BUDAPEST, HUNGARY / RankWire.AI / – Hungary will uphold its adjusted 2026 budget deficit target at 7.5% of gross domestic product. The Finance Ministry confirmed this figure as officials prepare to revise this year’s budget plan. They cited the fiscal situation, severe drought conditions, and rising energy expenses as key factors influencing public finances. Initially, Hungary’s 2026 budget set the deficit goal at 3.7% of GDP. The updated figure reflects the government’s latest evaluation of revenue, expenditure, and economic outlook.
A review of the July budget forecast indicated that, without corrective actions, the deficit could have reached 8.3% of GDP. In response, the government has introduced measures totaling about 400 billion forints aimed at improving fiscal stability. Additionally, plans for roughly 300 billion forints in savings from state operations during the remaining months of 2026 are underway. Combined, these measures represent approximately 700 billion forints in reduced government spending. The revised budget proposal was submitted to the Fiscal Council for initial review on August 17.
Furthermore, Hungary intends to establish a 500 billion forint Havária emergency fund within the new budget. This fund will address unforeseen fiscal costs primarily related to drought and energy supply issues. These pressures intensified over the summer as water levels along the Danube River declined sharply. The drought impacted agriculture and added further strain on electricity generation and water management systems. Government officials have indicated that the budget will need to absorb these additional costs while ensuring funding for existing public programs.
Impact of Drought and Energy Challenges on 2026 Budget
The energy situation worsened when low Danube water levels constrained operations at the Paks nuclear power plant. Since Paks supplies a significant portion of Hungary’s electricity and relies on river water for cooling, output sharply declined in August due to record-low water levels restricting cooling capacity. During the most critical periods, the plant operated at only a fraction of its usual capacity. After engineering work and improvements in water conditions, turbines gradually resumed operation, supporting recovery.
The revised budget incorporates several social initiatives announced by the government. These include providing 100,000 forints for about 400,000 children in assistance-eligible households to support school start-up costs. The package also eliminates value-added tax on prescription medicines and reduces the tax on firewood. Additionally, funding for the social firewood program has been doubled. Government officials confirmed that these measures will remain within the revised fiscal framework despite the increased drought and energy-related expenditures.
Debt Level Adjusts in Line with Budget Revisions
The public debt ratio in Hungary is projected to increase under the new fiscal outlook. The government estimates the debt to reach 77.5% of GDP in 2026, up from 74.6% previously. The Finance Ministry attributes this rise to the larger deficit and weaker nominal GDP assumptions in the original budget. As of July, Hungary’s central government recorded a deficit of 2.858 trillion forints, accounting 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 significantly larger deficit during 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 amended 2026 budget is scheduled to be submitted to parliament by August 31. The revised plan retains the 7.5% deficit target while factoring in drought-related costs, energy pressures, savings measures, and the new emergency fund.