Latest news with #FiscalCouncil
Yahoo
04-05-2025
- Business
- Yahoo
Hungary's election-year 2026 budget hinges on risky growth projection, fiscal watchdog says
By Gergely Szakacs BUDAPEST (Reuters) - The Hungarian government's budget plans for the 2026 election year could be at risk if its economic growth assumptions prove too optimistic, the head of budget watchdog Fiscal Council told Reuters. Prime Minister Viktor Orban's government forecasts 4.1% economic growth next year, well above the 3.2% economists' consensus in a Reuters poll and 2.6% forecast by the International Monetary Fund. S&P Global, which cut Hungary's credit rating outlook to negative from stable last month citing fiscal stability concerns, projects next year's growth at 2.5%. "The most important downside risk to the budget is if the projected growth trajectory proves to be too optimistic for 2026 as well," Fiscal Council Chairman Gabor Horvath said in remarks cleared for publication on Sunday. "There are significant uncertainties around this year's GDP growth, and definitely the uncertainties are not smaller regarding 2026 growth." Orban has banked on economic recovery to help him secure another term in next year's elections when he is expected to face the sternest opposition challenge in well over a decade. An upturn, initially expected already last year, so far has failed to materialize, forcing the government to cut spending and hike taxes and to cut its 2025 growth forecast. Hungary's economy was mired in stagflation in the first quarter, with output unchanged from a year ago and inflation running at the European Union's highest levels. Responding to the weaker-than-expected first-quarter data, the Economy Ministry told Reuters it planned to submit the budget to parliament with its original economic assumptions, with a next review of its forecasts due in June. The government aims to reduce next year's budget deficit to 3.7% of gross domestic product from a recently-increased 4% target in 2025, and a higher-than-expected 4.9% shortfall in 2024. Economists polled by Reuters, however, see next year's deficit at 4.2%. Given the scale of uncertainties in the world economy, the early adoption of the 2026 budget did not help, Horvath said. The level of reserves, just like in the 2025 budget, remained too low to tackle contingencies. "The level of the reserves is very low again, which, compared to the very high uncertainties, might be insufficient," he said. Moody's Analytics has warned that tariffs would hurt export-reliant central European economies, with the Czech Republic, Romania and Hungary among those hardest hit. Hungary's central bank has also flagged those as a risk. Horvath also said it was risky for the government to assume that its steep tax cuts for families can be financed by stronger growth, while special business taxes remain in place.
The Star
04-05-2025
- Business
- The Star
Hungary's election-year 2026 budget hinges on risky growth projection, fiscal watchdog says
FILE PHOTO: Hungarian Prime Minister Viktor Orban attends a news conference in Budapest, Hungary, March 4, 2025. REUTERS/Bernadett Szabo/File Photo BUDAPEST (Reuters) - The Hungarian government's budget plans for the 2026 election year could be at risk if its economic growth assumptions prove too optimistic, the head of budget watchdog Fiscal Council told Reuters. Prime Minister Viktor Orban's government forecasts 4.1% economic growth next year, well above the 3.2% economists' consensus in a Reuters poll and 2.6% forecast by the International Monetary Fund. S&P Global, which cut Hungary's credit rating outlook to negative from stable last month citing fiscal stability concerns, projects next year's growth at 2.5%. "The most important downside risk to the budget is if the projected growth trajectory proves to be too optimistic for 2026 as well," Fiscal Council Chairman Gabor Horvath said in remarks cleared for publication on Sunday. "There are significant uncertainties around this year's GDP growth, and definitely the uncertainties are not smaller regarding 2026 growth." Orban has banked on economic recovery to help him secure another term in next year's elections when he is expected to face the sternest opposition challenge in well over a decade. An upturn, initially expected already last year, so far has failed to materialize, forcing the government to cut spending and hike taxes