Jan. 8 (Bloomberg) -- Hungary, which is battling to exit the European Union’s excessive-deficit procedure, is on track to keep its budget deficit below the bloc’s 3 percent of economic output limit, the Economy Ministry said.
The government’s cash-flow based shortfall was 607.5 billion forint ($2.7 billion) in 2012, after a surplus of 84.2 billion forint in December, the ministry said in an e-mailed statement today. That’s equivalent to 2.1 percent of gross domestic product, excluding the deficit of local councils.
“The 2012 cash flow-based deficit gives a good foundation for meeting” the 2.7 percent of GDP deficit goal, according to EU methodology, the ministry said. The official deficit data will be sent to the EU at the end of March, the ministry said.
Prime Minister Viktor Orban has relied on new taxes, including special levies on the banking and telecommunications industries, to keep the budget shortfall below 3 percent and avoid losing EU development funds.
The austerity helped drive the economy into its second recession in four years as tax increases damaged investment, lending, consumption and growth.
Talks with the International Monetary Fund and the EU on aid of about 15 billion euros ($19.7 billion), which Hungary originally requested in November 2011, stalled amid a disagreement over the government’s fiscal policies.
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