Part I — Situation overview

According to the preliminary flash report published by the Ministry of Finance on 5 October 2026, the central subsystem of general government closed September with a deficit of HUF 92.8 billion. This is HUF 210.4 billion better than a year earlier. The nine-month cash-flow deficit is HUF 5,261.9 billion. Of this, HUF 2,186.9 billion is the EU pre-financing in August, that is, the domestic advance funding of projects of the Recovery and Resilience Facility (RRF, the EU’s post-pandemic recovery fund). Without it, the deficit is HUF 3,075 billion, HUF 253.7 billion smaller than last year. According to Finance Minister András Kármán, the spending of the first quarter before the election has been “worked off”. Prime Minister Péter Magyar wrote of a HUF 1,200 billion improvement in the balance over four months. The picture has two faces. Interest expenditure fell by HUF 726 billion over nine months, but net VAT revenue declined. According to the ministry itself, part of the September improvement is temporary: spending on professional appropriations managed by chapters (envelopes earmarked by ministries for programmes) fell by 61%, and the utility subsidy was HUF 154 billion lower, for scheduling reasons.

This is the first full quarter already shaped by the new government’s budgetary practice. MIAK has previously dealt with the breakdown of the record August deficit and the official budgetary legacy. Now the environment has changed. According to an analysis by GKI Economic Research, the yield on the ten-year forint government bond fell from 7.17% in March to 5.03% by June, and is 5.74% today. The main reason for the fall is the intention to introduce the euro in 2030. Meanwhile, yields in the developed world have risen to multi-decade highs, and the French ten-year bond stands at 4.94%. The European Commission has launched an infringement procedure over the tax advantage of Hungarian retail government securities. According to the Prime Minister’s earlier statement, the Fiscal Council (the independent body laid down in the Fundamental Law that gives its opinion on how well-founded the budget is) will receive the draft 2027 budget for its opinion by 15 October.

MIAK’s reading: the September figure is good news, but the credibility of the deficit path is not decided by monthly data. The interest saving does not stem from spending discipline but from a favourable market environment, and amid the global rise in yields this may quickly run out. On the road to the euro, the government must therefore prove that the improvement is durable and does not consist of deferred payments and a favourable interest rate environment.

Part II — Foundations in the literature

Three sources frame the topic. According to the 2025 country survey on the European Union and the euro area by the OECD (the organisation for economic co-operation of developed countries), the new EU budgetary rules are built on a multi-year, country-specific debt path. Compliance can be improved by well-equipped national independent fiscal institutions (IFIs, Independent Fiscal Institution). The European Commission’s 2026 macroeconomic report warns that the favourable gap of recent years between interest rates and the nominal growth of gross domestic product (GDP) is disappearing, so debt ratios may rise again. This calls into question how durable the Hungarian interest saving is. According to the data of Carmen Reinhart and Kenneth Rogoff (Harvard economists, researchers who processed eight centuries of the history of financial crises), sudden, large capital inflows regularly precede debt crises. The cheap credit that comes with the introduction of the euro could set off exactly such an inflow. Together, the three sources say: the reduction of the deficit is credible if an independent body checks it, if it does not rest on a favourable interest rate environment, and if the credit-market risks of convergence are dealt with in advance. 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 steps. The first makes the composition of the deficit reduction visible, the second provides an independent forecast of the path required for the euro, and the third prepares for the pre-euro credit-market risks.

3.1 A quarterly path account: permanent savings, deferrals, interest and revenue separately (first edition by 30 November, for Q3)

The monthly flash report is on a cash-flow basis: it shows when money moves, not when the liability arises. The EU yardstick, however, is the ESA methodology (European System of Accounts, the EU’s uniform statistical accounting), which records the liability when it arises. MIAK proposes that the Ministry of Finance publish a short path account every quarter. In it, the annual change in the deficit should be broken down into four items. First: permanent spending cuts that come from a terminated or reduced programme. Second: deferred spending that has only been pushed back to later, for example the HUF 154 billion scheduling deviation in the utility subsidy. Third: the change in interest expenditure, broken down separately into the effects of yield changes and of the debt stock. Fourth: the revenue side, with the reasons for the decline in net VAT revenue shown separately. The document should also show how the cash-flow deficit relates to this year’s 7.5% ESA target. The commenters quoted by Magyar Nemzet asked precisely how much frozen investment lies behind the better figure. Only an item-by-item breakdown can answer this. According to the European Commission’s 2026 report (see 6.4.2), the favourable interest rate environment is not lasting, so the improvement coming from interest must be visible separately. This is an application of the G1 data-driven budget programme point, while for classifying permanent savings the expenditure review principle of G21 applies.

