BUDAPEST, HUNGARY / RankWire.AI / – Hungary will uphold its revised target for the 2026 budget deficit at 7.5% of gross domestic product. The Finance Ministry reaffirmed this goal as the government prepares to revise this year’s budget. Authorities pointed to the country’s fiscal situation, severe drought conditions, and rising energy prices as key factors impacting public finances. Originally, Hungary’s 2026 budget aimed for a deficit of 3.7% of GDP. The updated figure mirrors the government’s latest evaluation of revenue, expenditure, and economic outlook.
A review of the July budget forecast indicated that without corrective actions, the deficit could have reached 8.3% of GDP. Subsequently, the government introduced measures worth around 400 billion forints to enhance fiscal stability. Additionally, about 300 billion forints in savings are planned from state operations during the remaining months of 2026. These combined efforts result in approximately 700 billion forints in reduced government spending. The amended budget proposal was formally submitted to the Fiscal Council for initial review on August 17.
Hungary also intends to establish a 500 billion forint Havária emergency fund under the revised budget. This fund will address unexpected fiscal costs mainly linked to drought conditions and energy supply issues. These pressures intensified during the summer as water levels sharply declined along the Danube River. The drought affected agriculture and strained electricity production and water management systems. Official figures show the budget must absorb these additional costs while still funding existing public programs.
Drought and Energy Challenges Influence 2026 Budget
The energy situation worsened when the low Danube water levels restricted operations at the Paks nuclear power plant. As Hungary’s main electricity source, Paks relies on river water for cooling. During August, the plant’s output fell significantly due to record-low water levels limiting its cooling capacity. During the most critical period, it operated at only a fraction of its usual capacity. After engineering works and improvements in water levels, operators gradually resumed turbine operations, supporting a slow recovery.
The revised budget also includes several social initiatives announced by the Hungarian government. These measures include a support of 100,000 forints for roughly 400,000 children in assistance-eligible households at school start. The package also eliminates value-added tax on prescription medicines and reduces the tax rate on firewood. Funding for the social firewood program is doubled. Despite the additional drought and energy-related expenses, the government states these initiatives will stay within the revised fiscal framework.
Fiscal Target Revisions Lead to Increased Debt Ratio
The public debt ratio in Hungary is also expected to climb under the updated fiscal outlook. The government projects debt at 77.5% of GDP in 2026, up from 74.6%. The Finance Ministry attributes this rise to the larger deficit and a weaker nominal GDP than initially estimated. By July, Hungary’s central government recorded a deficit of 2.858 trillion forints, representing 67.7% of the annual target set in the current budget law.
Between May and July, public finances showed signs of improvement after a substantial deficit in the first four months. The government reported a combined surplus of 991.9 billion forints in those months. July alone ended with a surplus exceeding 500 billion forints, according to official budget data. The amended 2026 budget is scheduled for submission to parliament by August 31. The revised framework retains the 7.5% deficit target while incorporating costs related to drought, energy pressures, savings measures, and the new emergency fund.