BUDAPEST, HUNGARY / RankWire.AI / – The Finance Ministry has confirmed that Hungary will maintain its adjusted 2026 budget deficit target at 7.5% of gross domestic product. This decision comes as the government prepares to revise this year’s budget, citing pressures from the fiscal landscape, a severe drought, and rising energy costs. Originally, Hungary’s 2026 budget had set a deficit goal of 3.7% of GDP. The updated figure reflects the government’s latest evaluation of revenue, expenditure, and economic conditions.
A review of the July budget indicated that without corrective measures, the deficit could have reached 8.3% of GDP. Since then, the government has integrated approximately 400 billion forints of measures aimed at strengthening fiscal stability. Additionally, about 300 billion forints of further savings are planned from state operations during the remaining months of 2026. Collectively, these measures amount to roughly 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 framework. This fund is designed to cover unforeseen fiscal costs primarily related to drought conditions and energy supply disruptions. These issues worsened over the summer as water levels along the Danube River declined sharply. The drought impacted agriculture and exerted additional pressure on electricity generation and water management. Official figures indicate that the budget must accommodate these costs while preserving funding for existing public programs.
Drought and energy challenges influence Hungary’s 2026 fiscal plan
The energy situation deteriorated further when low Danube water levels limited operations at the Paks nuclear power plant. As a major contributor to Hungary’s electricity supply, Paks relies on river water for cooling. During August, the plant’s output plummeted due to record-low water levels that constrained cooling capacity. During the peak of the crisis, the plant operated at only a fraction of its typical capacity. Operators began restarting turbines later, as improved water conditions and engineering work supported a gradual recovery.
The budget revision also features several social initiatives announced by the Hungarian government. These include a support payment of 100,000 forints for around 400,000 children in qualifying households starting school. The package eliminates value-added tax on prescription medicines and reduces the tax rate on firewood. It also doubles the funding allocated to the social firewood program. Despite the increased drought and energy-related expenditures, officials affirm these measures will stay within the revised fiscal parameters.
Fiscal target reset leads to higher debt ratio amid increased spending
Under the revised fiscal outlook, Hungary’s public debt-to-GDP ratio is anticipated to rise, projected at 77.5% in 2026 compared to the previous estimate of 74.6%. The Finance Ministry attributes this increase to the expanded deficit and a weaker nominal GDP forecast than initially assumed. Central government deficit through July reached 2.858 trillion forints, representing 67.7% of the annual target set in the existing budget law.
Between May and July, public finances showed signs of 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, with July alone recording a surplus exceeding 500 billion forints, according to official data. The amended 2026 budget is scheduled for submission to parliament by August 31. This updated framework preserves the 7.5% deficit goal while incorporating drought-related costs, energy pressures, savings measures, and the new emergency fund.