and to cut its 2025 growth forecast. Hungary's economy was mired in stagflation in the first quarter, with output unchanged from a year ago and inflation running at the European Union's highest levels. Responding to the weaker-than-expected first-quarter data, the Economy Ministry told Reuters it planned to submit the budget to parliament with its original economic assumptions, with a next review of its forecasts due in June. The government aims to reduce next year's budget deficit to 3.7% of gross domestic product from a recently-increased 4% target in 2025, and a higher-than-expected 4.9% shortfall in 2024. Economists polled by Reuters, however, see next year's deficit at 4.2%. Given the scale of uncertainties in the world economy, the early adoption of the 2026 budget did not help, Horvath said. The level of reserves, just like in the 2025 budget, remained too low to tackle contingencies. "The level of the reserves is very low again, which, compared to the very high uncertainties, might be insufficient," he said. Moody's Analytics has warned that tariffs would hurt export-reliant central European economies, with the Czech Republic, Romania and Hungary among those hardest hit. Hungary's central bank has also flagged those as a risk. Horvath also said it was risky for the government to assume that its steep tax cuts for families can be financed by stronger growth, while special business taxes remain in place. (Reporting by Gergely Szakacs; Editing by Tomasz Janowski)
Straits Times
04-05-2025
- Business
- Straits Times
Hungary's election-year 2026 budget hinges on risky growth projection, fiscal watchdog says
BUDAPEST - The Hungarian government's budget plans for the 2026 election year could be at risk if its economic growth assumptions prove too optimistic, the head of budget watchdog Fiscal Council told Reuters. Prime Minister Viktor Orban's government forecasts 4.1% economic growth next year, well above the 3.2% economists' consensus in a Reuters poll and 2.6% forecast by the International Monetary Fund. S&P Global, which cut Hungary's credit rating outlook to negative from stable last month citing fiscal stability concerns, projects next year's growth at 2.5%. "The most important downside risk to the budget is if the projected growth trajectory proves to be too optimistic for 2026 as well," Fiscal Council Chairman Gabor Horvath said in remarks cleared for publication on Sunday. "There are significant uncertainties around this year's GDP growth, and definitely the uncertainties are not smaller regarding 2026 growth." Orban has banked on economic recovery to help him secure another term in next year's elections when he is expected to face the sternest opposition challenge in well over a decade. An upturn, initially expected already last year, so far has failed to materialize, forcing the government to cut spending and hike taxes and to cut its 2025 growth forecast. Hungary's economy was mired in stagflation in the first quarter, with output unchanged from a year ago and inflation running at the European Union's highest levels. Responding to the weaker-than-expected first-quarter data, the Economy Ministry told Reuters it planned to submit the budget to parliament with its original economic assumptions, with a next review of its forecasts due in June. The government aims to reduce next year's budget deficit to 3.7% of gross domestic product from a recently-increased 4% target in 2025, and a higher-than-expected 4.9% shortfall in 2024. Economists polled by Reuters, however, see next year's deficit at 4.2%. Given the scale of uncertainties in the world economy, the early adoption of the 2026 budget did not help, Horvath said. The level of reserves, just like in the 2025 budget, remained too low to tackle contingencies. "The level of the reserves is very low again, which, compared to the very high uncertainties, might be insufficient," he said. Moody's Analytics has warned that tariffs would hurt export-reliant central European economies, with the Czech Republic, Romania and Hungary among those hardest hit. Hungary's central bank has also flagged those as a risk. Horvath also said it was risky for the government to assume that its steep tax cuts for families can be financed by stronger growth, while special business taxes remain in place. REUTERS Join ST's Telegram channel and get the latest breaking news delivered to you.
