The European Commission has suspended an excessive deficit procedure (EDP) against Hungary, the National Economy Ministry (NGM) announced on June 11.

In the framework of the European Semester Spring Package, the EC weighed measures the eight member states under an EDP have taken to reduce their deficits, scrutinising increases in net expenditures compared to the upper threshold of the Council recommendation, the ministry noted earlier this month.

This year’s framework for the fiscal review of member states offers the chance to activate a National Escape Clause (NEC), allowing a temporary deviation from the net expenditure path set by the Council under the ReArm Europe Plan/Readiness 2030 defence package.

In a statement issued on June 11, the ministry said the budget remains on a stable and sustainable path, and the cabinet is still committed to fiscal discipline and to reducing both the budget deficit and state debt. 

The budget deficit is set to fall from 4.9% to 4.1% in 2025 and to 3.7% in 2026. The deficit reached 58.6% of the full-year target at the end of May, the ministry notes, without adding that the cashflow-based target for 2025 has just been revised upward from 3.7%.

The country’s stable financing situation and stability of the budget will enable the government to carry out Europe’s largest tax cut programme, the NGM said, referring to the lifelong personal income tax exemptions of mothers with at least two children, introduced gradually from 2026.

In related news, Hungary’s Fiscal Council expressed cautious optimism over the government’s 2026 growth. The draft budget projects 4.1% GDP growth for next year, but the council warned that weaker-than-expected economic performance in 2025 may complicate reaching these goals, adding that geopolitical conflicts and escalating trade tensions represent a downside risk. The accrual-based deficit is set to fall to 3.7% of GDP next year. 

The final vote on next year's budget is expected to take place on June 17.