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 goal as the government prepares to revise this year’s budget. Officials pointed to the country’s fiscal situation, severe drought, and rising energy costs as key pressures on public finances. Initially, Hungary’s 2026 budget set the deficit target at 3.7% of GDP, but the updated figure reflects the government’s latest evaluation of revenue, expenditure, and economic outlook.
A budget review conducted in July indicated the deficit might have reached 8.3% of GDP without further adjustments. Since then, the government has introduced measures totaling approximately 400 billion forints to bolster fiscal stability. Additionally, around 300 billion forints of savings are planned from state operations during the remaining months of 2026. Altogether, these measures amount to roughly 700 billion forints in reduced government spending. The revised budget proposal was submitted for preliminary review to the Fiscal Council on August 17.
Hungary also intends to establish a 500 billion forint Havária emergency fund within the scope of the revised budget. This fund aims to address unforeseen fiscal costs primarily associated with drought conditions and energy supply issues. These challenges intensified during summer, as water levels along the Danube River declined sharply, affecting agriculture and increasing pressure on electricity generation and water management. Government officials highlighted that the budget must absorb these costs while maintaining funding for existing public programs.
Impact of Drought and Energy Challenges on 2026 Budget
The energy situation worsened when low Danube water levels curtailed operations at the Paks nuclear power plant. As Hungary’s primary electricity source, Paks relies on river water for cooling, and during August, record-low water levels significantly reduced cooling capacity. During the most critical period, the plant operated at only a fraction of its normal output. However, operators began restarting turbines as water conditions improved and engineering work was completed, supporting a gradual recovery.
Furthermore, the updated budget incorporates several social initiatives announced by the government. These include a school-start subsidy of 100,000 forints for approximately 400,000 children in eligible households. The package also eliminates value-added tax on prescription medicines and reduces the tax rate on firewood, doubling funding for the social firewood program. Despite the added expenses stemming from drought and energy issues, authorities state these measures will stay within the revised fiscal framework.
Debt Level Rises with Fiscal Target Adjustment
Under the new fiscal outlook, Hungary’s public debt ratio is projected to increase, reaching 77.5% of GDP in 2026, compared with 74.6% previously. The Finance Ministry linked this rise to the larger deficit and weaker nominal GDP projections than those used in the initial budget. Through July, Hungary’s central government recorded a deficit of 2.858 trillion forints, accounting for 67.7% of the annual deficit target set by the existing budget law.
Financial conditions improved from May to July after a larger deficit in the first four months. The government reported a combined surplus of 991.9 billion forints during this period, with July alone ending with a surplus exceeding 500 billion forints, based on official budget data. The amended 2026 budget is scheduled for submission to parliament by August 31. This revised plan maintains the 7.5% deficit goal while incorporating costs related to drought, energy challenges, savings measures, and the new emergency fund.