Part I — Situation overview

On 1 October 2026 the Hungarian Central Statistical Office (KSH) announced that, according to preliminary data, the general government deficit in the first half of the year was HUF 2,809.5 billion, 6.2% of gross domestic product (GDP). A year earlier the same figure was HUF 310 billion, 0.7% of GDP. The bulk of the deficit, HUF 2,051.3 billion, arose in the first quarter, that is, still before the election. In the second quarter, during the transition between the two governments, HUF 758.2 billion (3.3% of quarterly GDP) was added. According to Portfolio’s calculation, the four-quarter rolling deficit worsened to 6.3%, a two-and-a-half-year low. This indicator is the combined balance of the last four consecutive quarters, which filters out seasonal fluctuations within the year. On the same day the KSH published the latest report under the European Union’s excessive deficit procedure (EDP — Excessive Deficit Procedure, the EU procedure applied when a country’s budget deficit is persistently high). In it the expected deficit for this year is HUF 6,902 billion, whereas the spring 2026 report still assumed 4,745 billion. In the same days Hungary also submitted its final payment request from the EU recovery fund (the Recovery and Resilience Facility, RRF). According to Portfolio, of the envelope of about 10 billion euros, 919.6 million euros in pre-financing has arrived so far, so the final assessment decides on nearly 9.1 billion euros. The European Commission must decide and pay by the end of December.

MIAK has written about the pre-election budgetary legacy in several steps so far. In May about the 91 per cent use of the deficit ceiling, in August about the itemised derivation of the deficit target, in September about the breakdown into one-off and lasting items. In connection with the RRF it proposed a monthly milestone tracker and a separate budget line. The new element now is that the legacy has also been closed statistically: the KSH’s quarterly data and the EDP report are already official figures used in an EU procedure.

MIAK’s reading: the problem is not only the size of the deficit, but the timing. In the spring, voters decided on a budgetary situation whose true picture became visible only half a year later, through statistical follow-up work. This is not the fault of the new or the old government, but a shortcoming of the reporting regime. In Hungary there is no mandatory document, accompanied by an independent opinion, that would record the actual state of public finances before the election.

Part II — Foundations in the literature

Three sources provide the framework for interpreting the topic. According to the autumn 2025 World Economic Outlook of the IMF (International Monetary Fund), the conditions for the credibility of fiscal adjustment are a reliable set of rules, an adequately resourced independent fiscal institution and debt transparency. The report gives a separate warning: if political pressure is placed on the professional institutions that collect data, this also undermines trust in official statistics. The IMF’s World Economic Outlook from a year earlier, in 2024, examining the success of reforms, concludes that the position in the electoral cycle influences implementation. And persuasive communication requires credible, independent analytical bodies, such as the Dutch economic policy analysis bureau (CPB). According to Ray Dalio (American investor, author of Principles), the weight of an opinion is given by its holder’s past performance, that is, by forecasts that proved right or wrong. This performance must be kept on record. Together, the three sources say: the legacy dispute ends when the figures appear before the election, under independent scrutiny and in a traceable way. The detailed discussion of the literature — by author, with quotations — can be found in section 6.4 Literature in detail.

Part III — MIAK’s concrete proposal

MIAK proposes three measurable measures. The first concerns future elections, the second the EDP reports published every six months, and the third this year’s RRF closure.

3.1 Official pre-election fiscal report (statutory rule by the end of 2027, first application before the next parliamentary election)

MIAK proposes that the Government submit a bill to the National Assembly making the publication of an official pre-election fiscal report mandatory. The report should be prepared by the Ministry of Finance no later than 60 days before election day. The Fiscal Council (the independent body enshrined in the Fundamental Law that gives its opinion on the soundness of the budget) should attach a public opinion to it within 15 days. The report should contain five elements. First: the KSH’s latest quarterly balance and the four-quarter rolling deficit. Second: the expected full-year deficit and debt according to EU methodology. Third: commitments already made but not included in the budget — the items that this year’s review found as expenditure that had not been built in. Fourth: conditional EU revenues that have not yet arrived. Fifth: the composition of expenditure, showing wages, cash benefits and investment separately. The latter is important because in the first half of this year expenditure grew by HUF 2,121 billion, while state investment fell by 311 billion, or 21.5%. The report is the counterpart of the commitment limit for the caretaker period proposed on 24 July. One makes the months before the election transparent, the other the months after it. According to the IMF’s analysis (see 6.4.2), independent, credible analysis keeps the weight of arguments even during the electoral cycle. This is the application of the G1 data-driven budget and the G15 countercyclical programme points to the electoral cycle.

