Fitch Ratings said the Hungarian government’s 2027 budget draft “shows commitment to consolidation” and euro adoption in a note on Thursday.

“Hungary’s draft 2027 budget and medium-term deficit targets are consistent with the government’s objective of meeting euro-adoption criteria by 2030,” Fitch said.

The rating agency added that its assessment of the government’s capacity to deliver frontloaded fiscal consolidation, given the significant fiscal deterioration in 2026, would be “central” to its sovereign rating analysis.

Fitch rates Hungary BBB with a negative outlook.

Fitch noted that the 2027 budget draft, presented by the government earlier in the week, targets a reduction in the general government deficit to 4.9pc of GDP from an estimated 7.5pc in 2026. It indcludes expenditure cuts equivalent to 1.5pc of GDP, the expiry of temporary and one-off pre-election measures worth 1.4pc of GDP, and lower interest payments of up to 0.2pc of GDP, reflecting falling costs on inflation-linked bonds and lower bond yields amid improved market sentminent, it said. Additional revenue measures of about 1pc of GDP are also planned, it added.

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The proposed spending cuts focus on concession contracts, economic development subsidies, government communications, public media, and state investment and operating costs, including a planned reduction of at least 10pc in operating expenditures of ministries and state-owned companies.

The government expects tax increases to raise 0.25pc of GDP through higher corporate and innovation taxation, 0.2pc from a wealth tax, 0.1pc from a levy on energy companies, and smaller increases in mining royalties, a tax on corporate fleets and an advertising tax.

“Sustained lower interest costs could support consolidation if favourable financing conditions persist, but savings from expenditure reviews and public-sector efficiency measures remain uncertain,” Fitch said.

Fitch projects the general government deficit will narrow to 5.4pc of GDP in 2027 from 7.3pc in 2026, and fall below 3pc by 2030. It expects state debt, relative to GDP, to peak at 77.7pc in 2027-2028.

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