Part I — Situation overview

On 8 July 2026 the Ministry of Finance published the result of the budget audit, and the figure is dramatic: as a proportion of gross domestic product (GDP, the economy’s output over one year), instead of the previously planned 3.7 per cent, a deficit of around 7.5 per cent is expected this year. According to HVG’s report, Finance Minister Kármán András warned of this order of magnitude. According to 444.hu’s account, the audit also showed that, without intervention, this year’s deficit could even reach 8.3 per cent of GDP, and next year’s (2027) 6.1 per cent — and that the previous budget, tied to the name of Nagy Márton, counted on nearly one thousand billion forints of EU funds that the previous government too knew were not accessible. Telex added to this that the ministry found some 400 billion forints of spending that did not appear at all in this year’s budget. The finance minister held out the prospect of an adjustment in August.

This fact-finding does not take place in a vacuum. In the post-election period, incoming governments routinely prepare an opening balance — an itemised overview, drawn up on taking office, of the inherited obligations, pending projects and uncovered promises — and this balance now shows that the gap between the planned and the real deficit is not a simple forecasting inaccuracy, but in part the result of deliberate planning decisions: to build on uncollectable revenue and to keep spending off the budget. For the sake of precision the two deficit figures are worth separating: the 7.5 per cent is the value the finance minister expects for this year, while the 8.3 per cent is the audit’s no-intervention scenario — the two do not contradict each other, but mark the path before and after the adjustment.

By MIAK’s reading, the deficit now revealed confirms its own long-held point: the root of the problem is not a single bad figure, but the opacity of the budget. If spending and revenue assumptions were public in real time, in machine-readable form, the 400-billion hidden item or the plan built on uncollectable EU funds could not even have arisen — publicity itself is the disciplining force. The stake, then, is not that the holes have now been found, but whether the hole-hunt will become a lasting, data-driven system.

Part II — Literature foundation

Before turning to MIAK’s concrete proposals, it is worth fixing the economic frame in which the concealed deficit and planning on uncollectable revenue can be interpreted. Kornai János (an economist of Hungarian origin, who developed the theory of the soft budget constraint, a Harvard professor between 1986 and 2002) described the soft budget constraint in his work A hiány (Economics of Shortage, 1980) — the situation in which the state regularly bails out the losing economic actor with credit, tax cuts or subsidy, so that the actor’s behaviour is no longer tied to its own solvency; hidden spending and uncovered promises are precisely the symptoms of this softened fiscal discipline. Carmen Reinhart and Kenneth Rogoff (Harvard economists who worked through eight centuries of the history of financial crises) warn in their work This Time Is Different that crisis-prone states overspend in good times, and that debt kept out of sight is just as much an obligation as the recorded kind — the “this time is different” illusion is dangerous precisely because it repeatedly turns out that it was not different. The detailed literature treatment — by author, with quotations — can be found in the 6.4 Literature in detail section.

Part III — MIAK’s concrete proposal

MIAK proposes three measurable measures which would handle the deficit now revealed not with a one-off hole-hunt, but in a lasting, transparent and least-regressive way.

3.1 From the audit to a permanent, data-driven budget (during 2026)

The most important principle is that the present audit should not remain a one-off event, but should become a permanent system. On the basis of the G1 data-driven budget and the A1 public-money dashboard programme points, MIAK proposes that the state make every budget item — together with the revenue assumptions — followable on a real-time, machine-readable, public surface. The 400-billion hidden spending now revealed and the plan built on uncollectable EU funds could occur because the budget’s internal assumptions were not publicly verifiable; alongside an open data standard (Open Fiscal Data Package), planning on uncollectable revenue becomes immediately visible and contestable. The aim is that the next government should not begin by untangling its predecessor’s balance sheet, but should inherit a continuously up-to-date budget seen by everyone.

3.2 Spending review instead of linear austerity (in the August 2026 adjustment)

The correction of the deficit cannot happen with blind austerity that trims every item equally, because that cuts well-performing and poorly performing spending alike. On the basis of the “organised abandonment” principle (the deliberate ending of non-functioning programmes so that the resource flows to the ones that work) of the G21 systematic review of state spending programme point, MIAK proposes that the August adjustment start with a zero-based review: for every larger spending item let us ask whether it achieved a measurable result, and let us reallocate the resource to the demonstrably efficient programmes. In this way deficit reduction does not strike those most in need, but ends the least justified spending — placing the burden of the painful adjustment on the most wasteful rather than the most regressive items.

