Part I — Situation overview

On the evening of 2 October 2026 the government’s two-day off-site meeting began at the Hungarian Defence Forces’ centre in Erdőbénye. According to Prime Minister Péter Magyar’s earlier announcement, the main items on the agenda are the economy, the 2027 budget, the restructuring of public administration, water management, energy and the climate situation. The decisions of the meeting had not been made public by the morning of 3 October. According to Telex, the Government will present the draft of next year’s budget at the end of October, and the bill will then be debated and adopted by Parliament. The strongest signal before the meeting came from the financing side. Gergely Tardos, chief executive of the Government Debt Management Agency (ÁKK, the company that manages the state’s debt, under the direction of the Ministry of Finance), spoke to Reuters. Based on consultations with investors, in his view a 2027 budget deficit target above 5.5% of GDP would cause serious disappointment. The deficit target is the annual deficit planned in advance in the budget, expressed as a proportion of gross domestic product (GDP). A value of around 5% would be acceptable, and 4.5% or below would be a positive surprise. According to the updated budget, this year’s deficit is 7.5% of GDP. According to Népszava’s calculation, retaining confidence would require an adjustment of 2–2.5 percentage points (pp) next year, of the order of HUF 2,000 billion.

The room for manoeuvre is narrowed by commitments from three directions. On 1 October Finance Minister András Kármán announced that from January 2027 the minimum old-age pension will rise to HUF 120 thousand, and pensions below HUF 146 thousand will increase on a tiered basis. According to Népszava, the package costs HUF 123 billion and affects more than 700 thousand people. According to HVG, next year personal income tax (PIT) at the minimum wage will fall by 6 percentage points, in exchange for the gross minimum wage rising by much less than 10%. Still outstanding from the election programme are the additional HUF 500 billion a year for healthcare and several public-sector pay rises. The third strand is the utility price reduction scheme. According to an expert analysis published in Telex’s G7 section, maintaining regulated energy prices has required budget support of HUF 800–1,000 billion a year since 2022.

So far MIAK has discussed separately the distributional effect of the 2027 consolidation, income-based energy support, the indexation rule for the minimum pension and the need for a multi-year debt path. The new element now is the deficit band set by the market: the head of ÁKK has stated in figures where investor disappointment begins. MIAK’s reading: the fall in yields since the election is an advance, not a credit. The 2027 budget will preserve this advance if every promise has a public price and funding, and if the largest, poorly targeted item, the structure of regulated energy price support, is also restructured.

Part II — Foundations in the literature

Three sources provide the framework for interpreting the topic. According to the autumn 2023 World Economic Outlook of the IMF (International Monetary Fund), fiscal adjustment must protect the most vulnerable with targeted support, while untargeted measures that blunt price signals, such as energy subsidies, should be phased out. In a box, the report also models the inflationary effect of European energy price caps: the support lowers inflation today, but raises it after it expires. The IMF’s autumn 2025 report goes a step further: every new support measure should be tightly targeted, transparently costed and explicitly temporary, and its funding must be identified before it is introduced. According to Carmen Reinhart and Kenneth Rogoff (Harvard economists, researchers who processed eight centuries of the history of financial crises), governments and investors repeatedly believe that “this time is different”, and the euphoria of confidence usually reverses quickly. Together, the three sources say: the post-election fall in yields is lasting only if the budget is costed item by item and targeted. 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 restructures utility price support, the second makes the cost of promises visible, and the third sets out the multi-year path of the deficit and the interest burden.

3.1 Consumption-tiered regulated energy price with one supported metering point (submitted together with the bill, in force from 1 May 2027, after the heating season)

MIAK does not propose abolishing the utility price reduction scheme, but a tiered refinement of the existing system. Today the discounted natural gas price applies up to 63,645 megajoules a year, that is, about 1,729 cubic metres, and electricity up to 2,523 kilowatt-hours, separately for each metering point. As a result, holiday homes, weekend houses and garages also receive the discount. Meanwhile, according to 2025 data from the largest residential supplier, average annual gas consumption was 962 cubic metres, and more than 90% of households fit within the discounted band. MIAK proposes four steps. First: the regulated price should apply only to a single metering point of the home actually lived in. Second: between average consumption and today’s upper limit there should be an intermediate band, whose price follows the procurement cost to a limited extent, according to a formula published in advance. Third: for the gas consumption of households with solar panels under annual net metering, the intermediate band price should apply, because net metering is already a discount in itself. Fourth: the price of below-average consumption should not change. The Government should quantify the expected savings and the number of households affected in an annex to the bill. The income-based supplementary support that MIAK proposed on 23 September should protect low-income households that fall into the intermediate band. The IMF’s 2023 assessment (see 6.4.1) urges precisely the phasing out of untargeted support that blunts price signals. This is an application of the SZ1 targeted support programme point and the G25 energy price shock preparedness programme point, while a lasting reduction in consumption is served by the K6 building energy efficiency programme.

