We expect Hungary’s budget deficit to widen towards 5.5% of GDP this year on account of pre-election stimulus, continued soft GDP growth and higher debt interest costs. Regardless of the election outcome, the deficit is likely to remain relatively large. Under Fidesz it would probably stay closer to 5% of GDP for a while. If Tisza were to win a supermajority and unlock frozen EU funds, the deficit could narrow towards 3.5-4.0% later this decade. This would likely be enough to stabilise the public debt ratio.
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