Hungary’s public finances showed a markedly improved picture in 2025, with the general government deficit narrowing sharply over the first nine months of the year, even as spending continued to rise.
According to the latest data, published by the Central Statistics Office, deficit of the general government sector stood at HUF 909 billion in the third quarter, equivalent to 4.2% of GDP, a slightly weaker result than a year earlier.
The third-quarter balance was HUF 95 billion less favourable than in the same period of 2024, reflecting the fact that expenditures grew faster than revenues during the quarter. Government revenues increased by HUF 529 billion, or 6.3% year on year, while expenditures rose by HUF 624 billion, representing a 6.8% increase.
Within the general government sector, the central government posted a deficit of HUF 831.6 billion in the third quarter. Local governments recorded a HUF 19.8 billion surplus, while the social security funds showed a HUF 57.3 billion deficit.
Despite the quarterly deterioration, the broader fiscal picture improved substantially over the first three quarters of 2025. Preliminary data show that the general government deficit amounted to HUF 1,219 billion, equal to 1.9% of GDP. Total revenues reached HUF 27,585 billion, while expenditures stood at HUF 28,804 billion.
On a year-on-year basis, the budget balance improved by HUF 1,142 billion, corresponding to a 2-percentage-point improvement relative to GDP. The turnaround was driven primarily by strong revenue performance, as total government revenues rose by HUF 2,241 billion, or 8.8%, compared with the first nine months of 2024.
Tax income is the backbone of growth
Tax income provided the backbone of this growth, supported by rising employment and wages. Revenues from taxes on production and imports increased significantly, while income tax receipts and social contributions also recorded double-digit and high single-digit growth rates, respectively. Other revenue categories contributed more moderately to the overall increase.
Spending rose by HUF 1,100 billion over the first three quarters, equivalent to a 4.0% increase, well below the pace of revenue expansion. Higher outlays were mainly linked to rising compensation of employees and increased social benefits.
Interest expenditures fell by HUF 432 billion, a 14.4% decrease, providing substantial relief to the budget. At the same time, public investment moderated, with gross capital formation falling by HUF 85 billion, or 4.5%, compared with the same period of 2024.