3.2 An independent path forecast by the Fiscal Council for the 3% euro condition (before the final vote on the 2027 bill)

One of the conditions for introducing the euro is that the general government deficit must not exceed 3% of GDP. This is one of the Maastricht criteria (the economic conditions for euro-area membership laid down in the EU treaty). MIAK proposes that the Fiscal Council, together with its opinion on the 2027 draft, publish its own independent forecast of the 2027–2030 deficit and debt path. The forecast should state in which year the deficit could fall below 3% under unchanged policy. It should also contain two risk scenarios. One: yields turn out 1 percentage point (pp) above plan, because of spillover from the French and global rise in yields. The other: the tax exemption of retail government securities ends or is restructured as a result of the infringement procedure, and this changes the share and price of retail financing. The Government should respond to the opinion item by item, according to the “comply or explain” principle: where it departs from the Council’s recommendation, it should give reasons. For this, the Council needs a stable budget and data access with deadlines. The OECD’s 2025 report (see 6.4.1) asks exactly this of national fiscal institutions. On 3 October MIAK asked the Government for a path extended with interest expenditure. The new element is independent scrutiny. This is an application of the G23 public debt sustainability programme point, while treating retail savings in a way compatible with EU rules belongs to the G13 capital-market programme point.

3.3 Pre-euro credit-market preparation: loosely calibrated limits now, a reserve-building rule for the upswing (by the first half of 2027)

According to an analysis by economist Balázs Égert published on Telex, the biggest risk of the euro is not entry but credit that is too cheap. If domestic inflation is higher than in the euro area, the Hungarian real interest rate may be very low under the common interest rate, and this can set off overheating in the credit and housing markets. As a euro-area member, the interest rate is no longer set by the Magyar Nemzeti Bank (MNB) but by the European Central Bank (ECB). The tool of defence is therefore macroprudential policy, that is, regulation that watches the risks of the financial system as a whole. Two such limits are in operation today: the debt-service-to-income limit (DSTI) and the loan-to-value limit (LTV). The legal possibility of a debt-to-income limit (DTI) has existed since 2023, but it has never been applied. Respecting the independence of the central bank, MIAK proposes that the MNB introduce the DTI, the maximum maturity and the interest rate stress test already now. The calibration should be loose enough to affect only a small share of new loans. That way, in the upswing only a parameter needs to be adjusted, not a new system built. On the Government’s side, two rules are needed. Part of the extra revenue of the upswing must be set aside, according to the G15 countercyclical fiscal stabiliser principle (state spending in a downturn, reserve-building in an upswing). And as market interest rates fall, the state’s mortgage interest subsidy should not be expanded. According to the experience of Reinhart and Rogoff (see 6.4.3), a sudden capital inflow is the antechamber of crises. This is an application of the G22 financial stability programme point.

The three measures are bound together by one principle: on the road to the euro the market prices the future, so the government must credibly prove the future path. The quarterly account makes the past transparent, the independent forecast makes the future verifiable, and the credit-market preparation ensures that the benefits of convergence do not turn into a crisis.

Part IV — Expected effects and risks

Dimension Expected effect Risk
Budget Permanent and deferred savings are separated; the interest gain is not mixed up with spending discipline The classification may be disputed if the ministry itself decides what counts as permanent
Money market and interest burden The independent forecast may reduce the risk premium (the difference between the Hungarian and the reference yield) If the Council’s forecast is worse than the government’s, it may cause a rise in yields in the short term
Households Credit limits prevent excessive indebtedness before the euro brings cheap credit The DTI and the maturity limit may affect young first-time buyers the most
Savers The fate and cost of the tax exemption become predictable in advance The end of the tax advantage may reduce retail demand for government securities and make state financing more expensive
Institutions The role of the Fiscal Council is strengthened, and the debate is about numbers Without adequate staff and data access the forecast remains a formality

The main question to weigh is timing. A stricter, credible path can pay off immediately through yields. According to Portfolio, Péter Virovácz, analyst at ING Bank, named precisely a stricter-than-expected and credible consolidation path as a domestic development that could reduce the risk premium and even make an interest rate cut possible. Spending cuts that are too fast, however, may further slow weak growth. The path account helps here, because it shows how much of the saving comes from deferred investment. From a growth perspective, this item is the most expensive.