3.2 EDP revision log (for the October 2026 revision by 30 November 2026, thereafter with every April and October report)

The EDP report is prepared twice a year, at the beginning of April and October, and also contains the expected full-year deficit. Between this year’s two reports the expected value of the 2026 deficit rose from 4,745 billion to HUF 6,902 billion, by about 2,000 billion. Last year’s GDP figure was revised upwards, this year’s downwards, and the expected balance of the social security funds improved from a deficit of 349 billion to break-even. How much of this is due to changes in the economic environment, how much to decisions of the new government and how much to inherited items not yet visible in the spring — the report does not break this down. MIAK proposes that the Ministry of Finance publish, with every EDP report, a machine-readable deviation table compared with the previous report. It should have four columns: macroeconomic revision, new legislation or government decision, item not previously built in, statistical reclassification. The first such table, for the difference between the spring and the autumn 2026 reports, should be prepared by 30 November. Later the log will build up into a time series and show which government’s forecasts were close to reality. According to Dalio’s principle (see 6.4.3), credibility is given by recorded past performance, not by the claim of the moment. This is the direct application of the record of decision-makers’ forecasts contained in the G19 programme point.

3.3 Itemised RRF closing account and updated deficit path (within 30 days of the Commission’s decision, by 31 January 2027 at the latest)

MIAK already proposed monthly milestone tracking in August; with the submission of the final request, the last step now follows. By the end of December the Commission will check the milestones item by item. If it does not consider one of them satisfactorily fulfilled, part of the payment may be withheld, and after December no RRF payment can be made. MIAK proposes that the Government publish a closing account 30 days after the decision. It should include, milestone by milestone, the Commission’s finding and the amount paid or withheld. It should also include which of the projects already launched will continue from domestic sources, and how much additional expenditure this means. Finally, it should also show how this changes the 2026 deficit and the 2027 path, and whether the shortfall will be covered by debt, spending cuts or revenue. From the point of view of EU negotiations, the closing account is useful even if the decision is disputed. The public, milestone-by-milestone picture shows where it is worth seeking issue-based allies in negotiating the next EU frameworks. The IMF (see 6.4.1) emphasises precisely that the credibility of adjustment is founded on debt transparency. This is the application of the G23 debt sustainability and the KP17 issue-based EU coalition-building programme points.

The three measures are linked by a single principle: the state of the budget should be a matter of record, not of dispute. The pre-election report records the starting position, the revision log explains the changes, and the closing account closes the largest external uncertainty. That way, at the next change of government, there will no longer be any need to argue about the figures, only about the answers.

Part IV — Expected effects and risks

Dimension Expected effect Risk
Budget The spending increase of the pre-election months becomes visible before the election; the political price of campaign-period spending rises The report itself becomes a campaign topic; the government may take the big decisions before the 60-day deadline
Institutions The Fiscal Council’s opinion becomes a benchmark before the election too; after the loss of its veto it gains a new, public role Without analytical capacity the opinion remains a formality; the Council may come under political pressure
Statistics and forecasting The reason for EDP revisions is public; governments’ forecasting performance becomes comparable over time The ministry decides the classification (macro or decision) itself; without independent verification the table can be embellished
EU funds After the closing account it is clear how much funding came and what remained a domestic burden Public accounting for the withheld amount is politically uncomfortable and may therefore be delayed
Society Voters can weigh costly promises on the basis of actual figures Deficit figures on their own can be alarming if they do not come with an explanation

The most important question to weigh is the timing of the pre-election report. If it appears too early, the government can still spend afterwards; if too late, there is no time to debate it. The 60-day deadline is aligned with the Hungarian electoral timetable, but it works only if the report also contains items already committed but not yet paid. The proposal becomes risky if the report remains the Ministry of Finance’s own document. That is why the Fiscal Council’s public opinion is indispensable, as is the Council receiving the analytical capacity for it. MIAK already asked for this in its analysis of 16 July.

For the RRF closing account the main question is whether the public, milestone-by-milestone picture weakens Hungary’s negotiating position. According to MIAK it does not: the Commission’s decision will be taken in December anyway, and the account only shows its consequences for the domestic budget. The risk is rather the reverse. If the shortfall does not appear item by item, the deficit may grow unexplained in 2027.

Part V — Measurability and summary

5.1 What is worth following? (suggested KPIs)

MIAK suggests the following key performance indicators (KPIs). These are suggested indicators, not government commitments.

  • The four-quarter rolling deficit. Baseline: 6.3% (Q2 2026). It is worth following whether it settles on a lastingly declining path by mid-2027.
  • The amount paid out on RRF closure by 31 December 2026. Nearly 9.1 billion euros are at stake. The indicator is the share paid out and the amount withheld per milestone.
  • The half-yearly value of state investment (gross fixed capital formation). Baseline: a 21.5% decline in the first half of 2026 compared with the previous year. Consolidation spares growth if this indicator does not fall further.
  • The share of unexplained revision between EDP reports. After the first log in November 2026, a value close to zero is worth treating as the target.

