Part I — Situation overview

Finance Minister András Kármán and Prime Minister Péter Magyar presented the spending side of the 2027 budget at a joint press conference on Tuesday, 20 October. In the afternoon the ministry’s leaders held a background briefing for analysts and journalists (Telex). The deficit target (the annual general government deficit set in advance as a share of gross domestic product, GDP) is 4.9 per cent. The improvement is supported by a spending cut of HUF 1,465 billion, 1.5 per cent of GDP, and HUF 665 billion of net additional tax revenue. According to the slide presented by Portfolio, 1,018 billion of the package is tied to concrete measures and 447 billion to cutting the operating expenditure of ministries and state-owned companies by at least 10 per cent. The largest items: the review of concession contracts deemed disadvantageous (246.1 billion), curbing economic development subsidies (169.5 billion), the ending of the migration fine (135 billion), and cuts in government communication and events (92.6 billion) and in support for the public media (61.3 billion). The concession item also includes the availability fees of the road network, i.e. the annual fees paid to the concession company for keeping the road usable.

The figures partly answer the request made in MIAK’s analysis yesterday: the itemised breakdown of the saving has become public. According to the Finance Minister, the 2027 draft will be sent to the Fiscal Council on Tuesday, and the Government will submit the bill at the end of the month to the National Assembly, which adopts or amends it. The itemised list, however, opens new questions. In reply to a question from 444.hu, the Prime Minister confirmed that the motorway concession contract will be terminated. Road-concession spending, however, falls only from 566 billion to 320 billion, because the run-off items of ongoing investments remain. On the migration fine, Portfolio wrote that the government has built the outcome of a not-yet-concluded legal dispute into the budget. On the wage bill, the Prime Minister said that there is no official hiring freeze, but vacated posts will not be filled (24.hu, Portfolio).

MIAK’s reading: the direction of the package is right, because the bulk of the saving comes from the state’s own operations and from funds channelled to the former circle of beneficiaries, not from services. Its credibility, however, will be decided on three points. The first is whether the uncertain items appear as uncertain. The second is whether the 10 per cent cut comes from abandoning named tasks or from uniform trimming. The third is whether the direct subsidies replacing the abolished allowances are bound by rules.

Part II — Grounding in the literature

Three sources provide the framework for interpreting the three questions. Susan Rose-Ackerman (professor of law and political science at Yale University, one of the founders of the economics of corruption) describes concessions in her book Corruption and Government as one of the main channels of high-level corruption: in such cases the state receives too little and pays too much, and the loss is borne by the budget. She also points out that the concession holder always fears that a new government will not honour old commitments, so the manner of termination is itself a cost factor. Peter F. Drucker (Austrian-American management thinker, founder of the methodology of measuring organisational effectiveness) regards the systematic abandonment of the past as the first rule of the effective organisation in his work The Effective Executive. For every activity one must ask whether we would go into it today if we were not already doing it. The Executive Board assessment published in the International Monetary Fund’s (IMF) 2025 World Economic Outlook report puts efficiency-enhancing steps first in the adjustment and explicitly warns against blanket, across-the-board spending cuts. The detailed discussion of the literature — author by author, with a paraphrase of the line of reasoning and a quotation — is in section 6.4 Literature in detail.

Part III — MIAK’s concrete proposal

MIAK proposes three measurable measures. All three build on the items presented on Tuesday and relate to the bill to be submitted at the end of the month and to its implementing rules.

3.1 Two conditional items on separate lines: the multi-year net balance of the concession termination and an offset for the migration fine (with the submission of the bill, by the end of October)

The concession review (246.1 billion) and the ending of the migration fine (135 billion) together amount to HUF 381.1 billion, 26 per cent of the total spending cut. Both depend on factors that are not solely in the government’s hands. For the concession, the net size of the saving depends on the terms of termination. What matters is any settlement amount, the expected run-off of the remaining 320-billion line from 2028, and the cost of operation; according to 24.hu, operation will be taken over by Magyar Közút. MIAK proposes that the explanatory memorandum of the bill publish a multi-year net table for the concession item. It should include the abolished fee, the run-off investments, the cost of the operation taken over and the payment linked to the termination, from 2027 until the original expiry of the contract. The termination agreement should be public in line with the A1 public-money dashboard and the A2 public-procurement transparency principle. According to Rose-Ackerman’s argument (see 6.4.1), an orderly, justified termination is not only a legal but also a budgetary matter: it reduces the likelihood and the cost of a legal dispute. According to Portfolio’s summary, the migration fine runs automatically until the infringement ends, and ending it requires a substantive change to the asylum procedure. MIAK therefore asks that the 135 billion appear as a conditional item, and that the bill name in advance the offset in case the daily fine does not end in the first quarter of 2027. The proposal applies an element of the G1 data-driven budget. On 8 October MIAK wrote about the public-procurement side of ending the motorway concession. This proposal makes its budgetary side accountable.

