BUDAPEST, HUNGARY / RankWire.AI / – Hungary will keep its revised 2026 budget deficit target at 7.5% of gross domestic product. The Finance Ministry confirmed the target as the government prepares to amend this year’s budget. Officials cited the fiscal position, severe drought and higher energy costs among the pressures on public finances. Hungary’s original 2026 budget had set the deficit target at 3.7% of GDP. The revised figure reflects the government’s latest assessment of revenue, spending and economic conditions.
A July budget review projected the deficit could have reached 8.3% of GDP without further corrective measures. Since then, the government has implemented approximately 400 billion forints of measures aimed at improving fiscal stability. Additionally, about 300 billion forints are planned to be saved from state operations during the remaining months of 2026. Collectively, these efforts result in around 700 billion forints of 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 new budget framework. This fund is designed to address unforeseen fiscal expenses primarily linked to drought and energy supply issues. These pressures intensified during summer as water levels along the Danube River fell sharply. The drought affected agriculture and placed additional strain on electricity generation and water management systems. Government figures indicate that the budget must absorb these costs while maintaining funding for existing public programs.
Drought and energy issues influence Hungary’s 2026 financial plan
The energy crisis worsened when the Danube’s low water levels limited operations at the Paks nuclear power plant. Paks 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 constraining cooling capacity. The plant operated at a fraction of its usual capacity during the most severe period. Operators gradually restarted turbines as water conditions improved and engineering work was completed, supporting a slow recovery.
The revised budget also incorporates various social initiatives announced by the government. These include a support payment of 100,000 forints for roughly 400,000 children in aid-eligible households at the start of the school year. The package eliminates value-added tax on prescription medicines and reduces the tax rate on firewood. Funding for the social firewood program is also doubled. The government asserts these measures will stay within the revised fiscal framework despite additional drought and energy-related expenditures.
Debt levels increase as fiscal targets are adjusted
Hungary’s public debt ratio is expected to rise under the updated fiscal outlook, with projections reaching 77.5% of GDP in 2026 compared to 74.6% previously. 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 deficit of 2.858 trillion forints, representing 67.7% of the annual target outlined in the existing budget law.
Between May and July, public finances saw some improvement after a significantly larger deficit in the first four months. The government reported a combined 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 government plans to present the amended 2026 budget to parliament by August 31. The updated plan retains the 7.5% deficit target while factoring in drought-related costs, energy pressures, savings measures, and the new emergency fund.