3.3 A fixed debt ceiling and a fiscal brake (medium term, 2026–2028)

The third condition is that the concealed deficit should not be able to recur: this requires a rule fixed in advance and automatic. On the basis of the G23 public-debt-sustainability framework and the G15 countercyclical fiscal stabiliser (state spending in a downturn, reserve-building in an upswing) programme points, MIAK proposes that the crossing of a statutory debt threshold trigger an automatic, pre-announced spending restriction (a fiscal brake), and that an independent fiscal institution (IFI — a body, independent of the government, that certifies the budgetary assumptions) certify the revenue plans in advance. This rule would have prevented precisely the current situation: an external certifier would not have let the uncollectable one thousand billion into the plan.

These three proposals are bound together by a single principle: fiscal discipline is not a question of austerity but of transparency. The deficit becomes manageable if every forint is visible, every revenue assumption is certified, and the correction targets the waste, not the person in need.

Part IV — Expected impacts and risks

Dimension Expected impact Risk
Economy Revealing the real deficit restores the credibility of planning and investor confidence The 7.5 per cent deficit and the adjustment may slow growth in the short term
Society The targeted spending review spares those in need, in contrast to blind austerity With poor execution, the burden of the adjustment may fall on the least well-off
Public administration The data-driven, public budget lastingly prevents hidden items Introducing the open data standard is time- and capacity-intensive and may meet resistance

The main question to weigh is the pace and manner of deficit reduction. Too fast, linear an adjustment can be demand-contracting and strike the weakest; too slow a correction, by contrast, risks the debt path and creditworthiness — the European Union’s excessive-deficit procedure (EDP), which can be launched over a persistently high deficit, is also a disciplining constraint. The proposal works if the adjustment is targeted (aimed at the wasteful items) and transparent; it tips onto the risk side if deficit reduction is carried out as linear trimming, under communication pressure, bypassing efficiency measurement.

Part V — Measurability and summary

5.1 What is worth tracking? (suggested KPIs)

MIAK considers the following suggested performance indicators (KPIs, in English: Key Performance Indicator) worth tracking on a 6–24-month horizon:

  • The actual annual deficit: as a share of GDP — the aim is to hold the path stabilised by adjustment around 7.5 per cent, cleansed of uncollectable revenue.
  • The publicity of the budget: whether the full spending and revenue structure is available in machine-readable, real-time form.
  • The number of hidden items: whether further spending not in the plan is revealed after the fact — its fall to zero is the main sign of the open system’s success.
  • The targeting of the adjustment: whether deficit reduction affects the wasteful or the social items in greater proportion.

These are suggestions, not government decisions — MIAK considers worth tracking what shows on a factual basis whether the consolidation is lasting and just.

5.2 Summary

MIAK’s key message is simple: the audit is a good start, but it is only worth something if it becomes a permanent system. MIAK asks the decision-maker to handle the deficit now revealed not with a one-off hole-hunt, but with a real-time, public, data-driven budget, a targeted spending review and a fixed debt ceiling — and to place the burden of the adjustment on the waste, not on the person in need.

The topic moves two MIAK foundational values. Transparency is concerned because it was precisely the publicity of the budget’s internal assumptions that would have prevented the hidden spending and planning on uncollectable revenue — secrecy is the breeding ground of the deficit. And data-drivenness, because the fairness of the adjustment depends on deciding which spending stays and which ends on the basis of measured efficiency, not political convenience.

Part VI — Justifications and further sources

6.1 Press framing by spectrum

The economic and left-liberal band (444.hu, Telex, HVG, Portfolio) stressed the weight of the news on the dramatic scale of the deficit and the hidden items: 444.hu ran the frame of the “thousand-billion holes” and the 8.3 per cent no-intervention path, Telex the 400-billion spending left out of the earlier budget, and HVG the finance minister’s 7.5 per cent signal. The change-of-government narrative here is the “revealing of the inherited bankruptcy”. The pro-government-conservative band (Mandiner) highlighted rather the threat of the adjustment through the frame of the “gigantic deficit figure” and “in August they will reach into the budget”. It deserves separate mention that 24.hu also ran a divergent frame, “the Tisza government drastically cut the deficit”, referring to a monthly, 424-billion-forint surplus — but this is a cash-flow, monthly figure, which does not contradict the deficit emphasis of the annual audit, only shows a different cross-section. In the name of ideology-freeness it should be recorded: revealing the real deficit and the need for the adjustment are not side-dependent facts; the subject of the debate is the scale and the distribution, not the existence of the problem.