3.2 The 10 per cent operating cut with an abandonment list for each ministry, protecting critical inspection and customer-service posts (together with the chapter appropriations; first report by 30 April 2027)

The 447-billion general operating saving is the least detailed element of the package. According to the Prime Minister, zero wage-bill management applies at the ministries, vacated posts will not be filled, and restructuring and targeted headcount reductions are expected at state-owned companies (24.hu). The risk of a uniform cut of the same proportion for every unit is well known: headcount falls where someone happens to leave, not where the task is least important. This may also have a price on the revenue side of the budget. At the press conference the Prime Minister named inspection as the main tool for tax collection and for curbing pass-through (444.hu, Portfolio). Part of the 929-billion additional tax revenue thus depends precisely on the capacity that may shrink because of unfilled posts. MIAK proposes two steps. First: by 30 April 2027 every ministry and state-owned company should publish an abandonment list, i.e. name which of its activities it is ending or narrowing, and what share of its allotted saving this provides. This is Drucker’s method, organized abandonment: the systematic ending of programmes that do not work, so that resources flow to those that do (see 6.4.2). Second: the Government should define the range of critical posts exempted from the hiring ban, at least in tax and consumer-protection inspection and at customer-service points, and publish their occupancy quarterly. The IMF Executive Board assessment (see 6.4.3) says the same: the adjustment should build on efficiency-enhancing steps, not on blanket cuts. The proposal links the G21 spending review and the KI8 efficiency measurement, and for critical posts the retention goals of the KI6 competitive public-service pay system.

3.3 Rule-based direct support in place of the abolished tao, and publication of government advertising spending by media outlet (with the implementing rules, by 31 December 2026)

Instead of the tao (the allowance allowing part of corporate tax to be offered for sports purposes), the government will give sports organisations HUF 150 billion of direct budgetary support in 2027. The total state sports budget is HUF 453 billion (24.hu). According to the Prime Minister, the amount will not decrease, it will only be decided “in a central, transparent system” (Portfolio). The switch is economically the right direction. The tao was a tax allowance, i.e. state spending that operated as revenue foregone, invisible on the spending side, and whose recipient was chosen by the offering company. Now the spending becomes visible, but the decision also moves to the centre. The system is better than the old one only if the allocation rule is public. MIAK proposes that the implementing rules set out by the end of 2026 what share of the 150 billion is allocated by a normative, headcount- and results-based formula and what share through calls for applications. They should also set out the role of independent assessors and the conflict-of-interest rules. Awarded support should be public by beneficiary, in machine-readable form, and the accounts of facilities built from former tao funds should be settled by a separate closure procedure. The IMF assessment (see 6.4.3) explicitly lists tax expenditures among the items that can be reformed. The same principle applies to the government advertising budget remaining after the 92.6-billion communication cut. Its allocation is worth publishing by media outlet, quarterly, in line with KU2 media-pluralism monitoring. And the 61.3-billion cut to the public media should be tied to a funding formula fixed in law under programme point A7, so that the size of the support is not the subject of an annual political bargain. The proposal extends the KU5 principle of open culture funding to sport.

The three proposals are linked by one common principle: a saving is lasting if it is visible what ends in its place and what replaces it. The conditional item must be written into the law and its implementation as conditional, the cut as a named task, and the new support as a rule. Rose-Ackerman, Drucker and the IMF say the same thing from three sides: the quality of deficit reduction matters at least as much as its size.

Part IV — Expected effects and risks

Dimension Expected effect Risk
Economy Marking the conditional items separately reduces the likelihood of having to touch the budget during the year; a credible plan can moderate the risk premium (spread), i.e. the extra that investors demand for Hungarian government bonds. If the concession net table shows a large termination cost, the presented 246.1 billion may be smaller in 2027, and this appears as worse news compared with the original plan.
Public administration The abandonment list ties the cut to tasks; protecting critical posts preserves inspection and customer-service capacity. Ministries may put formal, low-value items on the list, while the real saving continues to come from unfilled posts.
Society Administration and consumer-protection inspection do not weaken because of the saving; the allocation of sports support becomes traceable. Among sports organisations, the uncertainty of the transition year may hit smaller clubs working with youth players the hardest.
Transparency and media Publication by beneficiary and advertising data by media outlet reduce the scope for discretionary allocation. Formula-based public-media funding may make the budget rigid; publication alone does not prevent the circle of beneficiaries from reorganising.