3.2 Cost and funding table for each promise (as an annex to the 2027 budget bill, by the end of October)

MIAK proposes that, alongside the bill, the Government should submit a machine-readable table of every new commitment larger than HUF 20 billion. The table should contain five items of data per row. First: the 2027 cost or revenue loss. Second: the expected effect for the years 2028–2030. Third: the funding, that is, the identified expenditure cut or additional revenue. Fourth: the number of people affected. Fifth: whether the item is already a government decision or only a planned commitment. The first rows of the table are known: the pension package is HUF 123 billion, the additional healthcare funding HUF 500 billion a year. However, the PIT cut near the minimum wage, the public-sector pay rises and the announced reduction of the municipal solidarity contribution have not yet been publicly costed. The tripartite consultation should also see the link between the minimum wage and the PIT cut in the 2027 wage negotiations: the table is also a shared data basis for the FO10 wage coordination programme point. The Fiscal Council (the independent body laid down in the Fundamental Law that gives its opinion on the soundness of the budget) should give its opinion on the table before the final vote. The IMF’s 2025 recommendation (see 6.4.2) asks for exactly this: the funding must be identified before introduction. This is an application of the G1 data-driven budget programme point and the G20 impact assessment programme point, with the sustainability perspective of SZ13 for the pension rows.

3.3 Deficit path including interest expenditure and a yield sensitivity annex (together with the bill, updated with every ÁKK financing plan)

In August MIAK already asked for the publication of a multi-year deficit and debt path. The new request is to include the interest burden. According to Népszava, the 7% forint bond yield at the start of the year fell to 5% by the summer, and is now around 5.7%. According to the paper’s calculation, the 1.5–2 percentage point fall in interest rates brings savings of several hundred billion forints a year as the debt is gradually repriced. These savings, however, are not guaranteed. MIAK proposes that the Ministry of Finance should publish, year by year for 2027–2030, the deficit, the debt ratio and interest expenditure, all three as a proportion of GDP. Alongside this there should be a sensitivity table: by how much interest expenditure changes if yields turn out 100 basis points (1 percentage point) above or below plan. The document should also state where the chosen 2027 deficit target sits within the 4.5–5.5% band indicated by ÁKK, and why there. The path should build on the conditions for introducing the euro, which include the 3% deficit reference value. According to the experience of Reinhart and Rogoff (see 6.4.3), confidence turns faster than governments can react, so interest rate risk must be quantified in advance. This is a direct application of the G23 public debt sustainability programme point, while for the use of freed-up interest savings the expenditure review principle of G21 applies.

The three measures are linked by one principle: the confidence advanced by the market can only be kept by verifiable figures. Tiered utility prices make the largest, poorly targeted expenditure item fairer. The cost table puts a price tag on the promises. And the path including interest expenditure shows what the budget gains from discipline, and what it loses if confidence reverses.

Part IV — Expected effects and risks

Dimension Expected effect Risk
Budget Utility price support falls for households with several homes and high consumption; the funding of promises is visible at submission The savings may be smaller than expected if the limit of the intermediate band is set high under political pressure
Households The bills of below-average consumers do not change; the discount for owners of holiday homes and garages ends Low-income families living in poorly insulated houses may fall into the intermediate band if the income-based supplement is delayed
Financial market and interest burden Justifying the deficit band and publishing yield sensitivity reduces uncertainty If the chosen deficit target lies above the 5.5% band, the table also quantifies the disappointment
Labour market Wage negotiations can reckon with the costed effect of the PIT cut Public costing of public-sector pay demands may create tension with the trade unions
Climate and energy The intermediate band price encourages saving and modernisation Without a building renovation programme, the higher price is only a burden, not a saving

The most important question to weigh is natural gas. The expert analysis in Telex’s G7 points out that gas consumption depends much more on the thermal condition of the home than on income. A pensioner living in a poorly insulated village house may consume more than the high-income owner of a well-insulated city flat. The intermediate band is therefore fair only together with the income-based supplement and the building renovation programme. The timing of entry into force also matters. If the restructuring starts in the middle of the heating season, households have no time to adapt. A start on 1 May gives a whole summer to prepare.

