After Viktor Orban's ouster this year, the new team faced hefty upfront bills to access European Union money. Those prepayments showed up hard and fast in August, pushing the monthly deficit sharply higher while the related EU inflows are still in the pipeline.
The finance ministry reported a 5.2 trillion forints shortfall in the first eight months of the year, including a 2.3 trillion forints gap in August. That eight month figure equals $16.5 billion. Of the EU package, the Recovery and Resilience Facility totals 10 billion euros, or $11.6 billion.
The ministry noted that, without the RRF related outlays, August would have registered 124.3 billion forints in red ink. "The favorable budget trends experienced since May essentially remain intact," it said. It also indicated that the EU was expected to begin sending RRF funds in December.
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July was a bright spot, as Hungary logged the biggest monthly budget surplus on record while new Prime Minister Peter Magyar moved to tackle overpriced state contracts and the hangover from Orban's campaign spending. For 2024, the cabinet is projecting a deficit equal to 7.5% of GDP, which it says is more than twice the plan the prior government published. And despite what he described this week as an extremely difficult fiscal backdrop, Magyar said he would still follow through on social spending promises made before April's election.
EU money arriving only after upfront costs makes Hungary's monthly numbers noisy, even as the government targets a sizable full year gap. That mix can sway the currency and local rates, which in turn influences the prices of anything tied to Hungary's economy.
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