The Budget Council released its assessment of the draft law concerning Hungary's central budget for 2026 on Sunday evening.

The proposal itself remains unpublished and was exclusively provided to the Council for preliminary review.

The Council's analysis, emerging from the discussions around the proposal, concluded with several key points:

- The Council expressed no fundamental objections, indicating that their lack of agreement is not warranted at this stage.

- Given the unusually uncertain global economic environment, the Council highlighted risks associated with achieving the proposed objectives.

- The draft budget anticipates economic growth of 2.5% for 2025 and 4.1% for 2026; however, the Council pointed to first-quarter GDP data and global trade tensions as indicators of potential risks for lower growth outcomes for this year.

- High tariff levels could adversely affect exports, while uncertain outlooks might generally suppress investment activity, leading to ongoing growth risks extending into 2026.
- Mitigating some of these risks, domestic consumption is expected to continue expanding, bolstered by high employment levels, rising real wages, and government measures aimed at increasing households' net income.

- The planned public sector deficit, calculated on a cash basis (ESA), is set at 3.7% of GDP for 2026, with a projected 4% for 2025. The Council notes that a reduction in interest expenses is anticipated to contribute to a decrease in the deficit next year.

- However, the Council emphasized the need for the government sector's deficit to fall below 3% of GDP, cautioning that the 2026 deficit target still exceeds the European Union's 3% criterion, particularly in comparison to the 2.5% target submitted and approved by the EU for the coming year.

- The draft budget does not provide information regarding the crucial growth rate of net expenditures within the new European Union budgetary framework.

- Achieving the 2026 deficit target is associated with "substantive risks" arising from the uncertain conditions this year affecting the future baseline, challenges in attaining the projected economic growth leading to lost tax revenues, and the congestion of EU funds from the Recovery and Resilience Facility and the 2021–2027 budget, which could increase the cash-based deficit in light of unchanged expenditures.

- The Council noted that addressing these risks is complicated by the budget for Extraordinary Government Measures, which contains only a 50 billion forint reserve.

This is deemed insufficient relative to past levels and the magnitude of the risks identified, prompting the Council to recommend a significant increase in this reserve.

- On a positive note, the ratio of public debt is projected to decrease, expected to reach 73.1% by the end of 2025 and 72.3% by the end of 2026.

In response, the Ministry of Economic Development announced on Monday morning that it would follow the Budget Council's recommendation to substantially increase the 50 billion forint reserve within the Extraordinary Government Measures budget.

The Ministry indicated plans to raise this allowance to 192 billion forints, simultaneously implementing an equivalent reduction in expenditures outlined in the draft.

This adjustment is expected to maintain the overall balance of the budget while enhancing its resilience.

The Ministry also stated that with the Budget Council's opinion in hand, the government would submit the 2026 budget to the National Assembly on May 6, 2025.