Hungary recorded a budget surplus of 43.5 billion forint in May, equivalent to $140 million, the Finance Ministry said on Monday. The positive monthly balance lowered the cumulative budget shortfall for the first five months of the year to 3.806 trillion forints, which the ministry said represents 90.2% of the government’s full-year target.
Prime Minister Peter Magyar’s centre-right administration assumed control of public finances after the April election, inheriting a growing deficit that had developed under the previous right-wing administration led by Viktor Orban. Measures introduced by the former government ahead of the election are cited as having increased spending and created risks for Hungary’s credit standing.
Credit agency Fitch Ratings currently assigns Hungary a BBB rating and projects the full-year deficit will reach 6.4% of gross domestic product. Fitch also forecasts the deficit will be 5.9% of GDP in the following year, and the agency has emphasised that a credible plan to reduce the deficit is necessary to avoid a potential downgrade.
Finance Minister Andras Karman said he will complete an audit of public finances by June to inform possible revisions to the 2026 budget. The government has announced plans to publish an autumn medium-term fiscal framework that aims to start cutting the deficit toward 3% of GDP, a threshold the country needs to meet to pursue entry into the euro area by 2030.
Separately, the government intends to present anti-corruption reforms this week. Officials link those measures to unlocking a package of €16.4 billion in European Union funding.
Fitch’s projections and the government’s stated path to fiscal consolidation underline the narrow margin for error in Hungary’s budget management. The May surplus provides temporary relief by trimming the headline shortfall, but the scale of the remaining deficit and ratings agency expectations leave fiscal policy under close scrutiny.
Summary
Hungary posted a 43.5 billion forint surplus in May, reducing the first-five-month budget shortfall to 3.806 trillion forints, or 90.2% of the year target. The new centre-right government faces inherited deficits and ratings pressure from Fitch, which projects a 6.4% of GDP full-year deficit and stresses the need for a credible deficit reduction strategy.
Key points
- May surplus: 43.5 billion forint (about $140 million), lowering five-month shortfall to 3.806 trillion forints - impacts sovereign finances and bond markets.
- Ratings pressure: Fitch rates Hungary BBB and expects a full-year deficit of 6.4% of GDP, with a 5.9% forecast for the following year - relevant for sovereign credit and borrowing costs.
- Policy steps: Audit of public finances by June and an autumn medium-term plan targeting a 3% deficit to align with euro entry requirements by 2030 - affects fiscal policy and EU funding relations.
Risks and uncertainties
- Persistently high deficit projections - could pressure sovereign borrowing costs and investor confidence in government debt markets.
- Dependence on anti-corruption reforms to unlock €16.4 billion in EU funds - delays or shortcomings could affect public investment and liquidity.
- Need for credible deficit reduction strategy to avoid a ratings downgrade - uncertainty could influence domestic financial conditions and access to capital.