BUDAPEST, HUNGARY / RankWire.AI / – The Finance Ministry has confirmed that Hungary will hold its revised 2026 budget deficit goal steady at 7.5% of gross domestic product. This decision comes as the government prepares to amend this year’s budget, citing pressures such as the fiscal situation, a severe drought, and escalating energy costs. Initially, Hungary’s 2026 budget set the deficit limit at 3.7% of GDP. The current revision reflects the latest government assessment of revenues, expenditures, and economic conditions.
A review conducted in July projected the deficit could reach 8.3% of GDP if no corrective measures were implemented. Since then, the government has introduced approximately 400 billion forints of measures aimed at improving fiscal stability. An additional plan includes around 300 billion forints of savings from state operations during the remaining months of 2026. Collectively, these efforts amount to about 700 billion forints in reduced government spending. The amended budget proposal was submitted for preliminary evaluation to the Fiscal Council on August 17.
Hungary’s revised budget also features the creation of a 500 billion forint Havária emergency fund. This reserve is intended to address unforeseen fiscal costs primarily linked to drought conditions and energy supply issues. These pressures intensified over the summer as water levels along the Danube River dropped sharply. The drought disrupted agricultural activities and placed additional burdens on electricity generation and water management systems. Official figures indicate that the government’s budget must absorb these extra costs while still maintaining funding for existing public programs.
Drought and Energy Crisis Reshape the 2026 Fiscal Plan
The energy sector faced heightened challenges as low Danube water levels hampered operations at the Paks nuclear power plant. Since Paks supplies a significant portion of Hungary’s electricity and relies on river water for cooling, its output plummeted during August due to record-low water levels. During the most critical period, the plant operated at only a fraction of its normal capacity. Operations resumed gradually after engineering work and improvements in water conditions allowed turbines to restart, supporting a steady recovery.
The revised budget also incorporates various social measures announced by the government. These include support of 100,000 forints for approximately 400,000 children in eligible households at the start of the school year. The package eliminates value-added tax on prescription medicines and reduces the tax rate on firewood. Furthermore, it doubles funding allocated to the social firewood program. Despite these additional expenditures related to drought and energy issues, the government asserts that these measures will remain within the updated fiscal framework.
Rising Debt Levels Follow Fiscal Target Adjustments
The public debt ratio in Hungary is projected to increase under the new fiscal outlook. The government estimates debt will reach 77.5% of GDP in 2026, compared to 74.6% previously. The Finance Ministry attributed this rise to the larger deficit and a weaker nominal GDP than initially assumed in the original budget. Through July, Hungary’s central government recorded a deficit of 2.858 trillion forints, representing 67.7% of the annual deficit target set in the existing budget law.
Between May and July, public finances showed signs of improvement after a substantial deficit in the first four months of the year. Official data indicates a combined surplus of 991.9 billion forints over these three months. July alone ended with a surplus exceeding 500 billion forints. The government plans to present the amended 2026 budget to parliament by August 31. The revised plan maintains the 7.5% deficit target while accounting for drought-related costs, energy pressures, savings measures, and the new emergency fund.