For the credit limits, the risk is tightening too early. That is why MIAK proposes a loose initial calibration. The Czech central bank applied the debt-to-income limit earlier, then phased it out, but kept the tool and the experience. In the government securities matter the risk is the reverse. If the Government only reacts at the end of the procedure, retail financing may change abruptly. According to Portfolio’s calculation, on an investment of HUF 10 million as much as HUF 154 thousand a year may depend on the tax exemption. That is why it matters that the impact of the change appears in the independent forecast.

Part V — Measurability and summary

5.1 What is worth following? (suggested KPIs)

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

  • The actual value of the 2026 ESA deficit compared with the 7.5% target. Starting estimates: Fitch 6.4%, MNB 6.9% (Portfolio, 5 October 2026). It is worth following what share of the improvement is permanent according to the quarterly account.
  • The difference between the yield on the ten-year forint government bond and the average yield on ten-year bonds issued in euros. Starting value: 5.74% against 4.1% (GKI, HVG, 6 October 2026). It is worth following whether it narrows or widens after the 2027 budget is submitted.
  • The year for which the Fiscal Council’s independent forecast considers a deficit below 3% likely. Target value: the forecast should be public before the final vote on the 2027 budget and be consistent with the 2030 euro target.
  • The application of the debt-to-income limit and the interest rate stress test. Target value: a loosely calibrated rule in operation by the first half of 2027, with quarterly central bank data on the amount of new mortgages relative to income.

5.2 Summary

MIAK’s request is addressed to three parties. It asks the Ministry of Finance for a quarterly path account that separates permanent savings, deferred payments, interest gains and revenue changes. It asks the Fiscal Council for an independent path forecast alongside the 2027 draft, with yield and taxation risk scenarios, and asks the Government for an item-by-item response to it. It proposes that the MNB build up the pre-euro credit limits before the credit boom (a rapid, self-reinforcing surge in the stock of credit). Parliament decides on the budget act, and the central bank acts independently within its own competence. The September figure is a good starting point, but on the way to the euro it is the path that counts, not the month.

Of MIAK’s foundational values, data-drivenness and accountability are concerned here. Data-drivenness, because the quality of the deficit reduction can only be judged from an item-by-item breakdown, not from the monthly headline figure. Accountability, because the independent forecast and the “comply or explain” response oblige the Government to justify publicly if it departs from the professional recommendation.

Part VI — Justifications and further sources

6.1 Press framing by spectrum

In the business press, Portfolio carried the most threads. Its article “Mérsékelt hiányt termelt a költségvetés szeptemberben” reported the ministry’s data but stressed that a single month cannot be the final yardstick, and that the decline in net VAT revenue is not a favourable development. The paper also recalled the deficit estimates of Fitch and the MNB for this year, which are more favourable than the government target. Its inflation preview, ahead of Wednesday’s data from the Hungarian Central Statistical Office (KSH), put the emphasis on fuel prices. Its podcast was about the infringement procedure threatening the tax exemption of government securities. An opinion piece by Péter Ákos Bod described the change of government as a historic opportunity, but for a tight accession path urged the phasing out this year of the inherited market-distorting interventions (the article was not publicly downloadable, only its introduction). An analysis by Gergely Csiki highlighted that the Government must at the same time convince investors with a low deficit target and deliver on its promises (the article was not publicly downloadable, only its introduction).

In the liberal-left band, HVG carried GKI’s analysis: Hungarian yields are moving against the international rise because of euro expectations, but if this story is called into question, yields may rise quickly. Telex’s Névérték blog wrote not about the entry conditions but about the risk after entry: credit that is too cheap. Népszava’s opinion piece (by economist Csaba Martényi) listed eight advantages of the euro and called the failure to introduce it an omission of the Orbán era. In the general public-affairs band, 24.hu reported the social media assessments of the Finance Minister and the Prime Minister, recalling the political debate. Index presented the tension in the French government bond market, which is the external environment of Hungarian financing. In the conservative band, Magyar Nemzet collected the comments under the Finance Minister’s post: they called for accountability on frozen investments, unfulfilled promises and the 7.5% deficit target. Mandiner did not appear with fresh material in MIAK’s press monitor on this day.

