Published by Global Banking & Finance Review®
Posted on March 24, 2026
3 min readLast updated: March 24, 2026
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S&P Global warns that Hungary’s April 12, 2026 election winner must rein in social spending amid a near‑40% budget deficit in Jan–Feb and economic risks from energy shocks, growth forecasts lowered, and possible ratings downgrade.
By Gergely Szakacs
BUDAPEST, March 24 (Reuters) - The winner of Hungary's April 12 parliamentary election will have to take steps to rein in social spending to shore up state finances amid risks to an economic recovery from the global energy price shock, S&P Global said.
Hungary's budget deficit reached nearly 40% of the full-year target in the first two months of this year amid heavy spending by right-wing Prime Minister Viktor Orban ahead of the ballot, where the veteran leader faces the toughest challenge to his 16-year rule.
S&P said no apparent re-balancing of the medium-term fiscal position after the elections, in combination with rising external pressures, could trigger a ratings downgrade.
"We would anticipate that the incoming government after the 2026 election (regardless of the government composition) will need to engage in consolidation efforts to rein in the trajectory of social spending," S&P told Reuters in an emailed reply to queries.
Orban has said no austerity would be needed after the election to rein in the shortfall, which has exceeded government forecasts in the past years and is seen at around 5% of output.
Centre-right rival Peter Magyar is betting on a quick release of billions of euros in European Union funding, an anti-corruption drive and a wealth tax to shore up state finances.
S&P said recent global economic challenges put downward pressure on its 2.5% growth estimate after three years of near-stagnation. On Monday, Goldman Sachs lowered its growth forecast for Hungary to 1.6% from 1.9% due to the energy price shock.
"Our current negative outlook to Hungary's 'BBB-' rating reflects the potential risk that its fiscal performance could prove materially weaker than our forecasts," S&P said.
It said the energy price shock could lift both inflation and fiscal costs for Hungary due to the high energy intensity of the economy. S&P does not expect Hungary to receive any funding from the EU's pandemic recovery facility due to time constraints.
Earlier this month, Fitch Ratings said reversing weak growth and the deterioration of public finances and policy credibility would be the main challenges for Hungary's next government after larger-than-expected fiscal easing ahead of the ballot.
(Reporting by Gergely Szakacs; Editing by Susan Fenton)
Heavy social spending ahead of the election pushed the budget deficit higher, increasing risks to fiscal stability amid external economic pressures.
A lack of fiscal consolidation and increasing external pressures could lead to a ratings downgrade for Hungary.
S&P does not expect Hungary to receive any EU pandemic recovery facility funding due to time constraints.
Rising energy prices have led S&P and Goldman Sachs to lower Hungary's GDP growth estimates and see higher inflation risks.
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