BUDAPEST, HUNGARY / RankWire.AI / – Hungary will maintain its revised 2026 budget deficit goal at 7.5% of gross domestic product. The Finance Ministry confirmed this target as the government prepares to modify this year’s budget. Officials pointed to the country’s fiscal position, severe drought, and rising energy expenses as key pressures on public finances. Originally, Hungary’s 2026 budget set the deficit at 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 forecast indicated the deficit could have hit 8.3% of GDP without corrective actions. Since then, the government has implemented measures worth about 400 billion forints to improve the fiscal balance. Additionally, around 300 billion forints are planned to be saved from state operations in the remaining months of 2026. In total, these measures amount to roughly 700 billion forints in reduced government spending. The revised budget proposal was submitted to the Fiscal Council for initial review on August 17.
Hungary also intends to establish a 500 billion forint Havária emergency fund under the revised plan. This fund aims to cover unforeseen fiscal costs mainly linked to drought and energy supply issues. These challenges worsened over the summer, as water levels along the Danube River dropped sharply. The drought impacted agriculture and increased pressure on electricity production and water management. Government figures show that the budget must absorb these costs while still funding existing public programs.
Drought and energy challenges influence Hungary’s 2026 fiscal plan
Energy disruptions intensified when low Danube water levels limited operations at the Paks nuclear power plant. Paks supplies a significant share of Hungary’s electricity and relies on river water for cooling. During August, output plummeted as record-low water levels reduced cooling capacity. The plant operated at a fraction of its usual capacity during the most severe period. Operators later began restarting turbines after engineering work and improved water conditions supported a gradual recovery.
The revised budget also includes various social measures announced by the government. These measures include a school-start support of 100,000 forints for about 400,000 children in families eligible for assistance. The package also exempts prescription medicines from value-added tax and lowers the tax rate on firewood. Funding for the social firewood program is doubled. Despite the additional drought and energy-related costs, the government states these measures will stay within the revised fiscal framework.
Debt levels increase as fiscal targets are revised
Hungary’s public debt ratio is also projected to grow under the new fiscal outlook. The government estimates debt at 77.5% of GDP in 2026, up from 74.6%. The Finance Ministry attributes this rise to the larger deficit and weaker nominal GDP compared to the original budget assumptions. As of July, Hungary’s central government recorded a deficit of 2.858 trillion forints. This figure accounted for 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 larger deficit in 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, based on official data. The government plans to present the amended 2026 budget to parliament by August 31. The updated plan retains the 7.5% deficit target while including drought costs, energy pressures, savings measures, and the new emergency fund.