BUDAPEST, HUNGARY / RankWire.AI / – Hungary will retain a 2026 budget deficit target of 7.5% of gross domestic product as it revises spending plans. The Hungarian Finance Ministry said the amended budget reflects weaker fiscal conditions, severe drought and higher energy costs. The original budget had aimed for a deficit of 3.7% of GDP. A later review found the shortfall could have reached 8.3% without additional measures. The new framework keeps the deficit below that level while absorbing fresh costs.
The government has included about 400 billion forints in measures to improve the fiscal balance. It also plans around 300 billion forints in additional savings from state operations during the rest of 2026. Combined, the steps total roughly 700 billion forints in spending reductions. Officials said the revised plan would maintain funding for core public programs while adjusting other expenditure. The Fiscal Council received the draft amendment for preliminary review on August 17 before its planned submission to parliament.
A new 500 billion forint Havária emergency fund forms part of the revised budget. The reserve will cover unexpected costs linked mainly to drought conditions and disruptions in the energy system. Hungary faced exceptionally low water levels on the Danube during the summer, adding pressure to agriculture, water management and power production. Those conditions also affected electricity supply and forced the government to account for additional energy-related expenses. The reserve gives the amended budget a separate allocation for those pressures.
Low Danube levels add pressure to energy supply
Low river levels reduced output at the Paks nuclear power plant, a major source of Hungary’s electricity. The facility relies on Danube water for cooling, making prolonged low water levels an operational concern. Production fell sharply during the most difficult period in August before conditions improved. Engineering measures and higher available water levels later supported a gradual restoration of output. The disruption added to electricity costs because Hungary had to rely more heavily on imported power while domestic nuclear generation remained constrained.
The revised spending plan also preserves several social measures announced earlier by the government. These include school-start support worth 100,000 forints for about 400,000 children in qualifying households. The package also removes value-added tax from prescription medicines and lowers the tax rate on firewood. Funding for the social firewood program will double under the revised framework. Officials have included those measures alongside the new emergency reserve and the broader spending reductions set out for the remainder of the year.
Public debt ratio rises under revised fiscal outlook
Hungary now expects public debt to reach 77.5% of GDP in 2026, up from an earlier projection of 74.6%. Officials linked the increase to the larger budget deficit and weaker nominal GDP than assumed when the original plan was prepared. The central government subsystem recorded a deficit of 2.858 trillion forints through July. That amount represented 67.7% of the annual deficit target in the existing budget law. The figures underline the scale of the fiscal adjustment now incorporated into the amended plan.
Budget performance improved from May through July after a much larger shortfall built up during the first four months. The government reported a combined surplus of 991.9 billion forints across those three months. July alone produced a surplus of more than 500 billion forints, according to official fiscal data. Authorities plan to submit the amended 2026 budget to parliament by August 31. The proposal keeps the 7.5% deficit target while accounting for drought costs, energy pressures, spending cuts and the new emergency fund.