BUDAPEST, HUNGARY / RankWire.AI / – The Hungarian Finance Ministry announced that Hungary will keep its 2026 budget deficit goal at 7.5% of gross domestic product despite revising spending plans. This adjustment responds to weaker fiscal conditions, severe drought impacts, and rising energy expenses. Originally, the budget aimed for a deficit of 3.7% of GDP, but a subsequent review indicated the shortfall might reach 8.3% without further measures. The updated framework ensures the deficit stays below this level while accommodating additional costs.
To improve fiscal stability, the government has allocated approximately 400 billion forints for measures aimed at balancing the budget. An extra 300 billion forints are planned for savings from state operations during the rest of 2026. These actions collectively amount to roughly 700 billion forints in expenditure cuts. Officials emphasized that the revised plan would maintain funding for essential public services while adjusting other expenses. The Fiscal Council reviewed the draft amendment preliminarily on August 17 before it is scheduled for submission to parliament.
A new emergency fund of 500 billion forints, called Havária, has been incorporated into the updated budget. This reserve is designated to cover unforeseen costs mainly associated with drought and energy disruptions. During summer, Hungary experienced exceptionally low water levels on the Danube, which heightened challenges for agriculture, water management, and power generation. These conditions also impacted electricity supply, prompting the government to account for additional energy-related expenses. The reserve provides a dedicated allocation to address these pressures within the amended budget.
Low Danube water levels challenge energy supplies
The reduced water levels in the Danube caused a significant decline in output at the Paks nuclear power plant, a key source of Hungary’s electricity. Since the plant relies on Danube water for cooling, prolonged low water levels pose operational challenges. Production sharply decreased during August’s most difficult period but later recovered thanks to engineering measures and higher water levels. This disruption increased electricity costs as Hungary had to depend more heavily on imported power while domestic nuclear production remained constrained.
The revised spending plan also retains several social measures announced earlier. Among these are school-start support of 100,000 forints for approximately 400,000 children in eligible households. The package additionally eliminates value-added tax on prescription medicines and reduces the tax rate on firewood. Under the new framework, funding for the social firewood program will double. These measures have been incorporated alongside the new emergency reserve and the broader expenditure reductions planned for the rest of the year.
Public debt ratio increases under new fiscal forecast
Hungary projects that public debt will reach 77.5% of GDP in 2026, up from an initial estimate of 74.6%. Authorities attributed this rise to the increased budget deficit and weaker nominal GDP figures used during the original planning process. As of July, the central government recorded a deficit of 2.858 trillion forints, representing 67.7% of the annual target set in the current budget law. These figures highlight the significant fiscal adjustments now incorporated into the revised plan.
Performance from May to July showed improvement after a larger deficit in the first four months. The government reported a total surplus of 991.9 billion forints over these three months, with July alone producing a surplus exceeding 500 billion forints, according to official fiscal data. The amended 2026 budget is scheduled for submission to parliament by August 31. It maintains the 7.5% deficit target while accounting for drought-related costs, energy pressures, spending cuts, and the new emergency fund.