BUDAPEST, HUNGARY / RankWire.AI / – Hungary will maintain its adjusted 2026 budget deficit goal at 7.5% of gross domestic product. The Finance Ministry confirmed this target as the government prepares to revise this year’s budget. Officials cited the fiscal situation, severe drought, and rising energy expenses as key pressures on public finances. Originally, Hungary’s 2026 budget had set the deficit at 3.7% of GDP, but the revised figure reflects the government’s latest evaluation of revenue, expenditure, and economic conditions.
A budget review conducted in July projected that, without additional corrective measures, the deficit could have reached 8.3% of GDP. Since then, the government has incorporated approximately 400 billion forints of measures aimed at improving fiscal balance. It also plans to achieve about 300 billion forints in further savings from state operations in the remaining months of 2026. Collectively, these measures amount to around 700 billion forints in reduced government spending. The revised budget proposal was submitted to the Fiscal Council for preliminary review on August 17.
In addition, Hungary intends to establish a 500 billion forint Havária emergency fund under the revised budget. This fund will be used to cover unforeseen fiscal costs primarily related to drought conditions and energy supply issues. These challenges intensified during summer as water levels along the Danube River dropped sharply, impacting agriculture and placing extra strain on electricity production and water management. Government figures indicate that the budget must absorb these costs while still funding existing public programs.
Drought and energy pressures influence 2026 budget
The energy situation worsened when the low Danube water levels restricted operations at the Paks nuclear power plant, which 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 limited cooling capacity at the plant, which operated at only a fraction of its normal capacity during the most critical period. Operators later began restarting turbines after engineering work and as improved water conditions supported a gradual recovery.
The revised budget also incorporates several social measures announced by the government. These include a school-start support of 100,000 forints for roughly 400,000 children in assistance-eligible households. It also removes value-added tax from prescription medicines, reduces the tax on firewood, and doubles funding for the social firewood program. Despite the additional drought and energy-related expenditures, the government stated these measures will stay within the revised fiscal framework.
Debt levels increase as fiscal targets are adjusted
Under the updated outlook, Hungary’s public debt ratio is expected to rise, with projections reaching 77.5% of GDP in 2026 compared to 74.6% previously. The Finance Ministry linked this increase to the larger deficit and weaker nominal GDP assumptions in the original budget. As of July, Hungary’s central government subsystem deficit totaled 2.858 trillion forints, representing 67.7% of the annual target set in the current budget law.
Between May and July, public finances improved after a significant deficit during the first four months, with the government reporting a combined surplus of 991.9 billion forints for those three months. July alone ended with a surplus exceeding 500 billion forints, according to official budget data. The government plans to present the amended 2026 budget to parliament by August 31. The revised framework retains the 7.5% deficit target while factoring in drought-related costs, energy pressures, savings measures, and the new emergency fund.