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 balance. Additionally, about 300 billion forints of savings are planned from state operations during the remaining months of 2026. Collectively, these measures amount to roughly 700 billion forints in reduced government expenditure. The revised budget proposal was submitted to the Fiscal Council for preliminary review on August 17.
Hungary also intends to establish a 500 billion forint Havária emergency fund within the revised budget. This fund will address unforeseen fiscal costs primarily linked to drought conditions and energy supply issues. These pressures intensified in the summer, as water levels along the Danube River dropped sharply. The drought affected agriculture and increased stress on electricity generation and water management. Government figures indicate the budget must absorb these costs while maintaining funding for existing public programs.
Drought and Energy Challenges Influence 2026 Budget Planning
The energy situation worsened when low Danube water levels restricted operations at the Paks nuclear power plant. Paks usually supplies a significant portion of Hungary’s electricity and relies on river water for cooling. During August, output plummeted as record-low water levels limited the plant’s cooling capacity. For a period, the plant operated at only a fraction of its normal capacity. Operators later resumed turbine activity after engineering work and as improved water conditions supported a gradual recovery.
The revised budget also features several social measures announced by the government. These include a school-start subsidy of 100,000 forints for roughly 400,000 children in eligible households. The package also removes value-added tax from prescription medications and reduces the tax rate on firewood. Furthermore, funding for the social firewood program is doubled. The government stated these initiatives will stay within the revised fiscal framework despite the additional drought and energy-related expenses.
Public Debt Set to Rise as Budget Targets Are Adjusted
Under the new fiscal outlook, Hungary’s public debt ratio is forecasted to grow. The government projects debt at 77.5% of GDP in 2026, up from 74.6%. The Finance Ministry attributed this increase to the larger deficit and weaker nominal GDP than initially assumed in the original budget. As of July, Hungary’s central government subsystem deficit reached 2.858 trillion forints. This amount accounted for 67.7% of the annual deficit target set in the existing budget law.
Financially, the situation improved between May and July following a much larger deficit in the first four months. The government reported a combined surplus of 991.9 billion forints during those three months. July alone closed with a surplus exceeding 500 billion forints, according to official budget data. The amended 2026 budget is scheduled for submission to parliament by August 31. The revised framework maintains the 7.5% deficit target while factoring in drought-related costs, energy pressures, savings measures, and the new emergency fund.