Treasury data shows where some of the HUF 3 trillion worth of December expenditures was allocated

February 15, 2017

The State Treasury has released figures related to its expenditures in December 2016, providing a general picture of how it allocated some HUF 3.36 trillion (USD 11.5 billion), or 10 percent of the country’s GDP, in that month alone, reports Napi.hu. According to the online economics daily, the government racked up a deficit of HUF 907.6 billion by the end of December, despite operating on a surplus of HUF 59 billion in the first 11 months of 2016. Instead of closing the year with the first budget surplus in the modern history of Hungary, the government embarked on a massive spending spree at the end of the year.

Since then, the Ministry of National Economy has held numerous press conferences in an attempt to explain why this was necessary. Rumors suggest the spree was meant to inflate Hungary’s 2016 GDP figures against the backdrop of the government’s intensive “Hungary is getting stronger” propaganda campaign. Earlier, the Central Statistical Office (KSH) had forecast GDP growth at below 2 percent but it appears the last-ditch effort to drive up growth worked: Hungary’s unadjusted GDP barely tipped the scales at 2 percent.

While there is no detailed account of just how the money was spent, a table released by the State Treasury offers a glimpse of where the funds went. The data shows that several state institutions spent as much as one-third of their annual budget in December alone. For example, in December, the Justice Ministry managed to spend an amount equal to more than 30 percent of its annual budget, while the Ministry of National Economy spent more than 29 percent of its budget. The Ministry of National Development spent HUF 418.5 billion in December, 33.8 percent of its annual budget.

According to Napi, this can be explained in two ways: either the institutions were very prudent spenders through 2016 or (more likely) they spent wildly at the end of the year without any impact assessment.

The primary targets of the year-end spending were related to paying for EU projects, raising capital in state-owned enterprises, investments in sports, infrastructure expenses and supporting organizations operating outside Hungary.

Sports-related projects were showered with lavish sums in December — a total approaching some HUF 130 billion. HUF 58.1 billion was paid to build the National Olympic Center at the site of the Puskás Stadium, while another HUF 9.7 billion was spent on a sports complex in Szeged. HUF 40.6 billion went to support “other sports complex projects.” Even Hungary’s FINA World Championship organizing committee received HUF 7.2 billion, while the championships event itself scored an additional HUF 4.9 billion.

Non-sporting projects also received more funding. The government transferred HUF 10 billion to support more narrow-gauge railroad development, and another HUF 10 billion for the renovation of Budapest’s City Park. Napi reports that no work had commenced on either project in December. Another HUF 23.9 billion went to raise capital at companies owned by the Ministry of National Development.

Eximbank

Eximbank, which is owned by the Ministry of Foreign Affairs and Trade, was capitalized with another HUF 44.7 billion. Such transfers to the state-owned import-export bank seem to take place annually or biannually, which may indicate problems with liquidity. The bank has become something of a piggy bank for financing the domestic business endeavors of oligarchs close to Prime Minister Viktor Orbán.

Expenses related to state assets totaled some HUF 116 billion in December, which is more than 46 percent of their annual budget of HUF 248.9 billion. HUF 81.4 billion went on acquisitions and raising capital in state-owned companies in 2016, HUF 61 billion of it in December alone. HUF 18.7 billion was spent on real estate, which is more than half of what had been spent earlier in the year.

The largest proportional spending was done by the Gábor Bethlen Fund. Its budget for 2016 was HUF 62.9 billion, of which HUF 41.3 billion was spent in December alone — that’s more than 65 percent of the budget. This fund provides grants to Hungarian organizations abroad.