5.2 Summary

MIAK’s request is addressed to the Government and the National Assembly. The pre-election budgetary legacy has now become an official figure, but half a year after the election. For the next election this must be reversed. That requires a statutory obligation for an official pre-election report with an independent opinion. It requires a revision log updated every six months, and, after this year’s RRF decision, an itemised closing account expressed in forints.

Of MIAK’s foundational values, transparency and accountability are at stake here. Transparency, because voters can decide responsibly only about a budgetary situation they can see before the decision. Accountability, because without a record of forecasts and revisions every government can shift the blame for the deficit onto the other afterwards. The revision log replaces this blame-shifting with figures.

Part VI — Justifications and further sources

6.1 Press framing by spectrum

In the left-liberal band, 444.hu’s article “Hat hónap, mínusz 2800 milliárd forint” (Six months, minus HUF 2,800 billion) clearly framed the deficit as the previous government’s campaign spending. The outlet highlighted the HUF 2,121 billion spending increase and the fall in investment. It presented in detail which EDP indicators the new government had to rewrite, including the estimate of this year’s deficit raised from 4,745 billion to 6,902 billion. Telex’s economics section focused on the “sacred cows”, namely the interest rate cap (the state limit on the interest of variable-rate household mortgage loans), the utility price cuts and the margin cap (the state limit on the retail margin of basic foodstuffs). It asked how long these can be maintained alongside this year’s 7.5% deficit target. It noted that the interest rate cap remained in place even after the 30 September deadline, although since 2022 it has caused the banks more than HUF 500 billion in additional costs.

In the business press, Portfolio carried the quarterly data and the 6.3% rolling deficit in a separate article, and the final RRF request in another. According to the latter, every member state submitted its request on time, for the entire envelope of 573 billion euros. Portfolio’s podcast showed the debt financing side: the Government Debt Management Agency (ÁKK) has raised the net financing requirement by about 60% this year, and the role of retail government securities is changing. In the public affairs band, ATV, in its programme on a further HUF 119 billion reallocated to utility price protection, brought the argument that this money could be put to better use (the summary is based on the public introduction of the video). HVG approached the 2027 wage negotiations from the angle of fiscal room for manoeuvre. According to it, next year the government will cut personal income tax (PIT) at the minimum wage by 6 percentage points, in exchange for the gross minimum wage rising by much less than 10%. The conservative band did not carry the topic in MIAK’s press monitor on this day. This is noteworthy because an itemised explanation of the EDP revisions would give precisely the previous government’s side an opportunity to dispute the “legacy” figures on professional grounds.

6.2 Facts and data

General government balance by quarter (KSH, 1 October 2026, preliminary data; as reported by 444.hu and Portfolio):

Period Balance (HUF billion) As % of GDP
Q1 2025 −790 —
Q2 2025 +480 —
H1 2025 −310 −0.7%
Q1 2026 −2,051.3 —
Q2 2026 −758.2 −3.3%
H1 2026 −2,809.5 −6.2%
Four-quarter rolling balance (to Q2 2026) — −6.3%

Revenue and expenditure in the first half of 2026 (KSH):

Item Value (HUF billion) Change on the same period of the previous year
Total revenue 19,018.1 +539 (+2.9%)
Total expenditure 21,827.6 +2,121 (+10.8%)
of which: compensation of employees — +1,044 (+23.1%)
of which: other expenditure — +607 (+15.6%)
of which: gross fixed capital formation (state investment) — −311 (−21.5%)

Main revisions between the EDP reports for 2026 (444.hu, based on the EDP report):

Indicator Spring 2026 report Autumn 2026 report
Expected general government deficit HUF 4,745 billion HUF 6,902 billion
Balance of the social security funds HUF −349 billion 0 (break-even)

According to Telex, the government expects this year’s deficit to be 7.5% of GDP. A precedent for the social security funds: in spring 2025 balance was also assumed, and in the end there was a deficit of 246 billion.

Recovery fund (RRF), Hungary’s final request (Portfolio, 1 October 2026): Hungarian envelope about 10 billion euros; pre-financing paid out so far 919.6 million euros; nearly 9.1 billion euros at stake in the final assessment. The Commission’s deadline for assessment and payment is the end of December, after which no RRF payment can be made.

6.3 Policy dimensions

  • Economy (programme points) — the pre-election report as an element of the data-driven budget (programme point ID: G1), managing fiscal swings over the electoral cycle (programme point ID: G15), keeping a record of forecasting performance (programme point ID: G19), the impact of the RRF shortfall on the debt path (programme point ID: G23);
  • Foreign policy (programme points) — RRF closure and the negotiation of the next EU funds through issue-based alliances (programme point ID: KP17);
  • Social policy (programme points) — turning the continuously growing sums spent on utility price protection into targeted support, so that consolidation does not fall on investment and on those in need (programme point ID: SZ1).