Reuters
04-05-2025
- Business
- Reuters
Hungary's election-year 2026 budget hinges on risky growth projection, fiscal watchdog says
Summary Hungary's economy mired in stagflation in Q1 PM Orban faces closely-fought election next year Very low level of reserves poses risks to 2026 budget Hopes for strong growth propping up budget are a risk BUDAPEST, May 4 (Reuters) - The Hungarian government's budget plans for the 2026 election year could be at risk if its economic growth assumptions prove too optimistic, the head of budget watchdog Fiscal Council told Reuters. Prime Minister Viktor Orban's government forecasts 4.1% economic growth next year, well above the 3.2% economists' consensus in a Reuters poll and 2.6% forecast by the International Monetary Fund. S&P Global, which cut Hungary's credit rating outlook to negative from stable last month citing fiscal stability concerns, projects next year's growth at 2.5%. "The most important downside risk to the budget is if the projected growth trajectory proves to be too optimistic for 2026 as well," Fiscal Council Chairman Gabor Horvath said in remarks cleared for publication on Sunday. "There are significant uncertainties around this year's GDP growth, and definitely the uncertainties are not smaller regarding 2026 growth." Orban has banked on economic recovery to help him secure another term in next year's elections when he is expected to face the sternest opposition challenge in well over a decade. An upturn, initially expected already last year, so far has failed to materialize, forcing the government to cut spending and hike taxes and to cut its 2025 growth forecast. Hungary's economy was mired in stagflation in the first quarter, with output unchanged from a year ago and inflation running at the European Union's highest levels. Responding to the weaker-than-expected first-quarter data, the Economy Ministry told Reuters it planned to submit the budget to parliament with its original economic assumptions, with a next review of its forecasts due in June. The government aims to reduce next year's budget deficit to 3.7% of gross domestic product from a recently-increased 4% target in 2025, and a higher-than-expected 4.9% shortfall in 2024. Economists polled by Reuters, however, see next year's deficit at 4.2%. Given the scale of uncertainties in the world economy, the early adoption of the 2026 budget did not help, Horvath said. The level of reserves, just like in the 2025 budget, remained too low to tackle contingencies. "The level of the reserves is very low again, which, compared to the very high uncertainties, might be insufficient," he said. Moody's Analytics has warned that tariffs would hurt export-reliant central European economies, with the Czech Republic, Romania and Hungary among those hardest hit. Hungary's central bank has also flagged those as a risk. Horvath also said it was risky for the government to assume that its steep tax cuts for families can be financed by stronger growth, while special business taxes remain in place.
Budapest Times
28-04-2025
- Business
- Budapest Times
Government submits 2026 budget draft to Fiscal Council
The National Economy Ministry said the budget draft, "built on peace", contains Europe's largest tax reduction program and prioritises support for families and pensioners, while calculating with significant pay rises. The Hungarian government submitted its 2026 budget draft to the Fiscal Council on Thursday. The National Economy Ministry said the budget draft, 'built on peace', contains Europe's largest tax reduction program and prioritises support for families and pensioners, while calculating with significant pay rises. In a message on social media, National Economy Minister Márton Nagy said the draft budget earmarked HUF 4,800bn in support for families, adding that doubled tax allowances would leave HUF 290bn with families raising children, up from HUF 80bn in 2025. Households will get around HUF 800bn in support in the form of subsidies for the regulated utilities price system, and they will get a further HUF 800bn in interest payments on retail government securities. Some HUF 450bn has been earmarked for bonuses for Hungarians in uniform, and resources have been allocated for double-digit pay rises for public sector workers in smaller settlements. In line with Hungary's commitment to keep defense spending at 2pc of GDP, HUF 1,900bn will go toward upgrading the Hungarian Defense Forces. Around HUF 4,900bn will be spent on economic development, including HUF 2,200bn in European Union funding. Windfall profit taxes will remain in place in some sectors, while tax preferences for boosting headcount and spending on R+D will rise. The budget is calculated with 4.1pc GDP growth and 3.6pc average annual inflation. The primary deficit — excluding the cost of debt maintenance — is set at zero. The general government deficit target is 3.7pc of GDP, while state debt is set to fall to a year-end 72.3pc of GDP from 73.1pc at end-2025. The government will submit the budget bill to lawmakers on May 6, after the Fiscal Council issues its opinion on the draft.
