Part I — Situation overview

According to the report published by the Ministry of National Economy (NGM) on 8 May 2026, the central subsystem of the general government closed the end of April with a HUF 3.85 trillion deficit — of which the central budget accounted for HUF 3.74 trillion, the social security funds for HUF 150.3 billion of deficit, while the separated state funds showed a HUF 43.9 billion surplus. In April alone, the central subsystem produced a HUF 429.4 billion deficit, against the April 2025 figure of HUF 376.4 billion. The full statutory annual deficit target of the budget law is HUF 4.22 trillion, while the outgoing government’s informal — non-statutory — deficit target was HUF 5 trillion. By the end of April, 91 per cent of the full statutory target and 77 per cent of the informal target had been used up. According to the prime minister-designate Péter Magyar, the Orbán government’s own fresh calculation also points to an annual deficit rising to 6.8 per cent of GDP — close to the 7 per cent levels seen in the pandemic years of 2020–2021.

The 91 per cent deficit utilisation is not the result of a single shock but the culmination of a structural trend. According to the detailed March data, chapter-managed appropriations had already been utilised at 32 per cent of the annual envelope by the first quarter — more than twice the Q1 2025 figure. These include, among others, financing lines for government communications and flagship state events. The expenditure side is therefore front-loaded, and not solely on account of the usual early-year items (government securities coupon payments, 13th-month and 57th-week pensions). Data arriving in parallel paint a more nuanced picture: the MNB’s international reserves climbed above EUR 60 billion at the end of April — a historic peak — the CSO’s April 2026 inflation reading returned to the level seen at the start of the year (the dynamic gas-price rise has ended), but MOL’s group-level adjusted EBITDA came in at USD 626 million, 10 per cent below the expected USD 695 million. The Upstream business profited from surging oil and gas prices (it produced 55 per cent of total EBITDA), but Downstream is suffering the consequences of the Százhalombatta accident and the January Druzhba attack.

MIAK’s reading: the problem is not that “the deficit has spun out of control”, but that on the closing day of a 16-year governmental cycle, the state of the books structurally reflects the problems of fiscal governance — a 32 per cent Q1 utilisation of chapter-managed expenditures will not be cured by a single year’s stabilisation package. The question, therefore, is not whether an adjustment is needed, but in what structure: in what proportion the revenue-side and expenditure-side instruments will be used, and how it can be ensured that the 32 per cent Q1 “till-emptying” is not repeated in the next cycle.

Part II — Literature foundation

Before turning to MIAK’s concrete proposals, it is worth recording the scientific framework in which the topic is intelligible. Reinhart and Rogoff’s This Time Is Different (2009) treats the recurring pattern of fiscal crises: debt and banking crises return regularly, and the illusion of “this time is different” — politicians’ and investors’ conviction that past crisis patterns no longer apply to the present — is precisely what enables the catastrophes. Within this framework, the 91 per cent deficit utilisation is not a chance anomaly but a typical “early sign” in the serial-default literature. Chapter 22 of János Kornai’s monograph Economics of Shortage (1980) derives the gradations of paternalism and from this the soft budget constraint: if the state — in the parent–child analogy — regularly bails out micro-organisations (firms, budgetary entities, households) from financial consequences, then those involved take no notice of the cost constraint. The 32 per cent Q1 utilisation of Hungarian chapter-managed appropriations is precisely the 21st-century form of this pattern: in an “all or nothing” final year, the rational strategy of governmental bodies is to spend until the till is emptied. In The Effective Executive, Drucker’s concept of organized abandonment says: a leader’s most important decision is not what to do, but what to stop doing — for budget expenditure, this is the principle of zero-base review. The detailed literature treatment is contained in section 6.4 Literature details.

Part III — MIAK’s concrete proposal

MIAK proposes three measurable measures for the new government’s first 100 days.

3.1 Immediate spending moratorium and a mandatory zero-base spending review (within 30 days)

The first action is to halt the 32 per cent Q1 utilisation of chapter-managed appropriations. MIAK proposes that the new government, on the day of taking office, should decree: every ministry and independent budgetary chapter is required to deliver, within sixty days, a zero-base spending-review list — every budget line not justified by a fresh statutory obligation should land on the desk of the Ministry of Finance under Drucker’s “organized abandonment” principle, with the alternative to discontinue placed alongside the alternative to continue (see 6.4.3). In the first round, government-communications (Rogán-type), flagship state-event and NKA-type subsidy lines should be among the priorities for review. In the Klitgaard framework — G6 (rent-seeking) and A2 (public-procurement transparency) — this strengthens the D (discretion) and A (accountability) factors.