For the cost table, the main risk is selective completion. If the Government includes only items already decided, the promises still planned remain invisible. That is why the table’s “planned commitment” category is just as important as that of decisions. For the deficit path the risk is the reverse. An overly optimistic growth assumption flatters the interest path. The IMF’s 2025 report also warns that a fiscal strategy built on a favourable baseline scenario is itself a source of vulnerability.

Part V — Measurability and summary

5.1 What is worth following? (suggested KPIs)

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

  • The share of promise rows with funding when the bill is submitted. Target value: 100%. For every new commitment above HUF 20 billion, an amount and identified funding should be included.
  • The yield on the ten-year forint government bond in the 30 days after the budget is submitted. Baseline: around 5.7% (Népszava, 3 October 2026). It is worth following whether it falls or rises after submission.
  • The budgetary amount of regulated energy price support in 2027. Baseline: HUF 800–1,000 billion a year since 2022. It is worth following whether, after the tiered restructuring, the savings quantified in the bill are actually achieved by the end of 2027.
  • The deviation between actual and planned interest expenditure as a proportion of GDP. It is worth publishing annually and breaking the deviation down into yield changes, debt stock and exchange rate.

5.2 Summary

MIAK’s request is addressed to the Government, and the decision belongs to Parliament. Three documents should accompany the 2027 budget bill: the rule for the tiered restructuring of utility price support and its savings calculation, the cost and funding table for each promise, and the 2027–2030 deficit path including interest expenditure, with yield sensitivity. The head of ÁKK has set out the investor tolerance threshold. It is the Government’s job to show where it stands relative to it, and on what basis.

Of MIAK’s foundational values, transparency and data-drivenness are at stake here. Transparency, because without the price of a promise neither the voter nor the investor can judge what they are getting. Data-drivenness, because the current structure of utility price support rewards not need but the number of metering points and the size of the home, and this can be made fairer on the basis of consumption data.

Part VI — Justifications and further sources

6.1 Press framing by spectrum

In the left-liberal band, Népszava’s analysis “Ezen a hétvégén eldől, hogy jöhet-e magyar euró, vagy már startnál elbukunk” framed the cabinet meeting as a watershed between euro adoption and the election promises. According to the paper, the strengthening of the forint and the fall in yields are “confidence given in advance”, because so far not a single decision has backed the target of introducing the euro in 2030. It also critically mentioned energy support independent of need and the age-independent tax exemption for mothers of two children. Telex’s G7 section carried two strands. One was the article “Egyre egyértelműbb, hogy akkor emelhet jelentősen béreket a kormány, ha valahonnan elvesz”: it compared the ÁKK chief executive’s deficit bands with OTP’s July model, and highlighted that named public pay rises, such as the demands of the police and of ELTE’s teaching staff, are not yet in the figures. The other was an opinion piece by László Miklós, a former energy industry executive, according to which modifying the utility price reduction scheme is unavoidable, but full market pricing is not justified. The author proposed a tiered tariff, a discount restricted to one metering point and separate treatment for households with solar panels. HVG approached the topic from the side of wage negotiations: the era of large pay rises is ending, and the government may compensate with a PIT cut. Another Népszava article called the pension increase, in the words of former state secretary for finance Tamás Katona, supportable but requiring further steps.

In the public affairs band, ATV and 24.hu mainly provided event coverage: on the arrival of the ministers, the agenda and watching the national team’s match together. ATV mentioned the request of the Association of Independent Petrol Stations to reopen the closed filling station in Erdőbénye. In the conservative band, Magyar Nemzet made precisely this closed petrol station the symbol of economic policy failure. In another article it highlighted constitutional concerns around the tiered pension increase (this latter article was not publicly downloadable, only its lead). The conservative band did not take up the restructuring of the utility price reduction scheme on this day. Mandiner did not appear with fresh material in MIAK’s press monitor on this day. The business press (Portfolio) did not appear among the topic’s sources on this day; the economic policy analysis was carried by Telex’s G7 section and Népszava’s economics section.

