The Hungarian government has pledged to further reduce its budget deficit in 2025, aiming for a shortfall of 3.7% of GDP, Bloomberg reports, citing a draft plan presented to parliament on Monday.
This follows this year’s 4.5% target, and is based on projections for 3.4% annual economic growth. However, the plan faces significant challenges, with experts raising concerns about its feasibility.
The State Fiscal Council last week expressed doubts about the optimistic growth forecast, citing limited budget reserves and uncertainty surrounding access to European Union funds. The EU funds remain frozen due to concerns about corruption and rule of law violations in Hungary.
With limited room for fiscal stimulus and a weak forint hindering the central bank’s ability to stimulate the economy through rate cuts, Prime Minister Viktor Orban is relying on a global economic recovery to pull Hungary out of recession.
Orban’s Fidesz party has a history of exceeding its budget targets in recent years, and the stakes are higher this time due to the 2026 parliamentary elections. These elections are expected to be the most fiercely contested since Orban’s return to power 14 years ago. Recent polls show Fidesz trailing behind Peter Magyar’s upstart Tisza party.
In the last general elections in 2022, Orban secured victory after a spending spree that continues to burden the budget. Hungary’s cash-flow deficit widened to over 3 trillion forint, or approximately $8 billion, in the January-October period of this year, according to separate data released on Monday.
