Hungary's National Economy Minister has unveiled the main figures from the 2026 budget draft, while revising some of the 2025 budgetary targets. 

At a press conference following Thursday's (April 17) cabinet meeting, Marton Nagy presented the macroeconomic projections and fiscal targets in the 2026 budget, which will be submitted to Parliament on May 2 after review by the Fiscal Council. The government is returning to its earlier practice of adopting the budget in the summer, with 2024 marking an exception, even if it carries the risks of missing main targets as in the last five years.

The budget is based on real GDP growth of 4.1%, CPI of 3.6%, and an ESA-defined fiscal deficit of 3.7% of GDP, based on an HUF/€ rate of 400. In absolute terms, GDP is set to rise to HUF95 trillion (€23bn) from HUF88, trillion in 2024.

The cash-flow deficit is set to drop to HUF4.1 trillion and ESA-based deficit is forecast at HUF3.7 trillion. The primary balance of the budget will remain zero in 2026, as debt service costs are set to decline from 4% to 3.7%, which is still one of the highest among EU countries. The gross debt to GDP is expected to ease slightly, from 73.1% in 2025 to 72.3% in 2026.

Nagy also made the official announcement of the revision of the 2025 macro projections, raising inflation and slashing growth targets. Headline CPI was upped to 4.5% from 3.2% and GDP was cut to 2.5% from 3.4%, while the 2025 deficit target was raised from 3.7% to 4%. The fiscal slippage is due to the extension of tax breaks to families as well as higher energy subsidies and the increase in debt service costs, from high yields on inflation-linked government bonds, Nagy said.

The minister also confirmed earlier reports that the windfall tax on banks will remain in place next year, as banks have reaped record profits and the base rate remains elevated. The cabinet pledged to phase out the levy this year. 

The windfall tax on multiple sectors was introduced in mid-2022, as part of a fiscal consolidation following an unprecedented spending binge before the elections. Next year, the budget assumes HUF360bn in proceeds from the extra bank levy but half of the amount is deductible depending on government bond purchases of banks.

When asked by Bloomberg on what conditions the levy could be terminated, Nagy replied that the government would consider it if the base rate drops to 2–3 range, from the current 6.5%.

Sector-specific taxes will also remain in place for retailers and insurers, levies that the government vowed to phase out in 2024. MOL will continue to pay a tax on the Ural-Brent spread.

Nagy also hinted at further interventions in the retail markets. The cap on retailers profit margin, introduced in mid-March to 30 product categories, could be extended to non-food items such as cosmetics, washing power or diapers, at the end of May.

The margin on such products stands over 30% at present, he added.

Nagy argued that the government's intervention in the food market was justified as retailers booked extra profits and the cap on retailers' markup has already reduced headline inflation to 4.7% in March, which could fall further to 4% in April. Food inflation in parallel is set to decelerate from 7% in March to 5% this month.

Defence remains a top priority Nagy said, but the government will not provide more funding to this field, despite earlier pledges, in line with calls by US President Donald Trump addressed to NATO members. The HUF1.92 trillion budget equals 2% of GDP, unchanged from 2024. In addition, a new "defence reserve" line will be created, allowing for extra spending up to 1.5% of GDP should EU fiscal rules change.

Hungary expects to receive HUF2.36 trillion in EU funds in 2026, up from HUF2 trillion in 2025. In total, HUF4.8 trillion will be allocated to family support measures, which together with utility subsidies amount to HUF5.6 trillion in spending.

Nagy affirmed the government's target of 5% annual real wage growth, arguing that the economy is robust enough to sustain that level. Last year's 10% increase, a post-pandemic rebound, was not sustainable, but the 3.5% level seen in the latest February wage data is also unacceptable.

Commenting on S&P Global Ratings' recent review of Hungary's sovereign rating, he said it was "a bit of an anomaly" and that the other big rating agencies had assigned Hungary higher ratings.

Nagy sought to reassure markets that the government would not engage in a pre-election budget spree as it remains committed to fiscal discipline. He reaffirmed that Hungary's primary balance will remain at zero, calling it a cornerstone of the country's fiscal framework.

The government is working on regaining a stable or positive outlook from S&P by the next review in the autumn.

Asked about the expected impact of the tariff war, Nagy said his ministry had made calculations, but it was still too early to make estimates because of the quickly developing situation. He added that Hungary had not been asked to join a tariff war against China and pointed to Hungary's policy of economic connectivity and openness.

MNB governor Mihaly Varga warned that a trade war could erase 0.4-0.5pp from Hungary's GDP.

The government will weigh the central bank governor's request to wind up the MNB foundations, which would require amending to the central bank act, Nagy added.