Part I — Situation overview

On 13 October 2026, the International Monetary Fund (IMF) published its World Economic Outlook report. In it, the growth forecast for Hungary’s gross domestic product (GDP) this year was raised from April’s 1.7 to 1.9 per cent, and for next year from 2.0 to 2.1 per cent. The inflation forecast changed far more: 1.9 instead of 3.8 per cent this year, and 2.8 instead of 3.5 per cent next year. The IMF, however, now expects the unemployment rate at 4.5 instead of 4.2 per cent this year, and at 4.2 instead of 4.0 per cent next year. According to the IMF, the average price of crude oil may be 95.74 dollars per barrel this year, after 67.74 dollars last year. A day earlier, on 12 October, Portfolio reported on a fresh analysis by Fitch Ratings. The credit rating agency — that is, the company that assesses for investors how much risk is involved in lending to a state — keeps Hungary at a BBB rating with a negative outlook. A negative outlook signals that at the next reviews the rating is more likely to worsen than to improve. Fitch puts this year’s budget deficit at 7.3 per cent of GDP, and the 2028 deficit still at 5.8 per cent. Public debt, meanwhile, may rise from last year’s 74.6 per cent to 78.1 per cent by 2028. According to the agency, without a credible adjustment a downgrade is also a threat. The next Hungarian review will be on 4 December.

On 12 October, Prime Minister Péter Magyar announced in the National Assembly that the government will present the 2027 budget next week. According to Portfolio, he promised pay rises for, among others, health, social and education workers, and at the same time a “disciplined, stable and sustainable” budget. The speech contained no numerical target. According to Portfolio, the Ministry of Finance may present the medium-term macroeconomic and fiscal plan together with the budget. Magyar Nemzet wrote that information leaked from the government meeting in Erdőbénye had caused tension within the government. According to the paper’s earlier report, a loan to pre-finance EU funds was also discussed there. The Ministry of Finance, led by András Kármán, did not answer the paper’s questions on this. In recent weeks MIAK has called for an item-by-item response to the IMF’s recommendations and proposed a path forecast by the Fiscal Council, that is, the independent fiscal institution (IFI).

MIAK’s reading: the two assessments do not contradict each other. Both assume 1.9 per cent growth this year, and Fitch also regards the rapid fall in inflation as a success. The difference lies in what they measure. The IMF judges the economic cycle, Fitch the trajectory of the state’s solvency. A better growth figure is therefore no substitute for an adjustment plan. The credibility of next week’s budget depends on whether it is backed by concrete measures, a correction committed to in advance and a scenario prepared for shocks. It also matters how the burden of adjustment is shared while unemployment is rising.

Part II — Grounding in the literature

Three sources provide the interpretive framework. The first chapter of the International Monetary Fund’s 2024 World Economic Outlook sets out item by item what makes a medium-term consolidation plan credible. The plan should name measures sufficient to meet its targets, rest on realistic assumptions about interest rates, revenues and growth, be backed by a binding institutional framework, and protect the most vulnerable along the way. The OECD’s March 2026 Economic Outlook interim report highlights, at a time of energy-market shock, the risk scenario of a persistent disruption. In its view, energy-price support should be targeted and have a predetermined expiry date, while adjustment should proceed along a credible, country-specific medium-term path. In his main work, The General Theory of Employment, Interest and Money, the British economist John Maynard Keynes, founder of modern macroeconomics, distinguishes the confidence of investors from the confidence of lenders. According to Keynes, the weakening of either is enough to cause a downturn, but recovery requires both. Taken together, the three sources say that a good growth forecast is only one half of confidence. The other half, that of the lenders, can be regained with a plan committed to in advance and verifiable, one that is also prepared for shocks and social burdens. The detailed treatment of the literature — author by author, with quotations — is in section 6.4 Literature in detail.

Part III — MIAK’s concrete proposal

MIAK proposes three measurable steps. The first makes the credibility of the medium-term plan verifiable, the second prepares the plan for a persistent energy shock and rising unemployment, and the third sets out transparency conditions for any loan taken to pre-finance EU funds. The 2027 budget has not yet been published, so the proposals do not criticise its content but concern the form in which it is worth presenting.

