BUDAPEST, HUNGARY / RankWire.AI / – Hungary will uphold its adjusted 2026 budget deficit goal at 7.5% of gross domestic product. The Finance Ministry confirmed this figure as the government prepares to revise this year’s budget plan. Officials cited challenges such as the fiscal stance, a severe drought, and rising energy costs as factors impacting public finances. Initially, Hungary’s 2026 budget targeted a deficit of 3.7% of GDP. The new figure reflects the government’s latest evaluation of revenue, expenditure, and economic outlook.
A review in July estimated that without corrective actions, the deficit could reach 8.3% of GDP. Since then, the government has introduced measures totaling approximately 400 billion forints aimed at improving fiscal stability. Additionally, about 300 billion forints are planned in savings from state operations for the remaining months of 2026. Together, these measures reduce government spending by roughly 700 billion forints. The revised budget proposal was submitted for initial review to the Fiscal Council on August 17.
Hungary also intends to establish a 500 billion forint Havária emergency reserve in the updated budget. This fund will address unexpected fiscal costs primarily linked to drought and energy supply issues. These pressures intensified during summer as water levels along the Danube River plummeted. The drought impacted agriculture and increased demands on electricity generation and water management. The government’s figures show that the budget must accommodate these costs while ensuring continued funding for existing public programs.
Drought and energy challenges influence Hungary’s 2026 fiscal plan
The energy situation worsened as low Danube water levels constrained operations at the Paks nuclear power plant. As Hungary’s primary electricity supplier, Paks relies on river water for cooling. In August, output sharply declined due to record-low water levels limiting cooling capacity. During the most critical periods, the plant operated at a fraction of its usual capacity. Operators began restarting turbines once engineering work was completed and water conditions improved, supporting a gradual recovery.
The updated budget also incorporates several social initiatives announced by the government. These include a school-start support of 100,000 forints for around 400,000 children in aid-eligible households. Measures such as removing VAT on prescription medicines and reducing the tax on firewood are also included. The government has doubled funding for the social firewood program. Despite these additional drought- and energy-related expenditures, officials state these measures will stay within the revised fiscal framework.
Debt levels increase as fiscal targets are adjusted
Under the new fiscal outlook, Hungary’s public debt ratio is expected to rise to 77.5% of GDP in 2026, from the previous estimate of 74.6%. The Finance Ministry linked this increase to the larger deficit and a weaker nominal GDP projection than initially assumed. As of July, the central government recorded a deficit of 2.858 trillion forints, representing 67.7% of the annual target set by the existing budget law.
Between May and July, Hungary’s public finances saw some improvement after a larger deficit in the first four months. The government reported a combined surplus of 991.9 billion forints over those three months. July alone ended with a surplus exceeding 500 billion forints, according to official data. The amended 2026 budget is scheduled to be presented to parliament by August 31. The revised plan maintains the 7.5% deficit target while factoring in drought-related costs, energy pressures, savings initiatives, and the new emergency fund.