Fitch: Hungary's 2027 Budget Plan Supports 2030 Eurozone Entry Bid

Fitch Ratings said Thursday that Hungary's 2027 draft budget and medium-term deficit targets support the government's aim of meeting euro-adoption criteria by 2030, though it warned implementation will be difficult. The plan, presented by Prime Minister Péter Magyar on Monday, cuts the general government deficit to 4.9% of GDP from 7.5% expected this year. It relies on spending cuts worth 1.5% of GDP, savings of 1.4% from expiring pre-election measures, lower interest payments of up to 0.2% of GDP, and revenue measures worth about 1% of GDP. Cuts target economic-development subsidies, government communications, public media, and state investment and operating costs, including at least a 10% reduction in ministry and state-owned company operating expenditure. Tax measures include higher corporate and innovation taxation, a wealth tax, and a levy on energy companies. Fitch called the 2027 fiscal target an important measure of the credibility of the government's frontloaded consolidation strategy. The plan sets deficits of 4% of GDP in 2028, 3.4% in 2029 and 2.8% in 2030; Fitch forecasts 5.4% in 2027 and below 3% by 2030. It sees public debt peaking at 77.7% of GDP in 2027–2028, above the 57.5% median for "BBB" sovereigns. Fitch flagged risks from numerous small measures, uncertain savings, and new spending and tax relief worth about 1.4% of GDP.