BUDAPEST, HUNGARY / RankWire.AI / – Hungary will uphold its adjusted 2026 budget deficit goal at 7.5% of gross domestic product. The Finance Ministry affirmed this target as the government prepares to revise this year’s fiscal plan. Authorities pointed to the country’s fiscal situation, severe drought conditions, and rising energy prices as key pressures impacting public finances. Originally, Hungary’s 2026 budget set a deficit target of 3.7% of GDP. The updated figure mirrors the government’s latest assessment of revenue streams, expenditure levels, 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 introduced measures totaling about 400 billion forints aimed at improving fiscal balance. Additionally, it plans to implement approximately 300 billion forints of savings from state operations during the remaining months of 2026. Collectively, these measures amount to roughly 700 billion forints in reduced government spending. The revised budget proposal was forwarded to the Fiscal Council for preliminary review on August 17.
Hungary also intends to establish a 500 billion forint Havária emergency fund within the framework of the revised budget. This fund will address unforeseen fiscal costs primarily linked to drought conditions and energy supply issues. These challenges intensified over the summer as water levels along the Danube River dropped sharply, impacting agriculture and increasing strain on electricity generation and water management systems. Official figures indicate that the budget must accommodate these costs while maintaining funding for existing public programs.
Drought and Energy Challenges Lead to 2026 Budget Adjustments
The energy supply was further disrupted when low water levels along the Danube restricted operations at the Paks nuclear power plant. This facility, which supplies a significant portion of Hungary’s electricity, relies on river water for cooling. During August, output at Paks declined sharply as record-low water levels limited its cooling capacity, causing the plant to operate at only a fraction of its usual capacity during the most critical period. After engineering work and as water conditions improved, turbine restart procedures were initiated to support a gradual recovery.
The updated budget also features several social initiatives announced by the Hungarian government. These include a school-start support of 100,000 forints for around 400,000 children in households qualifying for assistance. The package also eliminates value-added tax on prescription medications and reduces the tax rate on firewood. Funding for the social firewood program has been doubled. Despite the additional expenses stemming from drought and energy issues, officials state these measures will stay within the revised fiscal framework.
Debt Levels Expected to Rise as Fiscal Targets Are Adjusted
Under the new fiscal outlook, Hungary’s public debt ratio is forecasted to increase. The government estimates debt will 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 assumptions used in the original budget. As of July, Hungary’s central government deficit stood at 2.858 trillion forints, representing 67.7% of the annual deficit target specified in the current budget law.
Between May and July, public finances showed signs of improvement after a significantly larger deficit in the first four months. The government reported a combined surplus of 991.9 billion forints for those three months, with July alone ending with a surplus exceeding 500 billion forints, according to official data. The amended 2026 budget is scheduled for submission to parliament by August 31. The revised plan retains the 7.5% deficit target, incorporating drought-related costs, energy pressures, savings measures, and the new emergency fund.