6.2 Facts and data

Balance of the central subsystem of general government, 2026 (preliminary data of the Ministry of Finance, Portfolio and 24.hu, 5 October 2026):

Indicator Value
September deficit HUF 92.8 billion (HUF 210.4 billion smaller than in September 2025)
Nine-month deficit HUF 5,261.9 billion
Of which August RRF pre-financing HUF 2,186.9 billion
Nine-month deficit without pre-financing HUF 3,075.0 billion (HUF 253.7 billion smaller than a year ago)
Change in interest expenditure over nine months −HUF 726 billion compared with the previous year
Spending on professional appropriations managed by chapters in September −61% compared with the same month of the previous year (partly temporary factors)
Subsidy for public utility services HUF 154 billion less (scheduling deviation)
Removal from revenue of the amount received from the Modernisation Fund in July HUF 195 billion (increases the deficit)
Net VAT revenue declined (amount not given in the article)

Change in the annual cash-flow deficit plan (Portfolio, 5 October 2026): original plan HUF 4,218 billion; raised to HUF 5,445 billion in November 2025; the new government raised it to HUF 7,110 billion in the summer, the ESA equivalent of which is 7.5% of GDP. According to Magyar Nemzet, the original deficit target was 3.7%. Fitch expects a deficit of 6.4% this year, the MNB 6.9%.

Public debt (24.hu and Magyar Nemzet, 5–6 October 2026): 74.6% of GDP at the end of 2025, 77.9% in the first quarter; the amended path assumes 77.5% by the end of the year.

Yield environment (GKI, HVG, 6 October 2026; Index, 6 October 2026):

Indicator Value
Yield on the 10-year forint government bond March 2026: 7.17%; June: 5.03%; now: 5.74%
Average yield on 10-year government bonds issued in euros 3.3% (end of 2025) → 4.1%
Yield on the US 30-year government bond above 5.3% (summer 2026)
Yield on the French 10-year benchmark bond 4.94% (5 October), the highest value in the euro area; French public debt is 120% of GDP

Inflation (Portfolio, 6 October 2026): 1.3% in August, 1.2% in July. KSH publishes the September figure on 7 October; the median of analysts’ expectations is 1.8%. Fuel prices rose by more than 6% month on month. The MNB’s new inflation target, valid from 2028, is 2.5%.

Retail government securities (Portfolio, 5 October 2026): the European Commission has launched an infringement procedure over the tax advantage of Hungarian retail government securities over the bonds of other countries. On an investment of HUF 10 million, as much as HUF 154 thousand a year may depend on whether interest income remains tax-exempt.

Mortgage market (Telex, 6 October 2026): the Home Start Programme (Otthon Start Program) offers first-time buyers loans at a fixed 3% interest rate; the average interest rate on new mortgages is thus roughly 3 percentage points below the market rate. The average repayment burden has not increased, but the average loan-to-value ratio of new loans has risen, and borrowers have taken out much larger amounts relative to their income.

6.3 Policy dimensions

  • Economy (programme points) — the quarterly path account as an element of the data-driven budget (programme point ID: G1), the classification of permanent savings (programme point ID: G21), the independent deficit and debt path forecast (programme point ID: G23), setting aside the extra revenue of the upswing (programme point ID: G15), restructuring the taxation of retail government securities in a way compatible with EU rules (programme point ID: G13), pre-euro macroprudential preparation (programme point ID: G22).

