Hungary to spend a record percentage of GDP on arms?

Amidst escalating conflicts, the Hungarian government has elevated the development of the Hungarian Defence Forces to a top priority. Prime Minister Orbán has stressed repeatedly that the goal is to have a strong, powerful, deterrent force capable of ensuring peace. However, the question remains: how does Hungary’s strength compare to other nations?

Sourcing Arms from Germany

G7 has reported that in the previous year, Hungary emerged as the third-largest purchaser of arms from the German defence industry, after Ukraine and Norway. Though the specific figures remain unconfirmed, it is estimated that Hungary imported German weapons amounting to one billion euros. Rheinmetall, a key German strategic partner and a major beneficiary of the heightened European arms demand, inaugurated a facility in Zalaegerszeg to manufacture Lynx armoured combat vehicles. In addition, Rheinmetall is actively engaged in the advancement of the next-generation KF51 Panther tanks. The company is also overseeing the production of Gidrán armoured vehicles in Kaposvár under a Turkish license, establishing a radar production plant in Nyírtelek, and constructing an ammunition factory in Várpalota. Complementing these endeavours, Hungarian companies are contributing to the arms industry by producing small arms in Kiskunfélegyháza and collaborating with Airbus in Gyula to manufacture helicopter parts.

This year’s budget

The draft budget for this year sees a nearly 29 percent increase in defence spending, rising from HUF 1,395 billion (EUR 3.59 billion) to HUF 1,796 billion (EUR 4.63). The Defence Fund, established in 2022 and primarily funded by bank and insurance taxes to cover additional expenditures like equipment purchases, will experience a 55 percent allocation boost to 1,309 billion forints. According to the budget, this increase could push defence spending to 2.1 percent of GDP in 2024, surpassing the NATO criterion of 2 percent and setting a record percentage of GDP spent on arms.

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How powerful is Hungary in the region?