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. The government has since incorporated about 400 billion forints of measures designed to improve the fiscal balance. It also plans about 300 billion forints of additional savings from state operations during the remaining months of 2026. Together, those measures amount to about 700 billion forints in lower government spending. The revised budget proposal was submitted to the Fiscal Council for preliminary review on August 17.
Hungary also plans to create a 500 billion forint Havária emergency fund under the revised budget. The fund will cover unforeseen fiscal costs linked mainly to drought conditions and energy supply problems. Those pressures intensified during the summer as water levels fell sharply along the Danube River. The drought disrupted agriculture and placed additional strain on electricity generation and water management. Government figures show the budget must absorb those costs while maintaining funding for existing public programs.
Drought and energy pressures reshape 2026 budget
The energy disruption became more serious when low Danube levels restricted operations at the Paks nuclear power plant. Paks normally provides a large share of Hungary’s electricity and depends on river water for cooling. Output fell sharply during August as record-low water levels limited cooling capacity at the facility. The plant operated at only a fraction of normal capacity during the most severe period. Operators later began restarting turbines after engineering work and improved water conditions supported a gradual recovery.
The revised budget also includes several social measures announced by the Hungarian government. These include school-start support of 100,000 forints for about 400,000 children in households that qualify for assistance. The package removes value-added tax from prescription medicines and cuts the tax rate on firewood. It also doubles funding for the social firewood program. The government said these measures will remain within the revised fiscal framework despite the additional drought and energy-related spending.
Debt ratio rises as fiscal target is reset
Hungary’s public debt ratio is also expected to increase under the updated fiscal outlook. The government projects debt at 77.5% of GDP in 2026, compared with 74.6% previously. The Finance Ministry linked the increase to the larger deficit and weaker nominal GDP than assumed in the original budget. Hungary recorded a central government subsystem deficit of 2.858 trillion forints through July. That figure represented 67.7% of the annual deficit target contained in the existing budget law.
Public finances improved between May and July after a much larger deficit accumulated during the first four months. The government reported a combined surplus of 991.9 billion forints for those three months. July alone ended with a surplus exceeding 500 billion forints, according to official budget data. The government plans to submit the amended 2026 budget to parliament by August 31. The revised framework keeps the 7.5% deficit target while incorporating drought costs, energy pressures, savings measures and the new emergency fund.