The main trade-off lies in proposal 3.1. Marking the conditional items separately is more honest, but politically uncomfortable, because 381.1 billion of the presented 1,465 billion looks less certain. According to MIAK, this is the lesser risk. If no agreement is reached on the migration fine and no offset has been named in advance, the deficit slips during the year and the credibility of the 4.9 per cent target is damaged. The MBH analyst asked by Portfolio called exactly this the target’s “forced path”. Proposal 3.2 becomes risky if the range of critical posts opens too wide and the exceptions eat up the saving. The range must therefore be defined narrowly, on a task basis. For proposal 3.3 the stake is speed: the implementing rules must be ready by 1 January, otherwise the transition will preserve the old, bargain-based practice.

Part V — Measurability and summary

5.1 What is worth following? (suggested KPIs)

MIAK suggests following these key performance indicators (KPIs):

  • Marking of conditional items: whether in the submitted bill the concession and migration items appear on separate, conditional lines, with a multi-year net table for the concession and an offset named in advance for the fine. Worth following on the day of submission, expected at the end of October.

  • Coverage of the abandonment list: whether by 30 April 2027 at least 70 per cent of the 447-billion operating saving is tied to named activities that have been ended or narrowed.

  • Occupancy of critical posts: whether the number of filled posts in tax and consumer-protection inspection stays at or above the end-2026 level during 2027, with quarterly publication.

  • Publicity of sports support: whether 100 per cent of the 150-billion direct support is public by beneficiary, in machine-readable form, by the end of 2027.

5.2 Summary

The itemised list presented on Tuesday is a step forward: the Government has now named the sources of the saving. MIAK asks the Government that in the bill to be submitted at the end of the month the concession and migration items appear as conditional, with a multi-year net table and an offset named in advance. The 10 per cent operating cut should be based on an abandonment list for each ministry, protecting inspection and customer-service posts. And the 150 billion replacing the tao and the remaining advertising budget should be allocated under a public rule. Two MIAK foundational values are affected. Transparency, because the former tax allowance and the advertising money were risky precisely because the decision was not visible. Now that the spending becomes visible, the decision must be visible too. And accountability, because an uncertain item can only be held to account if it is stated in advance what happens if it does not materialise.

Part VI — Reasoning and further sources

6.1 Press framing by spectrum

Left-liberal band. Telex wrote an analytical report on the background briefing. It highlighted that the revenue figures that most determine the budget, such as VAT revenue, are not yet known. It also pointed out that the saving from dropping items linked to the previous government arises only once: once they are gone, they offer no further deficit-reduction potential. In the part on the advertising tax, the paper indicated that as a media company it cannot independently assess the measure. 444.hu published the itemised list and the amounts calculated back from the GDP-proportional data. To its own question it obtained the answer that the motorway concession contract will be terminated and that there is “no bargain with the oligarchs”. HVG provided live coverage of the press conference. Népszava’s article on the topic was not included in the processed material.

Public-affairs band. 24.hu covered the question-and-answer session of the press conference: the expected abolition of the migration fine, the powers returned to local governments, wage-bill management and the process of taking over the concession. In its sports section a separate article asked who will distribute the 150 billion and what will happen to the old tao cases. Index highlighted from the Prime Minister’s interview that four ministers in the government have a veto over the budget, and that it has been used “one and a half” times. ATV asked K&H Bank’s analyst, who considers the deficit target achievable, but sees the implementation of the roughly 1,500-billion spending cut and inflation above 3 per cent as risks.

Economic band. Portfolio gave the most detailed, slide-by-slide breakdown, in a “quite extreme spending cut” frame. It published a separate analysis of the legal background of the migration fine, according to which the government built the conclusion of an unresolved legal dispute into the budget. In its market round-up, investment analysts stressed that the target has been met, but that the deficit target below 5 per cent puts the government on a forced path.

Government-critical conservative band. Magyar Nemzet wrote in an “austerity” frame. It highlighted that besides the cuts in subsidies, a HUF 929-billion tax-increase package is needed, which also reaches large companies and consumers. Another of its articles highlighted in its title the “hard times” of the public sector: layoffs and pay freezes at state-owned companies, hiring restrictions at ministries. Mandiner’s material was not in the processed set.

