs have restrained lending and business activity during a year-long recession.
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