3.2 Independent Fiscal Council with 90-day reports (within 90 days)

The operational translation of MIAK’s G1 (Data-driven budget) and G19 (Radical transparency in economic decision-making) programme points: strengthening the operational capacity of the Independent Fiscal Institution (IFI; the domestic counterpart is the Fiscal Council), and a mandatory publication cycle of reports every 90 days on the utilisation dynamics of chapter-managed appropriations, the path of government-securities yields and the route to the Maastricht target. The institutional defence against the “this time is different” syndrome documented by Reinhart–Rogoff is precisely that a body, regularly and independently of the political cycle, signals the early signs of serial default (see 6.4.1).

3.3 Public-money dashboard — every forint traceable (by Q3 2026)

In the first cycle, the joint operationalisation of G1 and A1 (Public-money dashboard): a public, real-time interface on which every budgetary payment (recipient, date, procurement number, legal basis) is accessible without a six-month wait. This is the counter-instrument to Kornai’s soft budget constraint (see 6.4.2): if chapter-managed expenditures become visible one by one, the paternalism mechanism of “taking no notice of the constraint” is broken, because civic and press attention serves as a real-time counterweight. The dashboard is at the same time a precondition for A2 public-procurement transparency and A8 cohesion-policy accountability.

The common principle of the three proposals: not hysteria, but accounting should restore order. The zero-base spending review is the operational form of the Drucker principle, the IFI’s 90-day reports are an early-warning system for the Reinhart–Rogoff serial-default pattern, and the public-money dashboard is the technology for hardening Kornai’s soft budget constraint. Together, the three form an institutional hardening package — without it, the new government’s budgetary promises (income-tax exemption for mothers, doubling of the family allowance, Otthon Start) may collide with the 6.8 per cent deficit, just as the previous cabinet’s fixed expenditure lines did.

Part IV — Expected impacts and risks

Dimension Expected impact Risk
Economy Deficit path stabilises around the 4 per cent band by 2027; the public-debt-to-GDP ratio stops rising Excessive adjustment may push the economy into recession; the G15 counter-cyclical stabiliser only works if fiscal space is restored
Society The public-money dashboard reduces rent-seeking and, in the long term, institutional trust may grow In the short term, the zero-base spending review may affect support systems — in socially sensitive areas (healthcare, social policy) transparent communication is needed
Public administration IFI reports discipline chapter-managed expenditures; mandatory public justification Risk of ministerial pushback; the Drucker principle works only if there is political will at top management level for “organized abandonment”

The dilemmas in the table are simple: a choice has to be made between the speed and the selectivity of the adjustment. MIAK’s position: a fast transparency step (public-money dashboard, IFI reports) and gradual substantive adjustment (zero-base review on a 60-day timeline) — not the other way round. The precondition for the negotiation-based approach is consultation with coalition partners, the affected trade unions and the Fiscal Council on the content of the spending review; the transparency instruments, by contrast, can be introduced immediately by unilateral government decision.

Part V — Measurability and summary

5.1 What is worth tracking? (proposed key performance indicators — KPIs)

MIAK proposes the following indicators for review at 6, 12 and 24 months:

  • Annual general-government deficit relative to GDP — proposed target: 4.5 per cent by end-2026 (against the 6.8 per cent estimate), 3.5 per cent by 2027 (approaching the Maastricht target);
  • Q1 utilisation of chapter-managed appropriations — pushing the 32 per cent figure of 2026 below 25 per cent in 2027;
  • Number of Fiscal Council public reports — proposed: at least four 90-day reports per year, each assessing the early indicators of serial default (external debt, inflation, FX reserves);
  • MNB foreign-exchange reserves — worth tracking whether the current EUR 60 billion peak does not erode under adjustment; floor target: not below EUR 50 billion.

Important: these are MIAK’s proposed indicators, not government decisions — the register is “worth tracking”, not “we will track”.

5.2 Summary

MIAK’s key message to the prime minister-designate and the finance portfolio led by András Kármán: the 91 per cent deficit utilisation in April is not a hysteria signal, but an institutional hardening call. The three proposals — zero-base spending review, Fiscal Council with 90-day reports, public-money dashboard — are an operational minimum: without them the budgetary promises of the Tisza programme will run into the “this time is different” trap recorded by Reinhart–Rogoff. Data-drivenness and transparency are the two foundational values now in play: the citizen has the right to see in real time what spending decisions stand behind the deficit, and the government — whoever forms it — has a duty to show this. Because only that fiscal framework is durable which a subsequent cabinet cannot quietly loosen.