6.2 Facts and data

Data Value Source
2027 deficit target 4.9% of GDP (2.6-percentage-point improvement) Portfolio, 20 October 2026
Total spending cut HUF 1,465 billion (1.5% of GDP) Portfolio; 444.hu, 20 October 2026
of which concrete measures HUF 1,018 billion Portfolio, 20 October 2026
of which operating expenditure (min. 10%) HUF 447 billion Portfolio; Magyar Nemzet, 20 October 2026
Concession contracts HUF 246.1 billion Portfolio; 444.hu
Road-concession spending HUF 566 → 320 billion 444.hu, 20 October 2026
Economic development subsidies HUF 169.5 billion Portfolio
Ending of the migration fine HUF 135 billion Portfolio; 24.hu
Reform of public-interest asset-management foundations (kekva) HUF 119.3 billion Portfolio
Government communication and events HUF 92.6 billion Portfolio
Real-estate and prestige investments HUF 87.7 billion Portfolio
Support for the public media HUF 61.3 billion Portfolio
Operation of the Directorate-General for Public Procurement and Supply (KEF) HUF 56.2 billion Portfolio
Support for foundations and civil society organisations HUF 50.3 billion Portfolio
Net additional tax revenue HUF 665 billion (929 billion additional − 264 billion household tax cut) 444.hu; Magyar Nemzet
Structure of the migration fine EUR 200 million lump sum + EUR 1 million per day (900 thousand asylum, 100 thousand return component) Portfolio, 21 October 2026
Accumulated daily fine 860 days, EUR 1.06 billion, approx. HUF 386 billion (at HUF 364/EUR) Portfolio, 21 October 2026
Direct sports support instead of tao HUF 150 billion; total state sports budget HUF 453 billion 24.hu, 20 October 2026
Primary balance and interest burden 2027 −1.1% and 3.8% of GDP respectively Telex; 444.hu, 20 October 2026
Planning exchange rate HUF 364/EUR Portfolio; 444.hu

Three remarks belong to the figures. ATV wrote of a spending cut of “roughly 1,500 billion”; this is a rounding of 1,465 billion. For the concession item, Portfolio named the M5 and M6 motorways, 24.hu the M2 and M6; the official itemised breakdown will be clear from the bill. For the public media, besides the 61.3-billion cut shown on the slide, the Prime Minister said in an interview with Telex that the annual budget of the public media could fall to roughly 60 per cent of its former level (Portfolio). The relationship between the two figures will be seen precisely from the bill. The sources reported different values for the 2027 level of government debt, so it is not included here.

6.3 Policy dimensions

  • Economy (programme points) — separate marking of the conditional items and the multi-year net table (G1), the abandonment list as a spending review (G21), ex-post impact assessment of the ended and restructured programmes (G20);
  • Public administration and e-government (programme points) — task-based implementation of the 447-billion operating saving (KI8) and retention of critical posts (KI6);
  • Transparency and anti-corruption policy (programme points) — publicity of the concession termination (A1, A2) and formula-based funding of the public media (A7);
  • Transport and infrastructure (background material) — the takeover of motorway operation by Magyar Közút, the cost of replacing the availability fees;
  • Culture (programme points) — publication of government advertising spending by media outlet (KU2) and extension of the principle of open, rule-based funding to sport (KU5).

6.4 Literature in detail

6.4.1 Susan Rose-Ackerman: Corruption and Government

In the chapter on high-level corruption, Rose-Ackerman describes large public contracts and concessions as the costliest channel of corruption. Such deals have a large impact on the budget and on the country’s growth prospects. In her summary, in such cases the state pays too much for large purchases and receives too little from concessions and privatisations. The loss must be made up either by extra taxes or by curtailing public services. Another line of her reasoning applies directly to termination. The holder of a corruptly obtained concession fears two things: that the new government will not honour old commitments, and that arbitrary conditions will be imposed on it after the investment. It therefore settles in for the short term and defends the contract by every means. The author also emphasises that an independent judiciary is a necessary guarantee of the impartiality of concession and privatisation deals, even if some judgments are inconvenient for reformers. In the case of the Hungarian motorway concession, this means that the termination brings the hoped-for saving if it is orderly, justified and public. The risk and the cost of a legal dispute are themselves a budget item, which is why point 3.1 asks for the multi-year net table. The author’s book is a copyrighted work, so her line of reasoning appears here in paraphrase.

