The Hungarian government is definitely going to revise its 2.5% GDP growth estimate for this year, which it claims is a conservative projection, in the Convergence Programme to be made public at the end of this month. Economic output could grow meaningfully more than that but detailed estimations are still being made, an Economy Ministry state secretary said on Wednesday. Péter Banai, who is in charge of public finances, also told a press conference that the cabinet continues to aim at HUF 6.6 bn revenues from the advertising tax in 2015, but it did not turn out from a report by state news agency MTI what new rates and what scope for the levy the government has in mind. There were official remarks in early March about the necessity to collect cc. HUF 7 bn revenues and setting the rate of the tax to around 5-10%. Banai also noted that by the end of this year the obligation of operating an online cash register could be applied on hairdressers too.
Key remarks by Péter Banai:

  • The updated Convergence Programme needs to be submitted to the European Commission by the end of April. This will contain the assumption of the Hungarian government for the country’s macroeconomic path up to 2018, along with a revised GDP projection for 2015.
  • Although the cabinet maintains its conservative 2.5% growth estimate for this year, the 2014 data confirm that economic growth could exceed this forecast in 2015.
  • Banai underlined that the budget deficit turned out better (2.6% of GDP) than expected (2.9%), which the Central Statistical Office (KSH) has just released a detailed report today.
  • Gross general government debt stood at 76.9% at the end of 2014, down 0.4 percentage points yr/yr. These favourable readings provide a sound basis to reaching the deficit target set for end-2015 and further debt reduction, Banai said, adding that the cabinet expects public debt to be lowered further.
  • He noted that the debt-to-GDP ratio was as high as 81% at the end of 2011 and that there are ony seven European Union member states where the 2014 debt figure was lower than the 2011 data. Denmark was the only other nation besides Hungary that managed to lower its debt every year.
  • The state secretary also noted that Hungary likely ranks in the first half of the EU’s budget deficit ranking for 2014, adding that there excessive deficit procedures (EDPs) in progress against 11 member states, while Hungary managed to keep is shortfall under 3% of GDP despite having three elections last year, while in previous election years the budget gap was always sizeable.
  • Banai labelled the deficit figure is quite favourable in view of the other macro data too, arguing that in many cases there is fiscal balance but there is no economic growth.
  • The online cash register system could be expanded already this year. As the next possible target group he has mentioned hairdressers. The targeted number of online cash registers, hooked up directly to tax authority NAV, was reached in August and the measure will help whiten the economy further and thus boost budget revenues in the whole of 2015, he said.
  • Although there was no inflation in 2014 (-0.1%), tax revenues were increased by the population gaining extra income on the expansion of family benefits, a wage hike for teachers in September and an increased number of people in public work schemes.

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