3.1 A credibility summary for the medium-term plan: debt turning point, identification rate, pre-set correction (with the presentation of the 2027 budget, ahead of Fitch’s 4 December review)

MIAK proposes that the Ministry of Finance publish a one-page credibility summary at the front of the medium-term fiscal plan, with four elements. The first is the debt turning point: in which year the debt-to-GDP ratio stops rising, and in which year it starts to fall. According to Portfolio, this is precisely what Fitch made the condition for removing the negative outlook. The second is the identification rate: what percentage of the 2027–2029 adjustment is covered by named, quantified measures, and how large is the part still to be specified later. MIAK’s proposed target is that at least 80 per cent of the 2027 adjustment be identified. The third is a pre-set correction. Part of the expenditure appropriations, for example an amount equal to 0.3 per cent of GDP, should be a frozen reserve, released in the second half of the year only if the half-year deficit is on track. If it is not, the reserve is realised as savings. The fourth is a public comparison of the assumptions with the forecasts of the IMF, Fitch and the Magyar Nemzeti Bank (MNB, the central bank). According to the IMF’s 2024 report (see 6.4.1), it is precisely identified measures and a binding institutional framework that give a plan its credibility. The summary does not replace the interest-sensitivity annex and the income-decile map proposed earlier by MIAK, but summarises on a single page what lenders look for first. This applies the G23 public-debt sustainability framework.

3.2 A persistent energy-shock scenario and an unemployment safeguard in the sequencing of the adjustment (together with the medium-term plan, first review by 31 March 2027)

According to the IMF, the average oil price may be 95.74 dollars this year and 87.39 dollars next year. The medium-term plan will probably assume falling energy prices. MIAK proposes that the plan also include a second, adverse scenario. In it, the oil price stays at this year’s level in 2027 as well, and the plan quantifies how much the deficit, inflation and unemployment would rise in that case. The scenario should also state the response in advance: which expenditure is cut, and which is protected. According to MIAK, the sequence should be as follows. First in line should be untargeted subsidies and preferences, following the logic of the tiered utility-cost support and the tax-preference inventory. Last, and only after an impact assessment, should come unemployment benefits and the SZ1 targeted support. The plan should also set an unemployment safeguard. If the unemployment rate published by the Hungarian Central Statistical Office (KSH) is above 5.0 per cent for three consecutive months — that is, half a percentage point (pp) above the IMF’s forecast for this year — the pace of the following year’s adjustment should slow by a pre-set amount. At that point the FO7 countercyclical employment fund should also be activated. To avoid this becoming a loophole, the Fiscal Council should give a public opinion on the activation. The OECD (see 6.4.2) names persistent energy-market disruption as the main risk, and calls for targeted support with an expiry date. This is the joint application of the G25 energy-price shock preparedness plan and the G15 countercyclical fiscal stabiliser (public spending in a downturn, building reserves in an upswing).

3.3 Public justification and interest-cost calculation before any pre-financing loan (at least 15 days before the contract is signed)

Pre-financing means that the state pays the costs of EU projects up front from its own money and recovers them from Brussels afterwards. This in itself is common practice. MIAK analysed on 9 September that in August, according to the Ministry of Finance, such items increased expenditure by HUF 2,186.9 billion. MIAK cannot judge whether the government is really planning a separate loan for this, because the ministry did not answer Magyar Nemzet’s questions. If it is, however, the market and the rating agencies will price the decision in. MIAK therefore proposes that at least 15 days before signing any such contract, the Ministry of Finance and the Government Debt Management Agency (ÁKK, the body that manages the financing of public debt) publish the following. First: the justification, that is, why a separate loan is needed, for what amount, and why ordinary government bond issuance is not enough. Second: the full interest cost, including fees, compared with the cost of current forint and foreign-currency issuance. Third: the repayment schedule, tied to the expected dates of EU reimbursements, and what happens if reimbursement is delayed. Fourth: the impact on the gross debt ratio and on the share of foreign-currency debt, which according to Fitch currently makes up around 30 per cent of total debt. Fifth: the full text of all conditions attached to the loan. The information should also be put before the competent committee of the National Assembly. According to Keynes (see 6.4.3), a weakening of lenders’ confidence is enough on its own to cause trouble, so silence is more expensive than public justification. This is the joint application of G1 data-driven budgeting and G23.

The three proposals are linked by one principle: credibility is created not by improving forecasts, but by commitments made in advance and verifiable afterwards. The IMF’s better figures strengthen investor confidence; Fitch’s warning concerns lender confidence. According to Keynes’s distinction, recovery requires both. The medium-term plan is therefore worth most if, alongside the favourable scenario, it also shows what happens in the bad case, and who bears the burden.

