Hungary’s new government, elected in April, has inherited a challenging fiscal position. Under unchanged policies the budget deficit is projected to increase from 4.7 percent of GDP in 2025 to 6.2 percent in 2026. This contrasts sharply with Hungary’s January 2025 medium-term fiscal-structural plan – a plan all European Union countries must draw up as part of the EU economic governance framework – which envisaged a gradual decline in the deficit to 2.5 percent by 2026. Net public-expenditure growth, the main operational indicator under EU fiscal rules, is also expected to significantly exceed the limits set under the EU excessive deficit procedure (EDP) to which Hungary is subject, and which requires Hungary to rein in its debts. […]