BUDAPEST, HUNGARY / RankWire.AI / – Hungary will uphold its adjusted 2026 budget deficit projection at 7.5% of gross domestic product. The Finance Ministry reaffirmed this target as the government prepares to revise this year’s budget. Officials highlighted the fiscal situation, severe drought conditions, and rising energy expenses as key factors impacting public finances. Originally, 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 estimated that, without implementing additional measures, the deficit could have reached 8.3% of GDP. To counter this, the government has introduced approximately 400 billion forints of measures aimed at improving the fiscal balance and is also planning about 300 billion forints of further savings from state operations during the remaining months of 2026. Collectively, these efforts represent around 700 billion forints in reduced government spending. The revised budget proposal was submitted to the Fiscal Council for initial review on August 17.
In addition, Hungary intends to establish a 500 billion forint Havária emergency fund within the framework of the revised budget to cover unforeseen fiscal costs primarily associated with drought and energy supply issues. These challenges intensified during the summer as water levels along the Danube River plummeted, disrupting agricultural activities and exerting extra pressure on electricity generation and water management systems. According to government data, the budget must absorb these added costs while still funding existing public programs.
Drought and energy challenges influence 2026 budget revisions
The severity of the energy crisis worsened as low water levels along the Danube restricted operations at the Paks nuclear power plant, which normally supplies a significant portion of Hungary’s electricity and depends on river water for cooling. During August, output sharply declined as record-low water levels limited the plant’s cooling capacity, forcing it to operate at only a fraction of its normal capacity during the worst period. Fortunately, operators gradually restarted turbines after engineering interventions and improved water conditions supported a slow recovery.
Furthermore, the revised budget incorporates several social measures announced by the government. These include a school-start support of 100,000 forints for roughly 400,000 children in households eligible for assistance, the removal of value-added tax from prescription medicines, and a reduction in the tax rate on firewood. The plan also doubles funding allocated to the social firewood program. The government emphasized that these initiatives will be maintained within the revised fiscal framework despite the additional expenses stemming from drought and energy issues.
Public debt ratio climbs as fiscal targets are adjusted
Hungary’s public debt ratio is also projected to increase based on the new fiscal outlook. The government anticipates debt reaching 77.5% of GDP in 2026, up from 74.6%. The Finance Ministry attributed this rise to the larger deficit and weaker nominal GDP assumptions compared to the original budget. By July, Hungary’s central government subsystem had accumulated a deficit of 2.858 trillion forints, representing 67.7% of the annual deficit target set in the existing budget law.
Between May and July, public finances showed improvement after a substantial deficit in the first four months, with the government reporting a combined surplus of 991.9 billion forints over those three months. July alone saw a surplus exceeding 500 billion forints, according to official budget data. The government plans to submit the amended 2026 budget to parliament by August 31. The revised plan maintains the 7.5% deficit target but incorporates costs from drought, energy pressures, savings measures, and the new emergency fund.