Part IV — Expected effects and risks

Dimension Expected effect Risk
Budget and financing The debt turning point and the frozen reserve make the path verifiable; the likelihood of a downgrade may fall The frozen reserve may cause payments to be withheld in the second half of the year, for example delayed investments
Labour market The safeguard prevents the adjustment from accelerating further in a deteriorating labour market The slowdown rule may become a loophole if activation is not based on an independent opinion
Society The social safety net comes at the end of the adjustment; the burden first falls on untargeted subsidies Narrowing untargeted subsidies also affects part of the middle class, which may provoke political resistance
Financial stability and confidence Public justification of a pre-financing loan reduces speculation The published interest-cost comparison may also be unfavourable, which could force a review of the decision
Public administration A single summary shows what previously had to be pieced together from several annexes Preparing the summary by next week’s presentation is a tight deadline; later publication is also acceptable if it appears before 4 December

The most important dilemma is the pace. Fitch expects faster debt stabilisation, while the IMF signals rising unemployment. Too fast an adjustment would damage the labour market, too slow an adjustment the rating. MIAK’s proposal does not resolve this with a single number but with a rule. In the baseline scenario the adjustment proceeds at a pre-set pace, and a deteriorating labour market may slow it only if the condition is public and certified by an independent body. From the rating agencies’ point of view, such a conditional rule is less risky than a target changed along the way without explanation.

The second dilemma is the price of publicity. Publishing the adverse scenario may draw attention in the market, and disclosing the interest cost of a pre-financing loan may spark political debate. In MIAK’s view, both risks are smaller than the risk of silence. Fitch listed less predictable economic policy among the main risks, and the uncertainty surrounding the leaked loan plan reinforces this.

Part V — Measurability and summary

5.1 What is worth following? (suggested KPIs)

MIAK suggests the following key performance indicators (KPIs). These are suggested indicators, not government commitments.

  • Existence of the credibility summary. Target: together with the medium-term plan, but no later than 4 December, the year of the debt turning point, the identification rate (proposed target: at least 80 per cent for the 2027 adjustment) and the size of the frozen reserve are published.
  • Fitch’s 4 December decision. It is worth following whether the negative outlook is maintained, improves to stable or a downgrade follows, and whether the rationale refers to the medium-term plan.
  • The unemployment rate. It is worth following the KSH’s monthly data against the IMF’s 4.5 per cent forecast for this year and the proposed 5.0 per cent safeguard.
  • Transparency of a pre-financing loan. Target: if such a contract is concluded, the justification, the full interest cost and the repayment schedule are 100 per cent public before signing.

5.2 Summary

MIAK’s request is addressed to the Government. At the front of the medium-term plan presented with the 2027 budget there should be a credibility summary: the year of the debt turning point, the share of identified measures and a frozen reserve, no later than Fitch’s 4 December review. The plan should show what happens if oil stays expensive, and set out that the adjustment starts with untargeted subsidies, ends with the social safety net, and slows if unemployment rises above 5 per cent. If the government were to take out a separate loan to pre-finance EU funds, it should publish the justification and the full interest cost before the contract. The final decision belongs to the National Assembly, but the basis of the decision must be visible before the debate.

Of MIAK’s foundational values, transparency and accountability are at stake here. Transparency, because lenders’ confidence wears away fastest amid speculation about plans that are not public. Accountability, because a pre-set turning point, reserve and safeguard can be held to account afterwards, whereas a general promise of discipline cannot.

Part VI — Reasoning and further sources

6.1 Press framing by spectrum

In the left-liberal segment, Telex and HVG published factual articles based on the MTI summary. Telex signalled already in its headline that the IMF had changed its inflation forecast far more than its growth forecast, thus putting disinflation — the slowing of the pace of inflation — at the centre of the story. HVG also reported the global figures in detail. In this segment, the Fitch analysis and the budgetary tension did not appear among the highlighted topics of MIAK’s press monitor on that day; the monitor did not record articles by 444.hu or Népszava on this topic.

In the mainstream segment, Index likewise published the MTI text. 24.hu supplemented it with the quarterly growth data and also placed it in a political frame: it reported that former Prime Minister Viktor Orbán had spoken about factory closures and unemployment on an opinion programme. In the economic segment, Portfolio covered the topic most fully, in three articles. According to the headline of the IMF article, alongside better growth there is “bad news too”, namely unemployment. The Fitch article named the budget as the greatest risk, and the third article summarised the budgetary promises of Péter Magyar’s parliamentary speech.

