BUDAPEST, HUNGARY / RankWire.AI / – Hungary will uphold its adjusted 2026 budget deficit target at 7.5% of gross domestic product. The Finance Ministry affirmed this target as the government prepares to revise this year’s budget plan. Officials pointed to the country’s fiscal situation, severe drought conditions, and increased energy expenses as key pressures affecting public finances. Originally, Hungary’s 2026 budget set a deficit limit at 3.7% of GDP. The new figure reflects the government’s latest evaluation of revenue, expenditure, and overall economic outlook.
A review of the July budget indicated that, without corrective actions, the deficit could have surged to 8.3% of GDP. Since then, the government has included roughly 400 billion forints worth of measures aimed at improving the fiscal balance. In addition, it plans to realize approximately 300 billion forints in savings from state operations during the remaining months of 2026. Altogether, these measures amount to about 700 billion forints in reduced government spending. The revised budget proposal was submitted to the Fiscal Council for an initial review on August 17.
Hungary also intends to establish a 500 billion forint Havária emergency fund within the revised budget. This fund is intended to cover unforeseen fiscal costs mainly linked to drought and energy supply disruptions. These issues intensified over the summer as water levels along the Danube River dropped sharply. The drought hampered agriculture and increased pressure on electricity generation and water management. Government officials indicate that the budget must absorb these additional costs while still maintaining funding for existing public programs.
Drought and energy issues influence 2026 budget projections
The energy sector was further impacted when low Danube levels restricted operations at the Paks nuclear power plant. Paks typically supplies a significant portion of Hungary’s electricity and relies on river water for cooling. During August, output plummeted as record-low water levels limited the plant’s cooling capacity. The plant operated at only a fraction of its usual capacity during the most critical period. Later, operators began restarting turbines as improved water conditions and engineering repairs facilitated a gradual recovery.
The revised budget also encompasses several social measures announced by the government. These include a school-start assistance of 100,000 forints for roughly 400,000 children from aid-eligible households. The package also eliminates value-added tax on prescription medications and reduces the tax rate on firewood. Furthermore, funding for the social firewood program has been doubled. Officials state that despite the additional expenses caused by drought and energy issues, these social measures will stay within the revised fiscal framework.
Debt level rises as fiscal targets are readjusted
Hungary’s public debt ratio is projected to grow with the new fiscal outlook. The government estimates debt at 77.5% of GDP in 2026, up from 74.6% previously. The Finance Ministry attributed this increase to the larger deficit and lower nominal GDP assumptions in the original budget. As of July, Hungary’s central government subsystem recorded a deficit of 2.858 trillion forints. This amount accounted for 67.7% of the total deficit target established in the current budget law.
Between May and July, public finances showed improvement following a significantly larger deficit during the first four months. The government reported a combined surplus of 991.9 billion forints for those three months. July alone ended with a surplus exceeding 500 billion forints, according to official budget data. The government intends to present the amended 2026 budget to parliament by August 31. The revised plan maintains the 7.5% deficit target, incorporating costs related to drought, energy pressures, savings measures, and the new emergency fund.