Part VI — Justifications and additional sources

6.1 Press framing across the spectrum

The liberal-left band (HVG, 444.hu, Telex, 24.hu) commented on the NGM report explicitly in the “till-emptying” and “fleecing the budget” frame — HVG’s headline (“The Fidesz government has completely fleeced the till”) and 444.hu’s analysis (“Orbán & co. have made a complete heap of rubble of the budget”) reinforce the structural-accountability frame. The economic paper (Portfolio) is more factual, but the headline on the April figure also evaluates: “the Tisza government takes over the budget in horrendous condition”. The conservative-pro-government band (Magyar Nemzet, Mandiner) settles the April figure with the “GDP-ratio” argument: Magyar Nemzet treats it in the context of the growth path; Mandiner brings the MNB foreign-exchange reserve peak (EUR 60 bn) to the foreground — focusing not on the deficit, but on the reserve buffer. The Telex/G7 analysis adds a third aspect: the corporate-tax (TAO) reform may bring far more revenue than a wealth tax — this is the revenue-side frame, which the liberal-left band’s deficit-frame focus emphasises less.

The three narrative choices — structural accountability (liberal-left), economic stability buffer (conservative), revenue-side instruments (economic-professional) — together show the full problem space. MIAK’s reading: all three are correct, but in priority order, first comes transparency (unpacking the origin of the deficit chapter by chapter), then revenue-mix reform (TAO + income-tax framework), and only after these the nominal reduction of the expenditure side.

6.2 Facts and data

Indicator Value Source
Central subsystem 4-month deficit HUF 3.85 trn NGM 8 May 2026
Central budget 4-month deficit HUF 3.74 trn NGM 8 May 2026
April 1-month deficit HUF 429.4 bn NGM 8 May 2026
April 2025 1-month deficit HUF 376.4 bn NGM 2025-05
Statutory annual deficit target HUF 4.22 trn 2026 budget law
Informal deficit target HUF 5 trn NGM informal
April utilisation (statutory) 91% NGM calculation
April utilisation (informal) 77% NGM calculation
Péter Magyar’s projection (% of GDP) 6.8% Tisza announcement, May 2026
Q1 utilisation of chapter-managed appropriations 32% (on the expenditure side, of the annual statutory appropriation) NGM Q1
MOL Q1 adjusted EBITDA (actual) USD 626 million MOL flash report, 8 May 2026
MOL Q1 analyst expectation USD 695 million Portfolio consensus
MNB FX reserves April 2026 > EUR 60 bn (historic peak) MNB 8 May 2026
Maastricht deficit target (reference value) 3% of GDP TFEU Article 126

6.3 Policy aspects

  • Economy (programme points) — G1 (Data-driven budget), G15 (Counter-cyclical fiscal stabiliser), G21 (Systematic review of public spending), G23 (Public-debt sustainability framework);
  • Transparency and anti-corruption policy (programme points) — A1 (Public-money dashboard), A2 (Public-procurement transparency), A8 (Cohesion-policy accountability);
  • Economy (background) — IMF Article IV, Eurostat deficit and debt report, documents of the Hungarian Fiscal Council.

6.4 Literature details

6.4.1 Carmen Reinhart – Kenneth Rogoff: This Time Is Different

Reinhart and Rogoff’s 2009 synthesis works through 800 years of financial-crisis history — from England’s 14th-century default to the 2008 American mortgage crisis. The book’s central thesis is the “this time is different” syndrome: politicians and investors regularly assume that the old patterns do not apply to them — and precisely for that reason they fail to defend against them, and the catastrophe occurs. In the Hungarian context, the serial-default literature is separately relevant: one passage of the book explicitly notes that “to conclude that Hungary and Greece will never again default because, with the EU, this time is different, may turn out to be a short-lived truth” (Reinhart–Rogoff 2009, paraphrased translation). The 91 per cent April deficit utilisation, in this framework, is an early signal and not a crisis in itself: the book defines the fiscal crisis as the simultaneous tightening of the credit market, exchange rate and banking intermediation — of these, the exchange rate is currently stable (the forint at a 4-year peak), the credit market is distinctly favourable (FX reserves of EUR 60 bn), but the fiscal component has stepped into the alert zone. MIAK’s reading: precisely for this reason it is now important to institutionalise the early-warning system for serial default — the IFI 90-day reports in proposal 3.2 do exactly this.

