Hungary’s Ministry of Finance says it has uncovered almost HUF 400 billion (EUR 1.1 billion) in previously undisclosed spending commitments during its review of the 2026 state budget, claiming the country’s inherited fiscal position was significantly worse than officially presented.

According to Finance Minister András Kármán, the review found around HUF 398–400 billion in expenditure that had not been included in the budget approved under the previous administration. The ministry argues that, without corrective measures, Hungary’s budget deficit would have reached 7.5% of GDP this year and could have climbed to 8.3% if expected EU recovery funds had failed to materialise.

Ministry blames campaign spending and hidden commitments

The Finance Ministry said the 2026 budget was originally drafted with a deficit target of 3.7% of GDP. According to the ministry, this was later internally revised to 5%, and by the time of the government handover, officials were already forecasting a 6.8% deficit.

The latest audit concluded that several factors had pushed the expected shortfall even higher.

The ministry attributes much of the deterioration to election-related spending introduced by the previous government, including the 14th-month pension, housing support for public-sector employees and tax cuts. Together, these measures are estimated to have increased the deficit by 1.3 percentage points of GDP.

It also cited costly revisions to major state contracts, including the 35-year motorway concession, the Budapest–Belgrade railway project and rail development linked to the industrial park in Iváncsa.

Nearly HUF 400 billion in additional liabilities

Beyond previously identified pressures, officials say the budget review uncovered almost HUF 400 billion in further spending commitments that had not been reflected in the budget. According to the ministry, these include:

  • HUF 112 billion linked to a weaker-than-expected municipal budget balance;
  • HUF 46 billion in additional healthcare spending;
  • HUF 56 billion for the M49 motorway and other road developments;
  • HUF 112 billion related to advance payments involving state-owned defence company N7 Holding;
  • HUF 72 billion in space industry service fees paid to 4iG.

According to the ministry, these items were previously unaccounted for in the official budget framework.

EU funding seen as key to improving outlook

The government argues that the fiscal outlook has improved thanks to its agreement with the European Union, which it says will unlock funding from the Recovery and Resilience Facility. According to the ministry, access to these funds is expected to reduce this year’s deficit by 491 billion forints, equivalent to around 0.5 percentage points of GDP, even after taking into account additional borrowing under the programme.

Officials also pointed to the strengthening of the forint and the planned restructuring of certain public institutions as factors helping to improve the fiscal picture.

New budget plans due later this year

Despite the revised projections, the government has not yet announced a new official deficit target. The Finance Ministry said it will present a revised 2026 budget at the end of August, including additional measures aimed at reducing the deficit.

A draft budget for 2027 is expected in October, alongside an updated medium-term fiscal strategy. The government says the plan will be designed to bring Hungary below the European Union’s 3% deficit threshold by 2030, one of the key fiscal criteria for adopting the euro.

The Finance Ministry’s assessment represents the government’s position on the state of the public finances following its review of the inherited budget. The previous government has not responded to the latest claims.

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