BUDAPEST, HUNGARY / RankWire.AI / – Hungary will retain its adjusted 2026 budget deficit target of 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 conditions, and rising energy costs as key pressures impacting public finances. The original 2026 deficit target was set at 3.7% of GDP, but the revised figure reflects the government’s latest evaluation of revenues, expenditures, and economic conditions.
A review conducted in July projected that, without corrective measures, the deficit could have reached 8.3% of GDP. Since then, the government has implemented measures totaling about 400 billion forints aimed at improving fiscal balance. Additionally, around 300 billion forints of further savings are planned from state operations during the remaining months of 2026. Collectively, these measures amount to roughly 700 billion forints in reduced government spending. The amended 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 revised budget framework. This fund is designed to cover unforeseen fiscal costs mainly linked to drought and energy supply issues. These pressures worsened during summer, as water levels along the Danube River dropped sharply. The drought affected agriculture and increased the strain on electricity generation and water management. Official figures indicate the budget must absorb these costs while maintaining funding for existing public programs.
Drought and energy issues influence the 2026 fiscal plan
The energy disruption intensified when the low water levels on the Danube restricted operations at the Paks nuclear power plant. Paks typically provides a significant share of Hungary’s electricity and relies on river water for cooling. During August, output sharply declined as record-low water levels limited cooling capacity. The plant operated at only a fraction of its usual capacity during the most critical period. Operators later began restarting turbines after engineering work and improved water conditions supported a gradual recovery.
The revised budget incorporates several social measures announced by the government. These include a school-start aid of 100,000 forints for roughly 400,000 children in households qualifying for assistance. The package also removes value-added tax from prescription medicines and reduces the tax rate on firewood. Moreover, funding for the social firewood program has been doubled. Authorities state that these initiatives will remain within the revised fiscal limits despite the additional drought and energy-related expenditures.
Rising debt ratio as fiscal targets are adjusted
The public debt ratio in Hungary is projected to increase under the new fiscal outlook. The government now estimates debt at 77.5% of GDP for 2026, up from 74.6%. The Finance Ministry attributes this rise to the larger deficit and weaker nominal GDP assumptions in the original budget. As of July, Hungary’s central government subsystem deficit totaled 2.858 trillion forints, accounting for 67.7% of the annual deficit target set by the existing budget law.
Between May and July, public finances showed signs of improvement following a substantially larger deficit in the initial four months. The government reported a combined surplus of 991.9 billion forints for those three months. July alone concluded with a surplus surpassing 500 billion forints, based on official budget data. The government plans to present the amended 2026 budget to parliament by August 31. The revised plan maintains the 7.5% deficit target, factoring in drought-related costs, energy pressures, savings measures, and the new emergency fund.