Hungary's ambition to adopt the euro by the end of the decade has received a cautious endorsement from Fitch Ratings, which said the government's 2027 draft budget and medium-term deficit targets are consistent with meeting the bloc's entry criteria by 2030.
The assessment, published on Thursday, comes as Budapest seeks to rebuild its reputation in Brussels after years of friction under the previous administration. Prime Minister Péter Magyar, who took office earlier this year, has made euro adoption a cornerstone of his economic agenda, aiming to anchor Hungary more firmly within the European mainstream.
A frontloaded consolidation plan
The 2027 budget, presented on Monday, targets a general government deficit of 4.9% of GDP, a sharp reduction from the 7.5% expected this year. To achieve this, the government plans spending cuts worth 1.5% of GDP next year, alongside the expiry of temporary and one-off pre-election measures that could save an additional 1.4%. Lower interest payments—thanks to declining costs on inflation-linked bonds and improved market sentiment—are expected to contribute a further 0.2% of GDP.
On the revenue side, the government proposes tax increases and other measures worth about 1% of GDP. These include higher corporate and innovation taxation (0.25% of GDP), a wealth tax (0.2%), and a levy on energy companies (0.1%), with smaller contributions from mining royalties, company-car tax, and advertising tax.
The spending cuts would affect economic-development subsidies, government communications, public media, and state investment and operating costs. Ministries and state-owned companies face at least a 10% reduction in operating expenditure.
Fitch, however, cautioned that implementing the full deficit-reduction package would be challenging, given the "large number of relatively small measures and the need for sustained consolidation." Some savings remain uncertain, while new spending commitments and tax relief worth about 1.4% of GDP would offset part of the gains.
The agency stressed the importance of meeting the 2027 fiscal target, calling it "an important measure of the credibility of the government's frontloaded fiscal consolidation strategy under its plans to meet euro-adoption criteria by 2030." The government's plan sets out a deficit of 4% of GDP in 2028, easing to 3.4% in 2029 and 2.8% in 2030.
Fitch's own forecasts put Hungary's budget deficit on a similar path, narrowing to 5.4% of GDP in 2027 from 7.3% in 2026, and eventually falling below 3% by 2030. Public debt is projected to peak at 77.7% of GDP in 2027–2028, well above the 57.5% median for countries in Fitch's 'BBB' sovereign rating category. The subsequent debt trajectory will depend on the forint's exchange rate and economic growth.
Hungary's growth has lagged behind that of similarly rated countries since 2023, which Fitch attributes to weak external demand, heightened policy uncertainty, delayed EU funding inflows, and the impact of deficit reduction on investment. The government expects GDP growth of 2.4% in 2027, accelerating to above 3% by 2030, partly driven by higher EU-funded investment. The EU recently unfroze €4.2 billion in funding for Hungary, part of a wider €16.4 billion agreement, with access to the remaining funds still subject to approval.
Fitch's growth forecasts are broadly aligned, projecting real GDP growth of 2.5% in 2027, accelerating to about 3% from 2028, supported by stronger investment and private consumption as EU funds are deployed and external demand recovers.
Meeting the budget targets alone would not qualify Hungary for euro adoption. Countries must also meet conditions covering inflation, long-term interest rates, exchange-rate stability, and national legislation. Political and economic risk consultancy Eurasia Group considers it possible that Hungary could join the eurozone in 2032, according to a report of its assessment.
If Hungary were to enter ERM II—the exchange-rate mechanism that is mandatory before adopting the euro—in 2030, it could potentially join the eurozone in 2032 or later. Countries must spend at least two years in ERM II without severe exchange-rate tensions or devaluing their currency's central rate against the euro, and meet the other entry conditions.
Hungary's push for euro adoption comes amid a broader reset in EU-Hungary relations, as Budapest seeks a new chapter with the bloc. The government has also taken steps to align with EU norms, such as scrapping anti-LGBTQ+ child protection clauses, and has lifted its veto on Ukraine's accession talks. These moves are seen as part of a broader effort to restore credibility and pave the way for deeper integration.
