The Hungarian government is introducing further measures to stabilise the 2024 budget after earlier signs that this year’s fiscal plan has gone off track.

The government has ordered a mandatory 5% reduction in personnel-related expenses at nearly all state-owned companies in 2025, according to a fresh decree, which effectively targets savings in the H2, financial website Portfolio.hu recaps.

The companies stated in the decree are prohibited from using loans or credits to meet their payment obligations. Non-compliance could trigger a doubling of the amount owed, payable in 2026. Funds are to be transferred to a designated Treasury account by December 15, 2025, with enforcement delegated to the State Audit Office.

The measure exempts 30 companies from the cuts, a list that includes key strategic entities, such as energy giant MVM, railway company MAV and postal group Magyar Posta, as well as firms under the Hungarian central bank (MNB), parliamentary oversight, or slated for liquidation under state asset laws

The government cited external pressures, including the economic fallout of the war in Ukraine and regional instability, as reasons for the move. The language mirrors that of a similar decree issued in 2023, which was subsequently repealed but had required proportional cuts based on four months of personnel costs.

Analysts see the latest decree as part of a broader effort by the Orban government to reassert fiscal control amid sluggish growth, persistent inflation, and the suspension of EU funds.

A few weeks ago, the government revised the cash-flow-based deficit target upward by HUF651bn (€1.63bn) and subsequently the financing need of the budget. The accrual-based deficit target of 3.7% was raised to 4.1%.

​The National Bank, in its latest quarterly macroeconomic update warned that the debt-to-GDP ratio is now expected to rise in 2025 due to the budget slippage, a reversal of the earlier downward trajectory.

The worsening state of Hungary’s public finances is casting doubt over the credibility of the 2026 budget, which was approved by Parliament in June. Economists warn that the fiscal framework is built on assumptions that may prove overly optimistic, particularly in light of slowing growth, persistent inflationary pressures, and mounting fiscal risks.

As revenue projections look increasingly fragile and expenditure pressures remain elevated, the 2026 plan may require significant revisions.