BUDAPEST, HUNGARY / RankWire.AI / – Hungary has decided to maintain its adjusted 2026 budget deficit goal 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 rising energy expenses as key factors influencing public finances. Originally, Hungary’s 2026 budget had set a deficit limit of 3.7% of GDP. The updated figure reflects the government’s latest evaluation of revenue, expenditures, and economic conditions.
A review conducted in July projected that the deficit could have reached 8.3% of GDP without implementing further corrective steps. Since then, the government has adopted measures worth approximately 400 billion forints aimed at improving fiscal stability. Additionally, about 300 billion forints of savings are planned from state operations during the remaining months of 2026. Collectively, these measures amount to roughly 700 billion forints in reduced government expenditure. The revised budget proposal was submitted for preliminary review to the Fiscal Council on August 17.
Under the revised budget, Hungary also intends to establish a 500 billion forint Havária emergency fund. This reserve will cover unforeseen fiscal costs mainly related to drought conditions and energy supply disruptions. These issues intensified over the summer as water levels along the Danube River dropped significantly. The drought impacted agriculture and increased pressure on electricity production and water management. Official figures indicate that the budget must accommodate these expenses while continuing funding for existing public programs.
Drought and Energy Challenges Influence 2026 Fiscal Planning
The energy sector faced heightened difficulties when low Danube water levels restricted operations at the Paks nuclear power plant. Paks typically supplies a significant portion of Hungary’s electricity and relies on river water for cooling. During August, output dropped sharply due to record-low water levels limiting cooling capacity. The plant operated at only a fraction of its usual capacity during the most critical period. Operators gradually resumed turbine activity after engineering repairs and improvements in water conditions supported ongoing recovery.
The updated budget also incorporates several social initiatives announced by the Hungarian government. These include a school-start support payment of 100,000 forints for approximately 400,000 children in eligible households. The package also eliminates value-added tax on prescription medicines and reduces the tax rate on firewood. Funding for the social firewood program has been doubled. Despite the additional spending prompted by drought and energy issues, government officials stated these measures will stay within the revised fiscal framework.
Debt Levels Rise as Fiscal Goals Are Adjusted
The public debt ratio in Hungary is expected to climb under the new fiscal outlook. The government projects debt at 77.5% of GDP in 2026, up from 74.6%. The Finance Ministry attributed this increase to the larger deficit and weaker nominal GDP assumptions used in the original budget. As of July, Hungary’s central government recorded a subsystem deficit of 2.858 trillion forints, which accounts for 67.7% of the annual deficit target outlined in the current budget law.
Between May and July, public finances showed signs of improvement after a substantial deficit during the initial four months. The government reported a combined surplus of 991.9 billion forints for those three months. July alone concluded with a surplus exceeding 500 billion forints, based on official budget data. The government intends to submit the revised 2026 budget to parliament by August 31. The new framework retains the 7.5% deficit target while factoring in drought-related costs, energy pressures, savings measures, and the establishment of the emergency fund.