BUDAPEST, HUNGARY / RankWire.AI / – Hungary has decided to uphold its adjusted 2026 budget deficit goal at 7.5% of gross domestic product. The Finance Ministry confirmed this objective as the government prepares to revise this year’s budget plan. Authorities cited pressures from the fiscal stance, a severe drought, and rising energy expenses as factors impacting public finances. Originally, Hungary’s 2026 budget aimed for a deficit of 3.7% of GDP. The updated figure reflects the government’s latest evaluation of revenue, expenditure, and economic conditions.
A budget review in July projected that the deficit could have escalated to 8.3% of GDP without additional corrective actions. Since then, the government has integrated approximately 400 billion forints of measures aimed at improving fiscal balance. It also intends to implement around 300 billion forints of further savings from state operations during the remaining months of 2026. Collectively, these initiatives amount to roughly 700 billion forints in reduced government spending. The amended budget proposal was submitted to the Fiscal Council for an initial review on August 17.
Additionally, Hungary plans to establish a 500 billion forint Havária emergency fund within the revised budget framework. This fund will address unforeseen fiscal costs primarily linked to drought conditions and energy supply disruptions. These issues intensified over the summer as water levels along the Danube River dropped sharply. The drought impacted agriculture and placed extra strain on electricity generation and water management systems. According to government figures, the budget must absorb these costs while still funding existing public programs.
Drought and energy disruptions influence 2026 fiscal planning
Energy supply concerns worsened when low Danube levels restricted the operation of the Paks nuclear power plant. Paks typically supplies a significant portion of Hungary’s electricity and relies on river water for cooling. During August, output declined sharply as record-low water levels limited the plant’s cooling capacity. During the most critical period, the plant operated at only a fraction of its usual capacity. Operations resumed gradually after engineering repairs and improvements in water conditions supported a recovery process.
The updated budget also incorporates several social measures announced by the government. These include a school-start subsidy of 100,000 forints for approximately 400,000 children from assistance-eligible households. The package eliminates value-added tax on prescription medications and reduces the tax rate on firewood. Funding for the social firewood program has been doubled. Despite the additional drought-related and energy-related expenditures, the government asserts these measures will remain within the revised fiscal framework.
Debt levels increase as fiscal objectives are adjusted
The public debt ratio in Hungary is projected to rise in line with the new fiscal outlook. The government now estimates debt at 77.5% of GDP in 2026, up from 74.6%. The Finance Ministry attributes this increase to the larger deficit and weaker nominal GDP projections compared to the original budget assumptions. As of July, Hungary’s central government deficit stood at 2.858 trillion forints, representing 67.7% of the annual deficit target specified in the current budget law.
Between May and July, public finances saw some improvement after a significantly larger deficit accumulated 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, according to official budget data. The amended 2026 budget is scheduled for submission to parliament by August 31. It maintains the 7.5% deficit target while accounting for drought-related costs, energy pressures, savings measures, and the new emergency fund.