6.2 Facts and data

The ÁKK chief executive’s investor deficit bands for the 2027 budget deficit target (Telex, 2 October 2026; Népszava, 3 October 2026, based on the interview given to Reuters):

2027 deficit target (% of GDP) Expected investor reception
above 5.5% serious disappointment
around 5% acceptable (according to Népszava, at most neutral)
4.5% or below positive surprise

Market starting point (Népszava, 3 October 2026):

Indicator Start of year Summer Currently
10-year forint government bond yield 7% 5% 5.7%
Euro exchange rate in forints around 390 around 350 360–370

Promises and commitments — known cost data (the starting rows of the cost table under 3.2):

Item Known 2027 cost or effect Funding publicly identified? Source
Minimum pension raised to HUF 120 thousand, tiered increase up to HUF 146 thousand, 10% increase in benefits for people with reduced working capacity, doubling of the old-age allowance HUF 123 billion; more than 700 thousand people affected no Népszava, 3 October 2026 (announcement by András Kármán)
Additional healthcare funding HUF 500 billion a year no Népszava, 3 October 2026
PIT cut, 6 percentage points at the minimum wage not public no HVG, 30 September 2026
Public-sector pay rises (e.g. police, higher education) not specified no Telex, 2 October 2026
Reduction of the municipal solidarity contribution details unknown; this year the contribution may account for about 1% of state revenues no Telex, 2 October 2026
Budget support for regulated energy prices HUF 800–1,000 billion a year since 2022; more than HUF 5,000 billion in total between 2022 and 2025 — Telex G7, 3 October 2026 (citing Népszava’s compilation)

Wage baseline data (HVG, 30 September 2026): the gross monthly minimum wage is HUF 323 thousand, the guaranteed wage minimum HUF 373 thousand, and average gross earnings HUF 745 thousand. According to the estimate of the Magyar Nemzeti Bank (MNB), 15% of full-time employees earn at these levels. According to the MNB’s latest inflation report, economic performance does not support even the current wage growth rate of around 7%.

The discounted band of the regulated gas price (Telex G7, 3 October 2026): 63,645 megajoules (at least 1,729 cubic metres) of natural gas and 2,523 kilowatt-hours of electricity a year per metering point. In MVM Next’s universal service in 2025, average residential consumption was 962 cubic metres, and more than 90% of residential customers fit within the discounted band.

Structure of this year’s deficit (Telex, 2 October 2026): according to OTP’s July analysis, one-off items account for 1.5 percentage points of this year’s deficit, for example the six-month weapons bonus for the armed bodies and the repayment of the tax linked to CO₂ allowances. According to the updated budget, this year’s deficit is 7.5% of GDP.

6.3 Policy dimensions

  • Economy (programme points) — the cost table for each promise as an element of the data-driven budget (programme point ID: G1), ex-ante and ex-post impact assessment of the promises (programme point ID: G20), review of the use of freed-up interest savings (programme point ID: G21), the debt path including interest expenditure (programme point ID: G23), making energy price support targeted (programme point ID: G25);
  • Social policy (programme points) — a need-based supplement to utility price support (programme point ID: SZ1), the long-term sustainability of the tiered pension increase (programme point ID: SZ13);
  • Employment policy and labour market (programme points) — a shared data basis for the minimum wage and the PIT cut in tripartite wage negotiations (programme point ID: FO10);
  • Environment and climate (programme points) — the building energy efficiency programme as a lasting counterweight to the burden of the intermediate gas band (programme point ID: K6), resilience to energy market shocks (programme point ID: K7).

6.4 Literature in detail

6.4.1 IMF: World Economic Outlook 2023

The IMF’s autumn 2023 report discusses the protection of the vulnerable as a separate point among the tasks of fiscal policy. The composition of the adjustment must shield the most vulnerable, primarily through targeted support to households. According to the report:

“Untargeted fiscal measures should be phased out, especially those that blunt price signals — such as energy subsidies — as energy prices return to pre-pandemic levels.” (MIAK’s back-translation of the Hungarian rendering)

In a box, the same volume models energy subsidies, tax cuts and price caps in the euro area. According to the result, temporary support lowers inflation today, but raises it after it expires, and the effect also depends on how far actors believe that the support really is temporary. Translated to the Hungarian utility price reduction scheme: the regulated price, unchanged since 2013, is a lasting, untargeted subsidy that gives the largest absolute amount to the households that consume the most. The tiered restructuring (3.1) corrects precisely this flaw without changing the price for low-consumption households. And the limited price-increase formula published in advance also makes expectations predictable.

