IMF calls for urgent economic reforms in Hungary

An International Monetary Fund (IMF) delegation conducted consultations in Budapest from September 23 to October 6 regarding Hungary’s 2026 Article IV assessment. The IMF identified several economic pressures facing the country, including weak investment appetite, a widening gap between wages and productivity, a challenging global environment, and an aging population. The current budget deficit is projected to be between 7% and 7.5% of GDP, while national debt continues to rise.

The IMF emphasized the need for a comprehensive reform package, particularly regarding fiscal policy, as well as structural changes to boost innovation and productivity. While noting positive signs such as stabilizing inflation and the release of frozen EU funds, the mission stressed that fiscal consolidation must be credible and growth-oriented.

Political discussions regarding these recommendations have surfaced, with Fidesz MP Piroska Szalai noting that the IMF’s suggestions align with previous EU and OECD recommendations. Potential measures discussed include multi-tiered personal income tax, increases in corporate tax, and reductions in VAT and other tax exemptions. While such reforms could facilitate access to cheaper credit, they may also lead to significant austerity measures affecting households and small businesses.