The Finance Ministry has amended this year’s budget, revising the deficit target to 7.5% of GDP.  Without fiscal measures, this year’s deficit would have reached 8.3% of GDP, the Finance Ministry announced on August 24, according to financial website Portfolio.hu. The former Orban government approved the 2026 budget with a 3.7% deficit target last summer. The draft amendment will be submitted to parliament by August 31 at the latest.

The Budget Council raised no substantive objection to the amendments but warned of economic and fiscal risks. Due to the constitutional amendment adopted in July, the council’s prior approval is no longer required for the budget, and its role is now primarily advisory. It flagged downside risks to growth, including global trade tensions, wars, tighter energy supplies, higher energy prices and drought, although rising real wages, consumption and expected investment could support growth.

The council warned that the higher-than-expected deficit could increase the risk of Hungary being moved to the next stage of the EU excessive deficit procedure, as the budget shortfall should ultimately fall below 3% of GDP.

The revised budget targets a 2% GDP growth rate, down from the original 4.1% forecast and a cash-flow-based gap of HUF7.23 trillion (€20bn), up from HUF4.2 trillion.

The government aims to cut state operating costs by around HUF700bn, including HUF400bn from measures already in place and another HUF300bn expected to be saved by year-end.

Measures already adopted include cuts in the salaries of ministers and MPs, reductions in the cost of the Mohacs Danube bridge project and the abolition of the Sovereignty Protection Office.

The government will also set up a HUF500bn in Contingency Fund to address the effects of drought and the energy crisis, primarily covering agricultural damage and unforeseen costs related to energy security.  

According to Finance Minister Andras Karman, the agreement on EU funds improved the 2026 budget balance by 0.5pp of GDP. The transformation of public asset management foundations (KEKVAs) is expected to contribute a further 0.2pp, while falling government bond yields are expected to contribute another 0.1pp improvement.

The amended budget also includes some of Tisza's election pledges: a one-time HUF100,000 back-to-school allowance for 400,000 disadvantaged children, VAT exemption for prescription medicines, a cut in the VAT rate on firewood from 27% to 5%, and a doubling of the social firewood fund.

According to the ministry, the budget deficit had reached a record level by April, but the government recorded an almost HUF1 trillion surplus between May and July.

The ministry said the government is committed to reducing the public debt ratio, however, due to the inherited high deficit and a nominal GDP significantly lower than planned by the previous government, the debt ratio is expected to increase from 74.6% to 77.5% of GDP in 2026. The reduction in state debt relative to GDP is expected in the coming years.

The government plans to prepare a new medium-term fiscal and structural plan in October, alongside the 2027 budget, including a new commitment on net expenditure growth aimed at gradually reducing the deficit and public debt. 

The forint was little changed after the announcement, trading at 363 against the euro.