📖 Source: IMF: World Economic Outlook — Navigating Global Divergences (2023)

6.4.2 IMF: World Economic Outlook 2025

In the section on rebuilding buffers, the IMF’s autumn 2025 report urges a credible, medium-term consolidation that safeguards support for the vulnerable. According to the report, high debt crowds out priority spending and increases rollover and interest rate risk. On new support it writes:

“Where new discretionary support is warranted, it should be tightly targeted, transparently costed and explicitly temporary. […] To protect the adjustment, these offsetting measures should be set out before introduction.” (MIAK’s back-translation of the Hungarian rendering)

The report separately analyses how, in emerging markets, the primary budget balance responds ever more strongly to the rise in interest expenditure. This shows the close link between the interest burden and market access. Applied to the Hungarian 2027 budget: the cost and funding table for each promise (3.2) is precisely the practical form of “offsetting set out before introduction”. And the deficit path including interest expenditure (3.3) makes visible what the IMF describes as the main constraint on fiscal space.

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

6.4.3 Carmen Reinhart and Kenneth Rogoff: This Time Is Different

Reinhart and Rogoff’s 2008 working paper reviews a database of eight centuries of financial crises. They show that global debt crises often spread through commodity prices, capital flows, interest rates and the collapse of investor confidence. Their central thesis is the “this time is different” syndrome:

“The ability of governments and investors to delude themselves, giving rise to periodic bouts of euphoria that usually end in tears, seems to have remained a constant.” (MIAK’s back-translation of the Hungarian rendering)

Applied to the Hungarian situation: the forint bond yield easing from 7% at the start of the year to 5% by the summer (around 5.7% today) and the post-election strengthening of the forint are the product of market expectations, not of decisions already taken. Confidence can reverse quickly if the 2027 budget overshoots the indicated band. That is why MIAK proposes that a yield sensitivity annex should accompany the deficit path (3.3). In this way it is visible in advance how much the loss of confidence would cost.

📖 Source: Carmen M. Reinhart and Kenneth S. Rogoff: This Time Is Different — A Panoramic View of Eight Centuries of Financial Crises (NBER Working Paper No. 13882, 2008)

6.5 International comparison

The 2022 energy crisis brought European examples of consumption-linked, tiered energy price support. In 2023 Germany responded with a gas and electricity price brake: households paid a discounted price for up to 80% of their previous year’s consumption, and the market price for the quantity above that. The scheme kept the support, but the incentive to save was preserved in the upper part of consumption. In Spain, the social electricity discount for vulnerable consumers (bono social) is tied to eligibility and applies to a defined quantity of consumption. For costing promises, the United Kingdom’s practice is the most developed. The independent Office for Budget Responsibility publishes with every budget, measure by measure, whether it considers the government’s cost estimates plausible. In the Netherlands, the economic policy analysis bureau (CPB) also costs the parties’ programmes before elections. The common element: the price and funding of a measure are public before the decision, and an independent body gives its opinion on them. In Hungary this role can be filled by the Fiscal Council, if the table under 3.2 reaches it before the final vote.

Economy

  • G1 — Data-driven budget
  • G20 — Economic policy impact assessment system (Drucker audit)
  • G21 — Systematic review of public expenditure
  • G23 — Public debt sustainability framework
  • G25 — Energy price shock preparedness plan

Social policy

  • SZ1 — Targeted support
  • SZ13 — Pension adequacy and sustainability

Employment policy and labour market

  • FO10 — Modernisation of wage bargaining — tripartite wage coordination forum

Environment and climate

  • K6 — Building energy efficiency programme
  • K7 — Energy market shock resilience

Proposed new programme point: A cost and funding table for each promise with every budget bill, with the opinion of the Fiscal Council, and an interest expenditure sensitivity annex — for the Economy area.

6.7 List of sources

Press sources (MIAK press monitor, 3 October 2026 — topic 1):

Knowledge base references (books):

  • 📖 IMF: World Economic Outlook — Navigating Global Divergences (2023)
  • 📖 IMF: World Economic Outlook — Global Economy in Flux (2025)
  • 📖 Carmen M. Reinhart and Kenneth S. Rogoff: This Time Is Different — A Panoramic View of Eight Centuries of Financial Crises (NBER Working Paper, 2008)

MIAK internal materials:

Supplementary public data sources:

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