Hungary recorded its second-largest monthly budget deficit as Prime Minister Viktor Orban increased election-related spending ahead of the 12th April vote.
The Economy Ministry reported on Monday that February’s shortfall reached 2.14 trillion Forint ($6.4 billion), following a 32 billion Forint surplus in January.
This marked the largest monthly deficit since the onset of the pandemic in late 2020.
Orban has been boosting government spending in an effort to secure a fifth consecutive term, facing strong competition from Peter Magyar’s opposition Tisza party, which leads by double digits among decided voters in several independent polls, Bloomberg reports.
Measures such as expanded lifetime income tax exemptions for mothers, mortgage subsidies, and higher wages for teachers and public-sector employees all contributed to February’s budget deficit, the Economy Ministry said.
Earlier this month, Orban abandoned the government’s fiscal target for next year, stating he does not intend to tighten the budget after the election. He forecast a shortfall of 5% of GDP for both this year and the next, compared with official projections of a 4% deficit in 2027 and 3% in 2028.
Meanwhile, Tisza has promised to curb spending and reduce certain taxes while increasing revenue, including from frozen European Union funds that Magyar says could be accessed quickly through measures to tackle corruption and strengthen the rule of law.
S&P Global Ratings currently places Hungary’s credit just above junk status, while Fitch Ratings downgraded the outlook on Hungary’s second-lowest investment grade to negative from stable on 5th December, citing “significantly worsened” public finances driven by election-related spending.