6.4 Literature in detail

6.4.1 IMF: World Economic Outlook 2025

In the section on fiscal priorities, the IMF’s autumn 2025 world economic report lists the conditions for adjustment. These include not only the structure of expenditure and revenue, but also the institutional background:

“Robust frameworks and credible rules, well-resourced independent fiscal institutions, better budgetary governance, and greater debt transparency are key to fiscal adjustment efforts.” (MIAK’s back-translation of the Hungarian rendering)

Among the risks, the report separately mentions political pressure on the professional institutions responsible for data collection. In its view this also erodes public trust in official statistics and increases the likelihood of economic policy mistakes. Applied to the Hungarian legacy dispute: the current figures close the dispute because the KSH’s quarterly data and the EDP report are independent statistics compiled according to EU methodology. The same credibility would be available before the election too, if the report were accompanied by the independent opinion of the Fiscal Council (3.1). And the RRF closing account (3.3) is this year’s most tangible test of debt transparency.

📖 Source: IMF: World Economic Outlook — Global Economy in Flux (2025)

6.4.2 IMF: World Economic Outlook 2024

The chapter on reforms in the IMF’s 2024 report examines what makes economic policy reforms happen. According to the analysis, the political environment — for example whether a reform is proposed at the beginning of a new government or close to the next election — influences the chances of implementation. Consultation and communication, however, are a stronger predictor of success than circumstances. The chapter adds that effective communication requires an institutional framework that builds trust. As examples it mentions the Dutch economic policy analysis bureau (CPB) and the Australian Productivity Commission, which carry out and scrutinise policy analyses credibly and independently. Translated to the Hungarian situation: as the election approaches, the communication of budget figures inevitably becomes political. That is why the pre-election report (3.1) is worth something only if an independent body also endorses or criticises it. The same logic makes it necessary for the classifications of the revision log (3.2) to be verifiable by an external actor as well.

📖 Source: IMF: World Economic Outlook — Policy Pivot, Rising Threats (2024)

6.4.3 Ray Dalio: Principles

In the part on decision-making, Dalio argues that not all opinions are equal. The weight of a claim is given by the credibility of its holder, and this can be judged on two grounds: the quality of the reasoning and past performance. According to Dalio, past performance must be tracked deliberately, because only in this way can a well-founded opinion be separated from mere self-confidence. MIAK’s G19 programme point translates the principle into economic policy: decision-makers’ past forecasts must be kept on record. Applied to the EDP reports: today every government publishes new figures, but it does not have to account for how far its earlier estimate deviated from reality, and why. The revision log (3.2) creates this record. Within a few years it will reveal which financial leadership’s estimates were reliable. (The work is copyrighted, so the text above is a paraphrase.)

📖 Source: Ray Dalio: Principles

6.5 International comparison

An official pre-election fiscal report is established practice in several advanced democracies. In Australia the pre-election report is required by the 1998 Charter of Budget Honesty Act. On this basis the secretaries of the Treasury and of the Department of Finance publish the Pre-Election Economic and Fiscal Outlook within ten days of the election being called. The report is signed not by the ministers but by the departmental heads. In New Zealand, under the Public Finance Act, the Treasury issues a similar updated report a few weeks before the election. In the Netherlands, before the election, the CPB also calculates the fiscal impact of the parties’ programmes, on the basis of the parties’ voluntary participation. In the United Kingdom the independent Office for Budget Responsibility produces the official fiscal forecast and also regularly publishes an analysis of its own past forecasting errors. The latter is close to the revision log under 3.2. The common element is the same everywhere: before the decision, voters see official figures signed off under independent professional responsibility. In Hungary this role can be fulfilled by the opinion of the Fiscal Council, if it receives the analytical capacity for it.

Economy

  • G1 — Data-driven budget
  • G15 — Countercyclical fiscal stabiliser
  • G19 — Radical transparency in economic decision-making
  • G23 — Public-debt sustainability framework

Foreign policy

  • KP17 — Issue-based coalition-building in the EU

Social policy

  • SZ1 — Targeted support

Proposed new programme point: Official pre-election fiscal report with a public opinion of the Fiscal Council, and an EDP revision log updated every six months — for the Economy area.

6.7 List of sources

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

Knowledge base references (books):

  • 📖 IMF: World Economic Outlook — Global Economy in Flux (2025)
  • 📖 IMF: World Economic Outlook — Policy Pivot, Rising Threats (2024)
  • 📖 Ray Dalio: Principles

MIAK internal materials:

Supplementary public data sources:

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