The Finance Ministry published its customary, and legally mandated, year-end medium-term macroeconomic and budget forecast for the 2018-2022 period last Friday. As reported, the primary news was that the government now expects this year's budget deficit to be between 1.9% and 2.1%, down from the 2.4% originally projected.
However, the detailed charts attached to the forecast also reveal some other points of interest. Most importantly, it contains the government's own medium-term forecast on the tax cut and development fund's spending, which indicates how much room to maneuver the budget will have in each year.
According to the Finance Ministry's latest forecast, this will be HUF 60 billion in 2019 and also in 2020, rising to HUF 460 billion in 2021 and HUF 510 billion in 2022.
Compared to the earlier med-term outlooks published in previous years, the figures are lower, which means the government does make use of the opportunity by either increasing spending or cutting taxes. It is interesting to note that the highest number is for 2022, the next election year. As the budget deficit will remain on its originally projected falling trajectory, ESA deficit will be as low as 0.5% of GDP by 2022, the end of the current cycle.