Fitch cuts Hungary’s outlook to negative amid pre-election fiscal spending

Fitch Ratings has affirmed Hungary’s long-term issuer default rating at BBB but revised the outlook from stable to negative, the agency reported on its website.

The decision reflects almost zero economic growth and large-scale fiscal loosening ahead of the 2026 parliamentary elections.

Prime Minister Viktor Orbán’s government has introduced several costly fiscal measures — including the 13th and 14th pension payments — with an estimated total cost of 0.3% of GDP in 2025 and 2.1% in 2026, most of which represent permanent spending.

As a result, Hungary’s fiscal deficit is projected to rise from 5% of GDP in 2025 to 5.6% in 2026. This is nearly twice the average for BBB-rated sovereigns (3%) and significantly above the government’s own target of 3.7%.

The widening deficit will push Hungary’s public debt higher, from 73.5% of GDP in 2024 to 74.6% by the end of 2027.

Fitch also warns that additional populist measures may be introduced in early 2026, further weakening policy predictability and increasing fiscal risks.

According to the agency’s forecasts, the Hungarian economy will grow by only 0.3% in 2025, implying zero average GDP growth over 2023–2025. Investment has been declining for a third consecutive year due to tight monetary policy, reduced EU funding, and heightened uncertainty.

GDP growth is expected to accelerate to 2.3% in 2026.

The revision of the outlook signals that a rating downgrade may follow. Fitch last downgraded Hungary in 2012.

• Hungary will hold parliamentary elections in April 2026. Orbán’s main challenger is Péter Magyar of the Tisza party. On September 21, tens of thousands of protesters in Budapest accused Orbán of spending taxpayer funds on manipulative political campaigns.
• The government’s pre-election spending has also prompted a search for additional revenue. The Ministry of Economy plans to collect HUF 370 billion (USD 1.1 billion) in bank levies in 2026 — twice the previously expected amount.