Hungary posts record budget deficit, government freezes some spending

Hungary recorded a historic budget deficit of over 2.9 trillion forints (approximately CZK 178 billion) between January and April 2025, marking the highest shortfall for this period on record. The growing cost of interest payments and pensions outpaced the rise in tax revenues, prompting the government to implement a freeze on parts of its budget spending, according to a report by Bloomberg.

In April alone, the deficit reached 376 billion forints. Cumulatively, the shortfall over the first four months of the year amounts to 71 percent of the annual deficit target set by the government, Reuters noted.

State Secretary at the Ministry of Economy, Kornél Kisgergely, stated that the freeze in spending demonstrates the flexibility of Hungary’s fiscal policy, though he did not specify which expenditures would be affected.

Prime Minister Viktor Orbán’s administration is aiming to reduce the budget deficit to 4 percent of GDP in 2025, down from 4.9 percent in the previous year. The government is relying on a projected economic recovery to meet this goal and bolster its position ahead of parliamentary elections scheduled for next year.

However, there are concerns from financial institutions about potential pre-election fiscal loosening. Credit rating agency S&P Global Ratings has warned of the risk that government spending could rise in the lead-up to elections. Kisgergely has dismissed such concerns, stating the Cabinet does not plan to increase spending for political purposes.

The government has forecast economic growth of 2.5 percent this year, but the independent Budget Council has questioned the optimism of this projection, especially after the economy contracted in the first quarter of 2025.

Source: CTK