One of the main reasons behind the HUF 269.4bn surplus was that due to the public holidays at the beginning of May budget wages and family benefits were transferred from the budget at the end of April. The significant fiscal surplus – also a result of higher tax and tax-type revenues – is also signalling an economic rebound. In the period January-May 2014, the deficit of the central sub sector of the state budget was HUF 681.7bn.

In the month of May 2014, the central sub sector of the state budget registered a deficit of 817.3bn HUF. Within that, Social Security Funds and extra budgetary state funds posted surpluses of HUF 109.3bn and HUF 26.3bn, respectively. In the initial five months of 2013, the shortfall of the central sub sector of the state budget totalled HUF 559.4bn.

The difference between the  expenditures of the two periods at issue originated on the one hand from the effect of teachers’ wage hike effective as of September 2013 and on the other from expenditures related to non-profit healthcare entities which operate as budgetary institutions since 1 April 2013. Allocations for local governments were also significantly higher than those in the corresponding period of the previous year. Expenditures also increased due to the amount of HUF 68.6bn paid at the end of May for covering loan repayments within the framework of the debt consolidation of local governments.

In addition to the effect of the payment of wages and family benefits in April owing to public holidays at the beginning of May, the fiscal balance was improved by the inflow of EU funding – related to expenditures of previous months -- transferred by the European Commission. Extra revenues resulting from accelerating economic growth, higher employment and the connecting of cash machines to the on-line register of the tax authority have also improved the balance in May (mainly the revenue estimates regarding VAT, personal income tax, social contribution tax and related contributions).

The ESA budget deficit target for 2014 is unchanged at 2.9 percent of GDP.