GKI Analysis: This is why the 2026 budget is unsustainable

Fiscal discipline was sacrificed after 2019, and the domestic public deficit significantly exceeded the average of the V3 (Poland, Czech Republic, Slovakia) year after year. So the problem is only partly of external origin (global economic processes, energy prices). The 2025 and 2026 budgets also – despite prior promises – expect a deficit of over 3%, so the Maastricht criteria for the introduction of the euro are not the goal of economic policy. It is another matter whether even the planned deficit targets will be achieved.

Accrual balance of the Hungarian and V3 countries’ public finances (2025 and 2026: Planned by the Government)

Source: Eurostat and Parliament

A significant problem is that the government’s expectations for 2025 (on which the 2026 budget is based) are not based on reality either. While the budget expects economic growth of 2.5% this year, some experts are forecasting only 0.5%, while the GKI is forecasting 0.8%, with strong downside risks. Since the 2025 GDP will be significantly lower than planned, tax revenues will also fall short of expectations. All this puts the planned deficit for this year (3.9%), which the GKI estimates will be around 4.7%, into brackets.

The budget expects growth of 4.1% and a deficit of 3.7% in 2026. The analyst consensus is much more pessimistic. The GKI – in line with the analyst consensus – expects a 2.5% growth, so we expect a further significant shortfall in tax revenue. The new factories (BMW, CATL, BYD, EVE Power) contribute significantly to the GDP growth, which in fact provide a modest increase in tax revenue, given the low specific domestic value added.