BUDAPEST, HUNGARY / RankWire.AI / – Hungary will maintain its adjusted 2026 budget deficit target at 7.5% of gross domestic product. The Finance Ministry verified this target as the government prepares to revise this year’s budget. Officials pointed to the fiscal situation, severe drought, and rising energy costs as key pressures on public finances. Originally, Hungary’s 2026 budget set the deficit goal at 3.7% of GDP. The updated figure reflects the government’s latest evaluation of revenue, expenditure, and economic conditions.
A review of the July budget indicated the deficit might have reached 8.3% of GDP if no corrective steps had been taken. Since then, the government has implemented roughly 400 billion forints of measures aimed at strengthening fiscal stability. Additionally, about 300 billion forints of further savings from state operations are planned during the remaining months of 2026. Altogether, these measures amount to approximately 700 billion forints in reduced government spending. The revised budget proposal was submitted for preliminary review to the Fiscal Council on August 17.
Furthermore, Hungary intends to establish a 500 billion forint Havária emergency fund within the revised budget framework. This fund will address unexpected fiscal costs primarily arising from drought impacts and energy supply issues. These challenges intensified over the summer as water levels along the Danube River declined sharply. The drought affected agriculture and increased the pressure on electricity production and water management systems. Official figures indicate that the budget must absorb these costs while still funding existing public programs.
Drought and energy issues influence 2026 fiscal planning
The energy crisis worsened when low water levels on the Danube restricted operations at the Paks nuclear power plant. As Hungary’s main electricity provider, Paks relies heavily on river water for cooling. During August, record-low water levels significantly limited cooling capacity, causing the plant’s output to fall sharply. During the most critical period, the plant operated at a fraction of its usual capacity. Operators later resumed turbine operations as water conditions improved and engineering work was completed, supporting a gradual recovery.
The updated budget also incorporates several social measures announced by the government. These include a school-start support of 100,000 forints for approximately 400,000 children in qualifying households. The package also eliminates value-added tax on prescription medicines and reduces the tax rate on firewood. In addition, funding for the social firewood program will be doubled. The government assured these initiatives will remain within the revised fiscal plan despite the additional drought- and energy-related expenses.
Public debt ratio increases as fiscal targets are adjusted
Under the new fiscal outlook, Hungary’s public debt ratio is projected to rise. The government forecasts the debt at 77.5% of GDP in 2026, up from 74.6%. The Finance Ministry attributed this increase to the larger deficit and weaker nominal GDP assumptions compared to the original budget. As of July, Hungary’s central government recorded a deficit of 2.858 trillion forints, representing 67.7% of the annual target set in existing legislation.
Between May and July, the country’s 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 for those three months. July alone ended 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. The revised framework maintains the 7.5% deficit target, factoring in drought costs, energy pressures, savings measures, and the new emergency fund.