6.2 Facts and data

Indicator Value Source
Planned deficit this year (earlier budget) 3.7% of GDP Ministry of Finance / 444.hu, 8 July 2026
Expected deficit this year (with adjustment) ~7.5% Kármán András / HVG, 8 July 2026
Deficit this year without intervention ~8.3% Ministry of Finance / 444.hu, 8 July 2026
Next year’s (2027) deficit without intervention ~6.1% 444.hu, 8 July 2026
Spending left out of the plan ~400 billion HUF Telex, 8 July 2026
Uncollectable, budgeted EU funds nearly 1,000 billion HUF 444.hu, 8 July 2026

The direction of the set of figures is unambiguous: the roughly twofold gap between the planned and the real deficit stems in part from planning built on uncollectable revenue and spending kept off the budget — that is, it is not merely a macroeconomic shock, but a question of planning transparency.

6.3 Policy aspects

  • Economy (programme points) — the data-driven budget (G1), the systematic spending review (G21), the debt-sustainability framework (G23) and the countercyclical stabiliser (G15) are the gravitational centre of the topic;
  • Transparency and anti-corruption policy (programme points) — the public-money dashboard (A1) is the instrument for preventing hidden spending;
  • Public administration and e-government (background material) — the introduction of the open budget data standard and independent fiscal certification is a question of institutional capacity.

6.4 Literature in detail

6.4.1 Kornai János: A hiány (Economics of Shortage)

Kornai describes with the concept of the soft budget constraint the situation in which — in his words, in paraphrase — the budget constraint of the traditional socialist firm is soft: if it becomes loss-making, this does not yet lead to a real bankruptcy, because it is somehow “rescued”, receives a bailout loan, has its taxes cut or is granted a subsidy. Chapter 22 of the book ties paternalism to the softening of the budget constraint: where the state paternalistically bails out the actors, there solvency ceases to be a disciplining force. The present Hungarian audit shows, in this frame, that spending kept off the budget and planning on uncollectable revenue are symptoms of softened fiscal discipline — the solution is not to swap the actors, but to harden the constraint with transparent, certified planning. (Because of MIAK’s source status we give only a paraphrase from the volume.)

📖 Source: Kornai János: A hiány (Economics of Shortage, 1980)

6.4.2 Reinhart–Rogoff: This Time Is Different

Reviewing eight centuries of financial crises, the authors show that the recurring psychological root of crises is the “this time is different” belief: “the pervasive view that ’this time is different’ is precisely why it usually isn’t different, and catastrophe eventually strikes again” — that is, it is precisely the conviction that there will be no trouble now that signals the trouble. They warn separately that (domestic) debt kept out of sight cannot be ignored, because it has to be repaid from the same revenue source as the recorded kind. In the case of the Hungarian opening balance this means that the plan built on uncollectable funds and the hidden spending do not disappear just because the earlier budget did not name them — the obligation is real, and sooner or later burdens the same taxpayer.

📖 Source: Reinhart–Rogoff: This Time Is Different — Eight Centuries of Financial Folly

6.5 International comparison

The opening balance prepared by an incoming government and independent budgetary certification are established international practice. In the United Kingdom the government-independent Office for Budget Responsibility certifies the budgetary forecasts, precisely so that the government of the day cannot build on unrealistic revenue assumptions; a similar role is played by the network of independent fiscal institutions prescribed in the EU member states. The experience is that where an external body audits the revenue plans in advance, the Hungarian-type gap now revealed — planning on uncollectable funds, off-budget spending — is far less likely to arise. The Hungarian lesson is therefore not the one-off audit, but institutionalised, continuous certification.

Economy

  • G1 — Data-driven budget
  • G15 — Countercyclical fiscal stabiliser
  • G21 — Systematic review of state spending
  • G23 — Public-debt-sustainability framework

Transparency and anti-corruption policy

  • A1 — Public-money dashboard

6.7 Source register

Press sources (MIAK press monitor, 9 July 2026 — topic 2):

Knowledge-base references (literature):

  • 📖 Kornai János: A hiány (Economics of Shortage, 1980)
  • 📖 Reinhart–Rogoff: This Time Is Different — Eight Centuries of Financial Folly

Note: in the blog’s visible text the local file path of the books does not appear — only the author and the title. The file path is an internal matter of the generation process, not the reader’s.

MIAK internal materials:

  • MIAK policy area: Economy (programme points; programme point ID: G1, G21)
  • MIAK policy area: Transparency and anti-corruption policy (programme points; programme point ID: A1)
  • MIAK press monitor, 9 July 2026 — topic 2, score: 87/100

Additional public data sources:

  • IMF Fiscal Monitor; OECD Economic Outlook 2026; KSH (Hungarian Central Statistical Office), MNB and ÁSZ (State Audit Office) reports; Eurostat government deficit and debt data

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