BUDAPEST, HUNGARY / RankWire.AI / – Hungary will maintain its adjusted 2026 budget deficit target at 7.5% of gross domestic product. The Finance Ministry confirmed this figure as the government prepares to revise this year’s budget. Authorities cited the fiscal situation, severe drought, and increased energy costs as key pressures impacting public finances. Initially, Hungary’s 2026 budget set the deficit goal at 3.7% of GDP, but the revised figure reflects the latest government assessment of revenue, expenditure, and economic conditions.
A budget review conducted in July projected the deficit could reach 8.3% of GDP without additional corrective actions. Since then, the government has adopted measures worth about 400 billion forints aimed at improving fiscal balance. An additional roughly 300 billion forints are planned in savings from state operations during the remaining months of 2026. Collectively, these measures amount to approximately 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 budget. This fund will address unforeseen fiscal costs primarily linked to drought and energy supply issues. These challenges intensified over the summer as water levels along the Danube River fell sharply, disrupting agriculture and increasing pressure on electricity generation and water management. Government figures indicate the budget must absorb these costs while maintaining funding for existing public programs.
Drought and energy issues influence 2026 budget planning
The energy situation worsened when the low Danube water levels hindered operations at the Paks nuclear power plant. Paks supplies a significant portion of Hungary’s electricity and relies on river water for cooling. During August, output declined sharply due to record-low water levels limiting cooling capacity, leading the plant to operate at only a fraction of its normal capacity during the most critical period. Operators later resumed turbine operation after engineering repairs and improved water conditions supported a gradual recovery.
The revised budget also incorporates several social initiatives announced by the government. These include a school-start aid of 100,000 forints for approximately 400,000 children in eligible households. The package eliminates value-added tax on prescription medications and reduces the tax rate on firewood. It also doubles funding allocated to the social firewood program. Despite the additional costs stemming from drought and energy issues, the government states these measures will stay within the revised fiscal framework.
Rising debt ratio follows fiscal target adjustment
According to the updated fiscal outlook, Hungary’s public debt ratio is projected to rise to 77.5% of GDP in 2026, up from 74.6%. The Finance Ministry attributed this increase to the larger deficit and weaker nominal GDP compared to the initial budget assumptions. As of July, the central government subsystem registered a deficit of 2.858 trillion forints, representing 67.7% of the annual deficit target outlined in the current budget law.
Between May and July, public finances showed signs of improvement after a significant deficit accumulation in the first four months. The government reported a combined surplus of 991.9 billion forints during those three months. July alone ended with a surplus exceeding 500 billion forints, according to official budget data. The amended 2026 budget is scheduled for submission 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.