The draft targets a deficit of 4.9% of GDP, down from the 7.5% expected in 2026, and would cut ministries' and state companies' operating spending by at least 10%.
Hungary’s government proposes cutting public spending and raising taxes in 2027 to narrow the gap between what it spends and collects. Its draft budget targets a deficit of 4.9% of gross domestic product (GDP), a measure of the country’s economic output, compared with the 7.5% it expects in 2026.
Prime Minister Péter Magyar presented the draft on Monday. In an assessment published on Thursday, credit-rating agency Fitch Ratings said the budget supports the government’s ambition to meet euro-adoption conditions by 2030, but warned that carrying out the deficit-reduction plan would be challenging, Euronews reported.
The proposed cuts would affect some economic-development subsidies, government communications, public media, state investment and operating costs. Ministries and state-owned companies would have to reduce their operating expenditure by at least 10%. These remain proposed reductions, not cuts already carried out.
The government also proposes higher corporate and innovation taxation, a wealth tax and a levy on energy companies. Smaller revenue increases would come from mining royalties, company-car tax and advertising tax. The figures below measure the expected budget effects against GDP; they are not the tax rates businesses or individuals would pay.
| Measure | Expected budget effect |
|---|
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| Planned spending cuts | Savings of 1.5% of GDP |
| Expiry of temporary and one-off pre-election measures | Possible savings of 1.4% of GDP |
| Lower interest payments | Expected savings of up to 0.2% of GDP |
| Tax increases and other revenue measures | Additional revenue of about 1% of GDP |
| Of that total: higher corporate and innovation taxation | Additional revenue of 0.25% of GDP |
| Of that total: wealth tax | Additional revenue of 0.2% of GDP |
| Of that total: energy-company levy | Additional revenue of 0.1% of GDP |
| New spending commitments and tax relief | Offsetting costs of about 1.4% of GDP |
Some savings remain uncertain, and the new spending commitments and tax relief would offset part of the gains. Fitch said implementation would be difficult because the plan combines many relatively small measures and requires sustained efforts to reduce the deficit.
Analysis
Fitch expects the deficit to fall, but not as far in 2027 as the government intends. The agency described meeting next year’s target as an important test of the credibility of the government’s strategy, which puts larger deficit reductions in the earlier years.
| Year | Government estimate or target | Fitch forecast |
|---|---|---|
| 2026 | 7.5% | 7.3% |
| 2027 | 4.9% | 5.4% |
| 2030 | 2.8% | Below 3% |
The government’s ambition is to meet euro-adoption conditions by 2030, not to adopt the currency on a confirmed date. Meeting the budget targets alone would not qualify Hungary: the requirements also cover inflation, long-term interest rates, exchange-rate stability and national legislation.
Before adopting the euro, Hungary would have to spend at least two years in ERM II, the required exchange-rate mechanism, without severe exchange-rate tensions or devaluing its currency’s central rate against the euro. If Hungary entered that mechanism in 2030, it could potentially adopt the euro in 2032 or later, provided it also met the other conditions.
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