BUDAPEST, HUNGARY / RankWire.AI / – Hungary will uphold its adjusted 2026 budget deficit target at 7.5% of gross domestic product. The Finance Ministry affirmed this goal as the government prepares to revise this year’s budget. Authorities cited fiscal pressures, severe drought, and escalating energy expenses as key factors impacting public finances. The original 2026 budget set the deficit goal at 3.7% of GDP. The new figure reflects the government’s most recent evaluation of revenue projections, expenditures, and economic conditions.
A budget review conducted in July projected that, without corrective action, the deficit could have reached 8.3% of GDP. To counter this, the government has incorporated approximately 400 billion forints of measures aimed at improving fiscal stability. Additionally, it plans to save around 300 billion forints from state operations during the remaining months of 2026. These combined efforts amount to roughly 700 billion forints in reduced government spending. The updated budget proposal was submitted to the Fiscal Council for preliminary review on August 17.
Furthermore, Hungary intends to establish a 500 billion forint Havária emergency fund within the revised budget. This reserve will help cover unforeseen fiscal costs primarily associated with drought conditions and energy supply disruptions. These pressures intensified over the summer as water levels along the Danube River dropped sharply. The drought affected agriculture and increased strain on electricity generation and water management systems. Official data indicates the budget must accommodate these costs while continuing to fund existing public programs.
Drought and energy issues reshape Hungary’s 2026 budget outlook
The energy situation worsened when the low water levels in the Danube limited operations at the Paks nuclear power plant. Paks supplies a significant portion of Hungary’s electricity and relies on river water for cooling. During August, output sharply declined due to record-low water levels restricting cooling capacity. During the most critical period, the plant operated at only a fraction of its usual capacity. Later, operators resumed turbines as engineering repairs and improved water conditions enabled a gradual recovery.
The revised budget also incorporates several social measures announced by the Hungarian government. These include a school-start support of 100,000 forints for around 400,000 children in qualifying households. The package also removes value-added tax from prescription medicines and reduces the tax rate on firewood. Funding for the social firewood program has been doubled. Despite the additional drought and energy-related expenditures, the government states these measures will stay within the revised fiscal framework.
Debt ratio increases as fiscal targets are adjusted
Hungary’s public debt ratio is projected to grow under the new fiscal outlook. The government forecasts debt to reach 77.5% of GDP in 2026, up from 74.6%. The Finance Ministry attributed this rise to the larger deficit and weaker nominal GDP than originally projected. As of July, Hungary’s central government recorded a subsystem deficit of 2.858 trillion forints. This figure represented 67.7% of the annual deficit target set in the existing budget law.
Between May and July, public finances showed signs of improvement after a larger deficit in the first four months. The government reported a combined surplus of 991.9 billion forints for those three months. July alone closed with a surplus exceeding 500 billion forints, according to official budget data. The government intends to submit the amended 2026 budget to parliament by August 31. The revised framework maintains the 7.5% deficit target while incorporating drought-related costs, energy pressures, savings measures, and the new emergency fund.