📖 Source: Susan Rose-Ackerman: Corruption and Government — Causes, Consequences, and Reform

6.4.2 Peter F. Drucker: The Effective Executive

In the chapter on concentrating efforts, Drucker holds that the first rule of the effective executive is to abandon the part of the past that no longer produces results. The effective executive regularly reviews their own programmes and those of their associates and asks: if we were not already doing this, would we go into it now? If the answer is not an unconditional yes, the activity is dropped or sharply curtailed, and the best people freed up are moved to the opportunities of the future. Drucker especially emphasises that government is particularly prone to organisational obesity. Its programmes quickly become obsolete, and if they are not ended, the state collapses under its own weight. He considers systematic abandonment the only path to renewal. Within this framework the 10 per cent operating cut can be implemented in two ways. One is uniform trimming, which weakens everything a little. The other is abandoning named tasks, which strengthens the remaining ones. The abandonment list in point 3.2 asks for the second path. The author’s book is a copyrighted work, so his line of reasoning appears here in paraphrase.

📖 Source: Peter F. Drucker: The Effective Executive

6.4.3 International Monetary Fund: World Economic Outlook 2025

The IMF’s autumn 2025 report describes medium-term adjustment as a balanced package of spending rationalisation and revenue mobilisation. The adjustment should put efficiency-enhancing steps first and reallocate spending towards high-impact areas. The Executive Board assessment published at the end of the volume sums this up in one sentence:

“They emphasized the need to prioritize measures that raise efficiency of public spending and support sustainable and inclusive private sector led growth, while avoiding blanket spending cuts.”

The same text names the reform of pensions, healthcare, the wage bill and tax expenditures as areas that can create room for growth-supporting spending. The Hungarian 2027 package touches both points. The framework of the 447-billion operating saving sets a uniform proportion, which is why point 3.2 asks that implementation differentiate by task. And abolishing the tao is the restructuring of a tax expenditure, which improves spending efficiency only if the direct support that replaces it is bound by rules. This is what point 3.3 asks for.

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

6.5 International comparison

Canada, 1994–1995: programme review instead of uniform cuts. In the mid-1990s the Canadian federal government cut its spending not by cuts of the same proportion, but by a programme-by-programme review. Each programme was examined on the basis of a common set of questions: does it still serve the public interest, is it a task for the state, and does it work efficiently? Ministries received cuts of different sizes; some programmes were ended, others were kept. The Canadian example is a governmental application of Drucker’s abandonment question, and the model for the abandonment list in point 3.2.

The Netherlands: broad reconsiderations with thematic reports. In 2020 the Dutch government published thematic spending reviews which showed, area by area, what saving and reallocation options exist and what effects they have. The reports were public and gave the political debate a common basis of calculation. The publicity of the Hungarian abandonment list could serve a similar function.

Tax expenditure reports. The budgets of several EU member states account for the estimated value of tax allowances in a separate annex, because as revenue foregone they are not visible on the spending side. Replacing the tao implements this logic in the Hungarian budget for one item: the former tax allowance becomes direct spending. Point 3.3 asks that this visibility be accompanied by an allocation rule.

Economy

  • G1 — Data-driven budget
  • G20 — Economic-policy impact assessment system (Drucker audit)
  • G21 — Systematic review of public spending

Public administration and e-government

  • KI6 — Competitive public-service pay system
  • KI8 — Drucker-based efficiency measurement in public administration

Transparency and anti-corruption policy

  • A1 — Public-money dashboard
  • A2 — Public-procurement transparency
  • A7 — Media pluralism as an institutional guarantee

Culture

  • KU2 — Media-pluralism monitoring
  • KU5 — Cultural participation index and open culture funding

Proposed new programme point: Rule-based sports support system — a statutory ratio between the normative and the application-based parts of the direct support replacing the tao, independent assessment, a public register by beneficiary and a closure procedure for former tao investments — for the Culture area.

6.7 List of sources

Press sources (MIAK press monitor, 21 October 2026 — topic 1):

Knowledge-base references (literature):

  • 📖 Susan Rose-Ackerman: Corruption and Government — Causes, Consequences, and Reform
  • 📖 Peter F. Drucker: The Effective Executive
  • 📖 IMF: World Economic Outlook — Global Economy in Flux (2025)

MIAK internal materials:

  • MIAK policy area: Economy (programme points; programme point IDs: G1, G20, G21)
  • MIAK policy area: Public administration and e-government (programme points; programme point IDs: KI6, KI8)
  • MIAK policy area: Transparency and anti-corruption policy (programme points; programme point IDs: A1, A2, A7)
  • MIAK policy area: Transport and infrastructure (background material)
  • MIAK policy area: Culture (programme points; programme point IDs: KU2, KU5)
  • MIAK press monitor, 21 October 2026 — topic 1, score: 95/100

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