BUDAPEST, HUNGARY / RankWire.AI / – Facing a challenging fiscal environment, Hungary has decided to uphold its revised 2026 budget deficit goal at 7.5% of gross domestic product. The Finance Ministry confirmed this figure as the government prepares to amend the current year’s budget. Authorities cited the fiscal situation, severe drought conditions, and rising energy costs as key factors straining public finances. Originally, Hungary’s 2026 budget aimed for a deficit of 3.7% of GDP. The updated figure reflects the government’s latest evaluations of revenue projections, expenditure, and macroeconomic conditions.
A review of the July budget indicated that without implementing corrective measures, the deficit could have escalated to 8.3% of GDP. To counter this, the government has incorporated roughly 400 billion forints worth of measures designed to enhance fiscal stability. Additionally, it plans to save about 300 billion forints through reductions in state operational costs during the remaining months of 2026. These combined efforts amount to approximately 700 billion forints in curtailed government spending. The amended budget proposal was forwarded to the Fiscal Council for an initial review on August 17.
Furthermore, Hungary intends to establish a 500 billion forint Havária emergency fund as part of the revised budget plan. This reserve is intended to address unforeseen fiscal demands primarily caused by drought and energy supply disruptions. Such pressures intensified over the summer, notably as water levels along the Danube River dropped sharply. The drought has impacted agriculture and increased the strain on electricity generation and water management systems. Official figures show that the budget must absorb these additional costs while continuing to fund existing public programs.
Drought and Energy Challenges Reshape 2026 Fiscal Framework
The energy supply was further impacted when low Danube water levels restricted operations at the Paks nuclear power plant. Paks, which supplies a significant portion of Hungary’s electricity, relies on river water for cooling. During August, record-low water levels drastically limited the plant’s cooling capacity, causing a sharp decline in output. For a period, the facility operated at only a fraction of its normal capacity. Operators later began restarting turbines as water conditions improved and engineering work was completed, supporting a gradual recovery.
The revised budget also incorporates various social initiatives announced by the Hungarian government. These include a school-start support of 100,000 forints for approximately 400,000 children in eligible households. The package eliminates value-added tax on prescription medicines and reduces the tax rate on firewood. It also doubles funding for the social firewood program. Despite the increased spending related to drought and energy issues, the government assures these measures will stay within the revised fiscal framework.
Debt Levels Increase as Fiscal Goals Are Adjusted
According to the updated fiscal outlook, Hungary’s public debt ratio is expected to climb. The government now projects debt at 77.5% of GDP in 2026, up from 74.6% previously. The Finance Ministry linked this rise to the larger deficit and lower nominal GDP estimates compared to the original budget projections. Through July, Hungary’s central government recorded a deficit of 2.858 trillion forints, representing 67.7% of the annual deficit target set in the existing budget law.
Financial data shows some improvement between May and July after a substantial deficit early in the year. The government reported a combined surplus of 991.9 billion forints for those months. July alone ended with a surplus exceeding 500 billion forints, based on official budget figures. The government intends to present the amended 2026 budget to parliament by August 31. The revised plan maintains the 7.5% deficit target, incorporating costs related to drought, energy, savings measures, and the new emergency fund.