BUDAPEST, HUNGARY / RankWire.AI / – Hungary has decided to keep its updated 2026 budget deficit projection at 7.5% of gross domestic product. The Finance Ministry confirmed this figure as the government prepares to revise this year’s budget plan. Officials pointed to the country’s fiscal situation, a severe drought, and increased energy costs as key pressures on public finances. Originally, Hungary’s 2026 budget aimed for a deficit of 3.7% of GDP. The new figure reflects the government’s latest evaluation of revenue, expenditures, and economic conditions.
A review of the July budget indicated that, without corrective actions, the deficit could have reached 8.3% of GDP. Since then, the government has implemented measures totaling about 400 billion forints to improve fiscal stability. Additionally, it plans to save approximately 300 billion forints through reduced state operations during the remaining months of 2026. Collectively, these measures amount to roughly 700 billion forints in decreased government spending. The amended budget proposal was submitted to the Fiscal Council for initial review on August 17.
Hungary is also establishing a 500 billion forint Havária emergency fund in the revised budget. This fund aims to cover unexpected fiscal costs primarily due to drought conditions and energy supply issues. These pressures intensified during summer as water levels along the Danube River dropped sharply. The drought affected agriculture and increased the strain on electricity generation and water management systems. Government officials stated that these costs will be absorbed by the budget while continuing to fund existing public programs.
Drought and Energy Challenges Lead to 2026 Budget Adjustments
The energy situation worsened when low Danube water levels limited operations at the Paks nuclear power plant. Paks usually supplies a significant portion of Hungary’s electricity and relies on river water for cooling. During August, output sharply declined as record-low water levels restricted the plant’s cooling capabilities. At its peak, the plant operated at a fraction of its normal capacity. Later, turbines were gradually restarted after engineering work and improvements in water conditions facilitated a recovery.
The revised budget incorporates several social measures announced by the government. These include a school-start subsidy of 100,000 forints for roughly 400,000 children in assistance-eligible 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 expenses, the government assured that these measures will remain within the revised fiscal framework.
Rising Debt Ratio as Fiscal Goals Are Readjusted
Under the updated fiscal outlook, Hungary’s public debt ratio is projected to rise. The government estimates debt will reach 77.5% of GDP in 2026, up from 74.6%. The Finance Ministry attributed this increase to the larger deficit and a weaker nominal GDP than initially assumed. By July, Hungary’s central government subsystem recorded a deficit of 2.858 trillion forints. This figure represented 67.7% of the annual deficit target set in the current budget law.
Between May and July, public finances improved after a much larger deficit in the first four months. The government reported a total surplus of 991.9 billion forints over those three 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 plan maintains the 7.5% deficit target, incorporating drought-related costs, energy pressures, savings measures, and the new emergency fund.