In the conservative segment, Magyar Nemzet approached the topic from two directions. The article on the parliamentary debate highlighted the response of János Bóka, leader of the Fidesz parliamentary group, who spoke about tax increases, the IMF’s tax-increase recommendations, factory closures and a fall of more than twenty thousand in the number of people in employment. The other article described as a “scandal” that, according to the paper’s information, Bálint Ruff, the minister heading the Prime Minister’s Office, had objected to information leaked from the government meeting, and recalled the ministry’s silence on the borrowing issue. MIAK’s press monitor did not record Mandiner’s coverage on that day. In the international press, Rapporteur, a service of the Euractiv group, highlighted the link between the energy shock and indebtedness. According to the monitor’s summary, the IMF sees the energy shock caused by the Iran war as hitting highly indebted oil importers hardest, which have little choice left but to cut spending (the articles were not publicly downloadable).

6.2 Facts and data

The IMF’s October 2026 World Economic Outlook report — Hungary (MTI-based summaries: Telex, HVG, Index, Portfolio, 24.hu):

Indicator 2026 (April forecast → October) 2027 (April → October)
GDP growth 1.7% → 1.9% 2.0% → 2.1%
Inflation 3.8% → 1.9% 3.5% → 2.8%
Unemployment rate 4.2% → 4.5% 4.0% → 4.2%
Current account (% of GDP) −0.4% → −0.5% +0.4% → +0.3%

The current account is the balance of trade in goods, services and income between the country and the rest of the world. According to 24.hu, the Hungarian economy grew by 1.7 per cent year on year in both the first and the second quarter of 2026.

The IMF’s global figures (HVG, Portfolio):

Indicator Value
Global growth 2026: 3.1%; 2027: 3.4%
Euro area growth 2026: 1.1%; 2027: 1.2%
Global inflation 2026: 4.7% (4.4% in April)
Average crude oil price (average of Brent, Dubai Fateh, WTI) 2025: USD 67.74; 2026: USD 95.74; 2027: USD 87.39

Fitch Ratings’ analysis of 12 October 2026 (Portfolio):

Indicator Value
Rating and outlook BBB, negative
Budget deficit 2026: 7.3% of GDP (average of similarly rated countries: 3.1%); 2028: 5.8%
Public debt 74.6% last year, 78.1% by 2028 (category median: 58%)
Share of foreign-currency debt around 30% of total debt
Interest expenditure as a share of budget revenue easing to 8.3% by 2028
Growth 2026: 1.9%; 2027: 2.5%; 2028: 3.0%
Inflation 1.3% in August
Expected level of the central bank base rate 5.25% at year-end, 4.75% next year
Condition for removing the negative outlook halting the rise in the debt ratio
Next review 4 December 2026

The median is the middle value, with half of the group above it and half below.

6.3 Policy dimensions

  • Economy (programme points) — the credibility summary applies the public-debt sustainability framework (G23), the persistent energy-shock scenario the energy-price shock preparedness plan (G25), the slowdown rule the countercyclical stabiliser (G15), and the borrowing transparency data-driven budgeting (G1);
  • Employment policy (programme points) — the unemployment safeguard provides the activation condition of the countercyclical employment fund (FO7);
  • Social policy (programme points) — in the sequencing of the adjustment, targeted support (SZ1) is part of the protected group.

6.4 Literature in detail

6.4.1 International Monetary Fund: World Economic Outlook 2024

The first chapter of the Fund’s October 2024 report recommends that high-debt countries should neither postpone adjustment nor carry it out too abruptly. Postponement carries the danger of a market-forced adjustment, while too sharp a turn damages the economy. The report also sets out the content of a credible plan:

“To achieve lasting consolidation, a credible medium-term plan is essential. This plan should signal a commitment to and identify measures sufficient for meeting medium-term targets based on realistic assumptions about interest rates, revenues and spending, and the growth effects of the consolidation.”

In other words: lasting consolidation requires a credible medium-term plan that signals commitment and names measures sufficient for the targets, based on realistic assumptions about interest, revenue, spending and growth. According to the report, credibility also requires binding rules and an institutional framework, and the most vulnerable and key social spending must be protected during consolidation as well. Translated to the Hungarian situation, Fitch’s objection is precisely the absence of this: according to Portfolio, the agency expects only slow improvement because the government has not yet outlined a detailed adjustment plan. The credibility summary in 3.1 therefore asks for the identification rate and the frozen reserve, and 3.2 builds the protection of the vulnerable into the sequencing of the adjustment.

📖 Source: International Monetary Fund: World Economic Outlook — Policy Pivot, Rising Threats (October 2024)

6.4.2 OECD: Economic Outlook, Interim Report

The OECD’s March 2026 interim report analyses the energy-market effects of the Middle East conflict. Its forecast was made on the technical assumption that the disruption eases over time and that oil, gas and fertiliser prices gradually decline from mid-2026. As its main downside risk, however, it names exports from the region being persistently disrupted, causing energy prices even higher than assumed. On the government response it writes:

“Government measures to cushion the impact of higher energy prices should be timely, well-targeted on households most in need and viable firms, preserve incentives to lower energy use and have clear expiry mechanisms.”

