BUDAPEST, HUNGARY / RankWire.AI / – Hungary will uphold its updated target for the 2026 budget deficit at 7.5% of gross domestic product. The Finance Ministry confirmed this figure as the government prepares to revise this year’s budget. Officials cited pressures on public finances from the economic situation, severe drought, and rising energy costs. Initially, Hungary’s 2026 budget aimed for a deficit of 3.7% of GDP. The revised estimate reflects the government’s latest evaluation of revenue, expenditure, and economic outlook.
A budget review conducted in July indicated that without implementing corrective measures, the deficit might have reached 8.3% of GDP. Since then, the government has introduced measures totaling about 400 billion forints aimed at improving fiscal stability. Additionally, around 300 billion forints in savings from state operations are planned for the remaining months of 2026. Altogether, these measures represent roughly 700 billion forints of reduced government spending. The amended budget proposal was submitted for preliminary review to the Fiscal Council on August 17.
Furthermore, Hungary plans to establish a 500 billion forint Havária emergency fund within the revised budget framework. This fund is intended to cover unforeseen fiscal costs primarily caused by drought and energy supply issues. These pressures worsened over the summer as water levels along the Danube River fell sharply, impacting agriculture and increasing the strain on electricity generation and water management. Government officials state that these costs will be absorbed while maintaining funding for existing public programs.
Drought and Energy Challenges Drive Changes in 2026 Budget
The energy situation worsened when low Danube water levels limited operations at the Paks nuclear power plant. As a major supplier of Hungary’s electricity, Paks relies on river water for cooling. In August, output at the plant decreased significantly due to record-low water levels that restricted cooling capacity. During the most critical period, the plant operated at only a fraction of its usual capacity. Turbines have since been gradually restarted as water conditions and engineering work improved, supporting a slow recovery.
The updated budget also incorporates several social measures announced by the Hungarian government. These include a school-start support of 100,000 forints for approximately 400,000 children from eligible households. The package also eliminates value-added tax on prescription medicines and reduces the tax rate on firewood. Funding for the social firewood program has been doubled. Despite the additional spending due to drought and energy issues, the government asserts these measures will stay within the revised fiscal framework.
Debt Ratio Expected to Rise as Fiscal Goals Are Adjusted
Under the new fiscal outlook, Hungary’s public debt ratio is projected to grow, reaching 77.5% of GDP in 2026 compared to the previous estimate of 74.6%. The Finance Ministry attributes this increase to the larger deficit and lower nominal GDP assumptions used in the original budget. As of July, Hungary’s central government recorded a deficit of 2.858 trillion forints, accounting for 67.7% of the annual target outlined in the current budget law.
Between May and July, public finances showed signs of improvement after a notably larger deficit in the first four months. The government reported a combined surplus of 991.9 billion forints during those three months. In July alone, a surplus exceeding 500 billion forints was recorded, based on official budget data. The government intends to present the revised 2026 budget to parliament by August 31. The updated framework maintains the 7.5% deficit goal, accounting for drought-related costs, energy pressures, savings measures, and the new emergency fund.