Hungary raises 2025, 2026 budget deficit targets to 5% of GDP (updated)

OTP Bank Nyrt.

11/11/2025 08:53

PM Orban faces closely fought election in 2026

Minister sees 5% shortfall this year and next

Government to launch pension top-up ahead of vote

Tax on banks to be doubled next year

Adds analyst comment, detail, updates market reaction

By Gergely Szakacs and Anita Komuves

BUDAPEST, Nov 11 (Reuters) - Hungarian Prime Minister Viktor Orban's government has raised its budget deficit targets to 5% for this year and next, online media reported on Tuesday, with higher spending ahead of a 2026 election upending deficit reduction plans.

Faced with a third year of stagnation, Orban's government has announced large-scale tax cuts for families, wage hikes, food vouchers for pensioners and other measures to shore up support ahead of a 2026 national election.

In September, Economy Minister Marton Nagy said the deficit would come in at 4% to 4.5% of gross domestic product this year and 4% next year, both already above previous plans. Those have now both been raised to 5% to make room for more spending.

        Citing a media briefing with Nagy, news website telex.hu said the government would freeze reserves worth 192 billion forints and double a tax on banks in 2026 to 360 billion forints ($1.08 billion) to cover part of the wider shortfall.

        At 0957 GMT, the forint EURHUF= was down 0.7% to the euro, moving away from 1-1/2-year highs hit on Monday. Shares in central Europe's largest independent lender, OTP Bank OTPB.BU fell as much as 3%, underperforming the wider index.

        Orban's government will start phasing in a pension top-up early next year, financial news website portfolio.hu reported, adding 150 billion forints worth of spending.

        Altogether, the 2026 shortfall would rise by 1.23 trillion forints to 5.445 trillion, portfolio said, with the government planning to fund the larger shortfall with foreign currency borrowing at the start of next year.

        Fitch Ratings warned last month that Hungary's deficit cuts  were slower than expected, projecting a 4.5% of economic output deficit in 2025 and 4.2% in 2026, both now obsolete in light of the minister's announcements.

        S&P Global said last week that a sharp rise in the budget deficit, if coupled with higher inflation and currency market pressure, could threaten Hungary's credit rating.

        In mid-October, S&P estimated Hungary's budget deficit at 4.5% of economic output this year and 4.25% in 2026.

Moody's is scheduled to review Hungary's credit rating at the end of November, while Fitch Ratings has a review scheduled for early next month.

($1 = 333.79 forints)

 (Reporting by Gergely Szakacs and Anita Komuves
Editing by Conor Humphries, William Maclean and Frances Kerry)

 ((gergely.szakacs@thomsonreuters.com ; https://x.com/szakacsg ; https://www.reuters.com/authors/gergely-szakacs/))