Empty cash registers in Budapest. The expert warns: the new Hungarian government will face a painful collision with reality

The new Hungarian government will face serious fiscal challenges and the need to adapt its budget policy to EU rules, wrote Zsolt Darvas from the Brussels-based think tank Bruegel in an analysis. The country has a relatively high public debt and public finance deficit.

As the expert recalled, the leader of the TISHA party, which won Sunday's parliamentary elections, Peter Magyar, had previously announced, among other things, restoring the proper functioning of state institutions, combating irregularities in the spending of public funds and strengthening the independence of public media.

However, according to Darvas, one of the key challenges for the new government will be the fiscal situation. Public debt in Hungary at the end of 2025 amounted to approximately 75%. GDP. In turn, the deficit of the public finance sector in Hungary approached 5% in 2025. GDP and is expected to exceed this threshold this year.

Hungary is still subject to the EU's excessive deficit procedureand experts point out that a significant budget adjustment will be necessary. In Darvas' opinion, the deteriorating state of public finances and the high level of deficit may make it difficult to implement ambitious spending and investment plans.

The excessive deficit procedure is an EU mechanism intended to help a member country restore stable public finances if its deficit or debt is too high.

Darvas recalled that effective compliance with EU fiscal rules is crucial for access to EU funds.

“Even if the rule of law deficiencies that held back the disbursement of EU funds are quickly remedied, failure to meet the requirements under the excessive deficit procedure may still lead to the suspension of EU funds. (…) It will be crucial for the new government to set a credible fiscal path,” the expert wrote.

The TISHA party program assumes savings in public expenditure, including: by limiting costly public procurement, reducing inefficient spending and reviewing state investments. It is also indicated that it is possible to reduce the costs of public debt servicing if the country's creditworthiness improves. The proposals also included tax changes, including a tax on the largest assets and declarations regarding possible entry into the euro zone, which, according to analyzes, could stabilize inflation.

However, Darvas assessed that at the current level of deficit and debt, declarations of economic growth alone will not be enough to stabilize public finances, and some reforms may require unpopular political decisions.

From Brussels Łukasz Osiński (PAP)

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