BUDAPEST, HUNGARY / RankWire.AI / – Hungary has decided to keep its updated 2026 budget deficit goal 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, and rising energy costs as key pressures impacting public finances. Originally, Hungary’s 2026 budget set the deficit at 3.7% of GDP. The new figure reflects the government’s latest evaluation of revenue, expenditures, and economic conditions.
A review in July projected that without further measures, the deficit could reach 8.3% of GDP. Since then, the government has implemented measures totaling roughly 400 billion forints to improve fiscal stability. Additionally, about 300 billion forints of savings are planned from state operations during the remaining months of 2026. Collectively, these efforts amount to approximately 700 billion forints in reduced government spending. The revised budget proposal was submitted for preliminary review to the Fiscal Council on August 17.
Hungary also intends to establish a 500 billion forint Havária emergency fund within the revised budget. This fund aims to cover unforeseen fiscal costs primarily linked to drought conditions and energy supply disruptions. These issues intensified during the summer as water levels along the Danube River fell sharply. The drought affected agriculture and added extra pressure on electricity generation and water management systems. Government figures indicate the budget must absorb these additional costs while ensuring continued funding for existing public programs.
Drought and Energy Challenges Drive Changes in 2026 Budget
The energy supply situation worsened when low Danube water levels limited operations at the Paks nuclear power plant. As Hungary’s main electricity source, Paks depends on river water for cooling. During August, output dropped sharply because record-low water levels hindered cooling at the plant. It operated at significantly reduced capacity during the most critical periods. Operators later resumed turbine operations after engineering adjustments and improved water conditions facilitated a gradual recovery.
The revised budget incorporates several social initiatives announced by the Hungarian government. These include providing 100,000 forints of support at school start for around 400,000 children in qualifying households. The package also eliminates value-added tax from prescription medicines and reduces the tax rate on firewood. Furthermore, it doubles funding for the social firewood program. The government stated these measures will stay within the revised fiscal framework despite the additional drought and energy-related expenditures.
Increased Debt Ratio as Fiscal Goals Are Adjusted
Hungary’s public debt ratio is projected to rise under the new fiscal outlook. The government estimates debt will reach 77.5% of GDP in 2026, up from 74.6%. The Finance Ministry linked this increase to the larger deficit and weaker nominal GDP assumptions compared to the original budget. By the end of July, Hungary’s central government recorded a subsystem deficit of 2.858 trillion forints, representing 67.7% of the annual deficit target set in the current budget law.
Between May and July, public finances showed signs of recovery 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. In July alone, the surplus exceeded 500 billion forints, based on official budget data. The government plans to submit the revised 2026 budget to parliament by August 31. The updated framework retains the 7.5% deficit target, integrating drought-related costs, energy pressures, savings initiatives, and the new emergency fund.