Government Details 'Legacy' Budget Gap

Government officials detailed the impact of measures by the former government widening the 2026 budget gap at a press conference on Wednesday.

Finance Minister András Kármán put the "legacy" deficit at 8.3% of GDP, well over the former government's 3.7% target.

A table released by the government shows campaign measures added the equivalent of 1.3% of GDP to the gap. Pension expenditures, including the rollout of a 14th-month pension, added 0.2% of GDP, public sector pay rises added 0.2% and home purchase subsidies for public sector workers added 0.2% to the deficit.

The table shows "unfavorable" contracts and a "lack of fiscal controls" contributed the equivalent of 0.9% of GDP to the budget deficit. The unfavorable contracts included ones related to the expansion of the Paks nuclear power plant, a 35-year road maintenance concession and the upgrade of the Budapest-Belgrade railway.

Two decisions by the Court of Justice of the European Union, resulting in the rollback of taxes related to carbon emissions quotas and mining royalties, widened the gap by the equivalent of 0.5% of GDP.

Budget items identified in a review by the new government, including expenditures on defense industry developments and space research, added the equivalent of 0.4% of GDP to the deficit.

Funding from the European Union's Recovery and Resilience Facility (RRF) lost due to a lack of action by the former government to address concerns over corruption and rule of law added 1.1% of GDP to the gap.

The government acknowledged that a recent agreement reached with EU officials on the RRF funding would shave the equivalent of 0.5% of GDP off the budget deficit.

The government will amend the 2026 budget, with a new deficit target, by the end of August, and submit the 2027 budget to lawmakers by the end of October.