6.4 Literature in detail

6.4.1 OECD: Economic Surveys: European Union and Euro Area 2025

The OECD’s 2025 report sets out the new EU budgetary rules in a box. Instead of the many earlier target figures, a single indicator has become the yardstick: the net expenditure path, that is, the growth of primary expenditure corrected for discretionary revenue measures, cyclical unemployment spending and one-off items. Every country submits a multi-year plan, by the end of which debt must be on a plausibly declining path and the deficit must stay below 3%. Countries with a deficit above 3% must improve their balance in structural terms by at least 0.5% of GDP a year. The report gives national independent fiscal institutions a key role in enforcement:

“While ensuring that rules are applied consistently, well-equipped and effective national independent fiscal institutions can improve compliance and national ownership of the new framework.” (own translation)

According to the report, fewer than a third of EU institutions have stable funding protected by law, and responses to data requests mostly have no deadline. The new directive obliges governments to follow the recommendations of the independent institution or to explain the deviation. Applied to the Hungarian situation: the Fiscal Council’s independent path forecast (3.2) and the Government’s item-by-item response would implement exactly this mechanism. That way the path required for the euro would not be merely a government promise.

📖 Source: OECD: Economic Surveys: European Union and Euro Area 2025

6.4.2 European Commission: 2026 European Macroeconomic Report

According to the Commission’s 2026 macroeconomic report, the budgetary position of the member states has improved since the pandemic, but the interest rate environment is at a turning point. Rising refinancing rates increase interest expenditure, and this makes the gap between interest and growth unfavourable (abbreviated in English as r–g, the difference between the interest rate and the rate of nominal GDP growth). According to the report:

“Public debt dynamics are becoming more challenging as the favourable differential between interest rates and nominal GDP growth of recent years disappears.” (own translation)

According to the Commission, the budget balance will therefore be the main driver of changes in the debt ratio in the coming years. Applied to the Hungarian data: the nine-month interest saving of HUF 726 billion depends on the interest rate and inflation environment, not on spending discipline. If the global rise in yields spills over, this item may quickly reverse. That is why the interest effect must be visible separately in the quarterly path account (3.1).

📖 Source: European Commission: 2026 European Macroeconomic Report (European Economy Institutional Paper 328, 2025)

6.4.3 Carmen Reinhart and Kenneth Rogoff: This Time Is Different

Reinhart and Rogoff’s 2008 working paper examines financial crises using eight centuries of data from 66 countries. They summarise one of the strongest regularities in the literature on modern crises as follows:

“Countries experiencing sudden, large capital inflows are at high risk of having a debt crisis.” (own translation)

According to the authors, this relationship can be shown at national, regional and global level since 1800. Applied to Hungary’s road to the euro: convergence itself brings capital inflows and falling interest rates. The Portuguese, Spanish, Greek and Slovenian experience of the 2000s, recalled by the Telex analysis, showed exactly this. Cheap credit flowed into the housing market, and the reversal brought a credit crunch and a downturn. That is why MIAK proposes that the credit limits (3.3) be ready before the inflow, not after it.

📖 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 euro area’s experience in the 2000s is the most important lesson. After entry, Portugal, Spain, Greece and Slovenia experienced low real interest rates, rapid credit growth and overheated domestic demand. Under the common monetary policy, the national central bank no longer had an interest rate tool. Ireland introduced loan-to-value and loan-to-income limits for mortgages in 2015, as a lesson from the 2008 property market collapse. In the Czech Republic the debt-to-income limit was mandatory and was then phased out, but the central bank’s experience remained. Of the countries that most recently joined the euro, Croatia introduced the common currency in 2023 and Bulgaria in 2026. As for independent fiscal institutions, the OECD highlights that their role in the new EU rules is growing, but their capacity varies greatly between member states. The common lesson: the countries that were able to keep the benefits of convergence were those that institutionalised budgetary discipline and credit-market limits before the upswing.

Economy

  • G1 — Data-driven budget
  • G13 — Capital markets union implementation
  • G15 — Countercyclical fiscal stabiliser
  • G21 — Systematic review of state expenditure
  • G22 — Financial-stability monitoring and shadow-bank regulation
  • G23 — Public-debt sustainability framework

Proposed new programme point: Euro convergence path report: a quarterly account of permanent and deferred savings, with an independent forecast by the Fiscal Council and an item-by-item response from the Government — for the Economy area.

6.7 List of sources

Press sources (MIAK press monitor, 6 October 2026 — topic 1):

Knowledge-base references (literature):

  • 📖 OECD: Economic Surveys: European Union and Euro Area 2025
  • 📖 European Commission: 2026 European Macroeconomic Report (Institutional Paper 328)
  • 📖 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:

  • ÁKK (Government Debt Management Agency) — government bond yields and financing plan — https://www.akk.hu/

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