BUDAPEST, HUNGARY / RankWire.AI / – Hungary will keep its revised 2026 budget deficit goal at 7.5% of gross domestic product. The Finance Ministry confirmed the target as the government prepares to amend this year’s budget. Officials cited the fiscal position, severe drought and higher energy costs among the pressures on public finances. Hungary’s original 2026 budget had set the deficit target at 3.7% of GDP. The revised figure reflects the government’s latest assessment of revenue, spending and economic conditions.
A July budget review projected the deficit could have reached 8.3% of GDP without further corrective measures. Since then, the government has implemented measures worth approximately 400 billion forints aimed at improving fiscal stability. Additionally, around 300 billion forints of savings are planned from state operations during the remaining months of 2026. These combined measures amount to roughly 700 billion forints in reduced government expenditure. The revised budget proposal was submitted to the Fiscal Council for preliminary review on August 17.
Hungary also intends to establish a 500 billion forint Havária emergency fund within the framework of the revised budget. The fund is designed to address unexpected fiscal costs mainly 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 affected agriculture and heightened the strain on electricity generation and water management. Government officials indicated that these costs will be absorbed by the budget while maintaining funding for existing public programs.
Drought and energy challenges influence Hungary’s 2026 budget
The energy situation worsened when low Danube water levels limited 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, electricity output fell sharply as record-low water levels restricted cooling capacity at the plant. During the most critical period, the plant operated at only a fraction of its usual capacity. Operators gradually resumed turbine activity after engineering work and improving water conditions allowed a steady recovery.
The revised budget also features several social measures announced by the government. These include a school-start benefit of 100,000 forints for about 400,000 children in eligible households. The package also eliminates VAT on prescription medicines, reduces the tax rate on firewood, and doubles funding for the social firewood program. The government stated that these initiatives will remain within the revised fiscal framework despite the additional expenditures related to drought and energy issues.
Rising debt ratio as fiscal goals are recalibrated
Hungary’s public debt ratio is projected to increase under the updated fiscal outlook. The government estimates debt at 77.5% of GDP in 2026, compared to 74.6% previously. The Finance Ministry attributed this rise to the larger deficit and weaker nominal GDP than initially projected in the original budget. As of July, Hungary’s central government recorded a deficit of 2.858 trillion forints, representing 67.7% of the annual target specified in the current budget law.
Between May and July, public finances saw some improvement after a larger-than-expected deficit during the initial months. The government reported a combined surplus of 991.9 billion forints over that period, with July alone ending with a surplus exceeding 500 billion forints, based on official data. The amended 2026 budget is expected to be presented to parliament by August 31. The updated plan preserves the 7.5% deficit target while incorporating costs related to drought, energy pressures, savings measures, and the new emergency fund.