📖 Source: Carmen Reinhart – Kenneth Rogoff: This Time Is Different — Eight Centuries of Financial Folly (2009)

6.4.2 Kornai János: Economics of Shortage

Chapter 22 of Kornai’s 1980 monograph (A hiány) deals with the gradations of paternalism: it models the relationship between the state and the micro-organisation (firm, budgetary entity, household) using the parent–child analogy. The concept of the soft budget constraint grows out of this framework: if the micro-organisation knows that the state will bail it out whatever happens — supplying a top-up, reallocating, refilling the line at year-end — then according to him it is not a rational strategy to take its own cost constraint seriously. The 32 per cent Q1 utilisation of Hungarian chapter-managed appropriations is exactly this pattern in 21st-century form: the relevant ministerial leaders knew that on the closing day of the 16-year cycle the till would empty in any case, and that the “abandonment” would never be enforced one item at a time. MIAK’s 3.1 (zero-base review) and 3.3 (public-money dashboard) proposals together form an institutional hardener — the counter-instrument to Kornai’s soft constraint. The condition for hardening is transparency: paternalism works only as long as the consequence system remains foggy — once Q1 utilisation at 32 per cent becomes visible in real time, the political cost will discipline top management on its own.

📖 Source: Kornai János: A hiány (Economics of Shortage, 1980), chapter 22 (Gradations of paternalism)

6.4.3 Peter Drucker: The Effective Executive

In his 1966 classic, Drucker formulated the concept of organized abandonment: the most important decision of an effective leader is not what they should do, but what they should stop doing. Every organisation has expenditure lines, programmes and projects which have lost their original meaning but live on out of inertia. The leader has to ask, on every single item at regular intervals — according to Drucker, at least every three years — “if we had to decide now, would we still go in?” If the answer is no, the item is to be terminated, not optimised. Applied to the Hungarian budget: for a significant share of chapter-managed appropriations (government communications, flagship state events, certain types of NKA grants), it is not the level of expenditure that should be cut, but the justification re-examined from a zero base. MIAK’s G21 programme point builds directly on this: the mandatory three-yearly zero-base review is the operational form of “organized abandonment”. Proposal 3.1 proposes the first round of this with a 60-day timeline.

📖 Source: Peter Drucker: The Effective Executive (1966)

6.5 International comparison

In the OECD Economic Outlook 2026 (March 2026) Central European comparison, the projected Hungarian deficit of 6.8 per cent is close to the highest value in the region: Poland’s projected deficit this year is 5.2 per cent, the Czech Republic’s 2.8 per cent, Slovakia’s 4.6 per cent. In its 2025 Article IV consultation, the IMF World Economic Outlook 2025 had already signalled to Hungary that the structural deficit — calculated without cyclical items — was high, and that without adjustment the debt path would not be sustainable in the medium term. Poland’s response in 2024 is an interesting precedent: when the Tusk government took office (December 2023), it inherited a similarly front-loaded budget, and in its first 100 days the Ministry of Finance introduced a Spending Review framework, the first round of which it published directly in the February following its inauguration — an adaptable pattern for the Hungarian context, in a similar time window.

Economy

  • G1 — Data-driven budget
  • G15 — Counter-cyclical fiscal stabiliser
  • G19 — Radical transparency in economic decision-making
  • G20 — Economic-policy impact assessment system (Drucker audit)
  • G21 — Systematic review of public spending
  • G23 — Public-debt sustainability framework

Transparency and anti-corruption policy

  • A1 — Public-money dashboard
  • A2 — Public-procurement transparency
  • A8 — Cohesion-policy accountability

6.7 List of sources

Press sources (MIAK press monitor, 9 May 2026 — topic 3):

Knowledge-base references (literature):

  • 📖 Carmen Reinhart – Kenneth Rogoff: This Time Is Different — Eight Centuries of Financial Folly (2009)
  • 📖 Kornai János: A hiány (Economics of Shortage, 1980), chapter 22 (Gradations of paternalism)
  • 📖 Peter Drucker: The Effective Executive (1966)

MIAK internal materials:

  • MIAK policy area: Economy (programme points; programme point IDs: G1, G15, G21, G23)
  • MIAK policy area: Transparency and anti-corruption policy (programme points; programme point IDs: A1, A2, A8)
  • MIAK press monitor, 9 May 2026 — topic 3, score: 88/100

Additional public data sources:

  • Hungarian Fiscal Council — annual and semi-annual reports
  • Eurostat — deficit and debt report (excessive deficit procedure dataset)
  • IMF Article IV — Hungary 2025
  • OECD Economic Outlook (March 2026)
  • MNB foreign-exchange reserve statistics

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