That is, measures to cushion the impact of higher energy prices should be timely, target the households most in need and viable firms, preserve the incentive to save energy, and have a clear expiry. The report adds that fiscal space is limited and that adjustment must proceed along a credible, country-specific medium-term path. Two lessons follow for the Hungarian case. One is that the medium-term plan should not only assume falling oil prices but also a persistent shock. This is what the adverse scenario of 3.2 asks for. The other is that, during a shock, targeting and expiry are tools of adjustment, not obstacles to it.

📖 Source: OECD: Economic Outlook, Interim Report — Testing Resilience (March 2026)

6.4.3 John Maynard Keynes: The General Theory of Employment, Interest and Money

Chapter 12 of Keynes’s 1936 main work deals with long-term expectations and confidence. Here Keynes distinguishes investors’ own confidence from the confidence of lending institutions towards those who seek to borrow from them. According to Keynes, the latter is sometimes also called “the state of credit”. The two kinds of confidence work asymmetrically:

“But whereas the weakening of either is enough to cause a collapse, recovery requires the revival of both.”

That is, the weakening of either is enough to cause a collapse, but recovery requires both to be restored. Keynes adds that a strengthening of lenders’ confidence is a necessary but not sufficient condition for recovery. Within this framework, the two current assessments separate clearly. The IMF’s improving growth and inflation forecast may strengthen the expectations of economic actors. Fitch’s negative outlook, however, concerns the confidence of the state’s lenders, and a good growth figure does not by itself restore it. This is why proposal 3.3 asks that the justification and cost of any pre-financing loan be public before the contract, and why 3.1 builds on pre-set, verifiable commitments.

📖 Source: John Maynard Keynes: The General Theory of Employment, Interest and Money (1936)

6.5 International comparison

Fitch’s own comparison shows the gravity of the Hungarian situation. According to Portfolio, this year’s 7.3 per cent deficit far exceeds the 3.1 per cent average of similarly rated countries, and the 78.1 per cent debt expected for 2028 exceeds the category’s 58 per cent median. The growth forecast, on the other hand, is not weak in the international context: the IMF projects euro-area growth of 1.1 per cent this year and 1.2 per cent next year, and the Hungarian forecast of 1.9 and 2.1 per cent is higher. The difference therefore lies not in the performance of the economy but in the state of the budget. The IMF’s global message, highlighted by the international press, applies precisely to this group: the room for manoeuvre of highly indebted energy importers is the narrowest.

The European Union’s economic governance framework, renewed in 2024, requires member states to submit multi-year medium-term fiscal-structural plans built on a net expenditure path, and ties the pace of adjustment to debt sustainability. The credibility summary in 3.1 could be a domestic, one-page condensed version of this framework.

Economy

  • G1 — Data-driven budgeting
  • G15 — Countercyclical fiscal stabiliser
  • G23 — Public-debt sustainability framework
  • G25 — Energy-price shock preparedness plan

Employment policy

  • FO7 — Countercyclical employment fund

Social policy

  • SZ1 — Targeted support

Proposed new programme point: A rule requiring public justification and interest-cost comparison for state borrowing decisions — for the Economy area.

6.7 List of sources

Press sources (MIAK press monitor, 13 October 2026 — topic 3; international press monitor, 14 October 2026 — topic 10):

Knowledge-base references (literature):

  • 📖 International Monetary Fund: World Economic Outlook — Policy Pivot, Rising Threats (October 2024)
  • 📖 OECD: Economic Outlook, Interim Report — Testing Resilience (March 2026)
  • 📖 John Maynard Keynes: The General Theory of Employment, Interest and Money

MIAK internal materials:

  • MIAK policy area: Economy (programme points; programme point ID: G1, G15, G23, G25)
  • MIAK policy area: Employment policy (programme points; programme point ID: FO7)
  • MIAK policy area: Social policy (programme points; programme point ID: SZ1)
  • MIAK press monitor, 13 October 2026 — topic 3, score: 90/100
  • MIAK international press monitor, 14 October 2026 — topic 10, score: 51/100

Supplementary public data sources (if used):

  • Suggested data sources for follow-up: the IMF World Economic Outlook database (October 2026), Fitch Ratings’ releases on Hungary, the 2027 budget bill and the medium-term fiscal plan, the ÁKK’s financing plan, the KSH’s monthly labour-market flash report

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