State finances
Last year there was a deficit of 6.7% of GDP. This figure further undermines the credibility of the Orbán government.
On Tuesday, the Central Statistical Office (KSH) subsequently put a bad egg in the Orbán government’s Easter basket: According to preliminary information, new debt in 2023 increased again by 910 to 5,020 billion forints compared to 2022, or by half a point to 6.7% Gross domestic product (GDP). According to the Hungarian National Bank (MNB), national debt reached 55,135 billion forints or 73.5% of GDP at the end of the year.
Heavy real losses at ÁFA
As the KSH further announced, the tax authorities were able to enjoy income totaling 31,815 billion forints. Despite the recessionary environment, there was an increase of 13% or 3,645 billion forints. The increase was most striking in income tax (+22.5%), where 1,035 billion forints more reached the state treasury. The SV coffers took in 960 billion forints more, which basically corresponded to the pace of inflation. The increase in value added tax (ÁFA) of 365 billion forints or 5.5% actually represents a hefty real loss.
Spending, meanwhile, shot up by 14%, or 4,555 billion forints. What stood out here was the almost doubled debt service, for which the tax authorities alone had to raise an additional 1,660 billion forints.
Four years out of control
Since the year of the corona pandemic, the Orbán government has not been able to get the state budget under control; a deficit of 7.6% in 2020 was followed by only a modest correction to 7.2% in 2021 – the year of the “restart” of the economy. The year 2022 was marked by the war in Ukraine and the energy crisis, which is why the continued cautious correction to a deficit of 6.2% could certainly be sold as a success. Because these effects only had a weaker effect in 2023, the state would actually have had to take on less new debt. The fact that things ultimately turned out differently could have its origins in a misjudgment of economic policy.
They were counting on the economic engine to start up in the second half of the year. In fact, the engine came after a confident III. At the end of the year, things started to stutter again in the first quarter. This has destroyed another aura of the Orbán government, which previously only squandered money that the tax authorities had previously collected.
The finance department is now officially planning a deficit of 4.5% for 2024. Experts doubt whether the plan can be maintained. The original target has already been softened from a nominal 2,500 to just under 4,000 billion forints. However, this sum will be consumed by debt service alone.
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