BUDAPEST, HUNGARY / RankWire.AI / – Hungary intends to maintain its adjusted 2026 budget deficit goal at 7.5% of gross domestic product. The Finance Ministry confirmed this target 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. The original 2026 deficit target was set at 3.7% of GDP. The new figure reflects the government’s latest evaluation of revenue, expenditure, and economic conditions.
A budget review in July projected the deficit could reach 8.3% of GDP without further adjustments. Since then, the government has introduced measures worth about 400 billion forints to improve fiscal balance. It also plans to save around 300 billion forints from government operations during the remaining months of 2026. These measures total approximately 700 billion forints in reduced government spending. The amended budget proposal was submitted to the Fiscal Council for preliminary review on August 17.
Hungary also plans to establish a 500 billion forint Havária emergency fund under the new budget. This fund will cover unexpected fiscal costs mainly caused by drought and energy supply issues. These challenges worsened during summer, as water levels along the Danube River fell sharply. The drought affected agriculture and increased pressure on electricity generation and water management. Official figures show the budget must absorb these costs while maintaining funding for existing public programs.
Drought and energy challenges influence the 2026 fiscal plan
The energy situation worsened when low Danube water levels restricted operations at the Paks nuclear power plant. Paks usually supplies a significant part of Hungary’s electricity and relies on river water for cooling. During August, output dropped sharply due to record-low water levels limiting cooling capacity. The plant operated at a fraction of its usual capacity during the most critical period. Later, operators restarted turbines after engineering work and improved water levels allowed a slow recovery.
The revised budget also includes various social measures announced by the government. These include a school-start support of 100,000 forints for around 400,000 children in low-income households. The package eliminates value-added tax on prescription medicines and reduces the tax on firewood. Funding for the social firewood program is doubled. Despite the additional drought and energy-related expenses, the government states these measures will stay within the revised fiscal framework.
Rising debt ratio as fiscal targets are readjusted
The public debt ratio in Hungary is also expected to increase under the new fiscal outlook. The government estimates debt will reach 77.5% of GDP in 2026, up from 74.6%. The Finance Ministry attributed the rise to the larger deficit and weaker nominal GDP compared to the original budget assumptions. As of July, Hungary’s central government recorded a deficit of 2.858 trillion forints. This accounted for 67.7% of the annual deficit target set in the current budget law.
Between May and July, public finances showed improvement after a much 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 data. The amended 2026 budget is scheduled for submission to parliament by August 31. The revised plan retains the 7.5% deficit target while accounting for drought costs, energy pressures, savings measures, and the new emergency fund.