A new deficit target in an amendment to the 2026 budget drafted by the government highlights Hungary's "significant public finance challenges" Fitch Ratings said in a note on Wednesday.
The amendments to the 2026 budget, submitted to lawmakers on Monday, target a general government deficit of 7.5% of GDP, well over the original 3.7% target approved under the former Orbán government, but under the 8.3% gap that would have resulted without measures taken by the Tisza government, according to the bill.
Fitch noted that the revised deficit target is over its 6.4% projection at a rating review in June.
The government expects to draft the 2027 budget, along with a new medium-term fiscal plan, by the end of October, and estimates a budget deficit of 6.1% of GDP for 2027, absent additional measures, Fitch said.
The government has reiterated its intention to anchor its medium-term strategy to meeting the criteria for adopting the euro — a deficit under 3% of GDP and state debt no higher than 60% of GDP — by 2030, Fitch added.
The amendments to the 2026 budget put state debt at 77.5% of GDP at end-2026.
"Lower interest costs could support consolidation if financing conditions are favorable, although the potential savings from planned expenditure reviews and state efficiency measures are uncertain," Fitch said. "The credibility of the new government's medium-term fiscal strategy, its capacity to place public debt on a downward path and the implications for growth will be central to Fitch's sovereign rating assessment," it added.
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