BUDAPEST, HUNGARY / RankWire.AI / – The Finance Ministry announced that Hungary will maintain its revised 2026 budget deficit goal at 7.5% of gross domestic product. This decision comes as the government prepares to amend this year’s budget, citing pressures from the economic situation, severe drought, and rising energy costs affecting public finances. Originally, Hungary’s 2026 budget aimed for a deficit of 3.7% of GDP. The current revision reflects the government’s latest evaluation of revenue, expenditures, and the broader economic context.
A review of the July budget indicated that, without corrective measures, the deficit could have reached 8.3% of GDP. Since then, the government has implemented measures totaling around 400 billion forints to help improve fiscal balance. Additionally, approximately 300 billion forints are planned in extra savings from state operations during the remaining months of 2026. Collectively, these measures reduce government spending by about 700 billion forints. The revised budget proposal was submitted to the Fiscal Council for preliminary review on August 17.
Under the revised budget, Hungary also intends to establish a 500 billion forint Havária emergency fund. This reserve aims to cover unexpected fiscal costs primarily linked to drought conditions and energy supply issues. These challenges intensified over the summer as water levels along the Danube River fell sharply. The drought impacted agriculture and added further pressure on electricity production and water management systems. Officials indicate that the budget must absorb these additional costs while ensuring ongoing funding for existing public programs.
Drought and Energy Challenges Drive Changes in 2026 Budget
The energy sector faced increased disruptions when low Danube water levels restricted operations at the Paks nuclear power plant. This plant supplies a significant portion of Hungary’s electricity and relies on river water for cooling. During August, output dropped sharply as record-low water levels limited cooling capacity at the facility. For a period during the peak of the crisis, the plant operated at only a fraction of its normal capacity. Operators later restarted turbines after completing engineering work and as improving water conditions allowed a gradual recovery.
The updated budget also incorporates several social initiatives announced by the government. These include a support payment of 100,000 forints for around 400,000 children in eligible households starting the school year. The package also eliminates value-added tax on prescription medications and reduces the tax rate on firewood. Furthermore, funding for the social firewood program has been doubled. Despite the additional expenses stemming from drought and energy issues, officials state that these measures will stay within the revised fiscal framework.
Debt Levels Rise as Fiscal Targets Are Adjusted
Hungary’s public debt ratio is projected to increase under the new fiscal outlook, reaching 77.5% of GDP in 2026 compared to 74.6% previously. The Finance Ministry attributes the rise to the larger deficit and lower nominal GDP than initially projected in the original budget. Through July, the central government recorded a deficit of 2.858 trillion forints, representing 67.7% of the annual deficit target set in the current budget law.
Between May and July, public finances showed signs of improvement after a significant 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 for submission to parliament by August 31. The revised plan maintains the 7.5% deficit target, factoring in drought-related costs, energy pressures, savings initiatives, and the new emergency fund.