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The Finance Ministry announced on Monday that Prime Minister Peter Magyar’s cabinet would target a full-year budget shortfall of 7.5 percent of economic output. This figure improves on the 8.3 percent deficit that would have resulted without the measures introduced after the April elections. Those polls ended Viktor Orban’s 16-year rule as prime minister and installed the new government.
Summer drought conditions combined with the resulting energy crisis have restricted the administration’s room to pursue steeper fiscal savings this year. Low water levels on the Danube River have raised the prospect of extended shutdowns at the Paks nuclear power plant, which supplies nearly half the country’s electricity according to Reuters reporting from late July. The potential outage has heightened concerns over power system stability as evening demand surges.
In response the government has urged major industrial consumers to scale back electricity and water usage during peak times. MOL has cut its electricity consumption by 40 percent. Samsung SDI has reduced water use by 50 percent and electricity consumption by 10 percent in critical evening hours at its battery facility north of Budapest.
The drought has also elevated risks for agriculture with analysts warning the sector could subtract from overall GDP expansion in 2026. Official figures indicated the public budget deficit had already reached 93 percent of the full-year plan in the first four months of the year. This performance highlighted the difficult fiscal starting point inherited by the new leadership.
The ministry plans to submit a revised fiscal proposal to parliament by August 31 incorporating these developments. Public debt is projected to reach 77.5 percent of GDP by the end of 2026 under the maintained target. Officials have pointed to the combination of climate impacts and energy market strains as the main factors limiting faster progress on deficit reduction.
