Gergely Gulyas: Next Year’s Budget Is the Budget of Families Raising Children

The government met before Easter, here are the key decisions made at the cabinet meeting.

Gergely Gulyas, minister heading the Prime Minister’s Office (Photo: MTI/Noemi Bruzak)

They are maintaining the principle that the deficit should decline in parallel with interest expenditures, and the budget’s overall effect on the economy should be neutral—meaning the size of the deficit equals the cost of interest payments.

The central focus of the budget is family policy, with 4.8 trillion forints allocated to this area. Utility cost protection will receive 800 billion forints, making the total family support component of the budget 5.6 trillion forints.

For the doubling of the family tax allowance, 210 billion forints will be allocated.

Interest on retail government bonds will amount to 800 billion forints. For pensions, the government will spend 7.7 trillion forints, with an additional 24 billion forints set aside for a pension premium. The 13th-month pension will also be paid.

Defense remains a priority, requiring a proper armed force. The government will maintain the 2 percent of GDP spending level. Economic development will receive 4.9 trillion forints, of which 2.7 trillion will come from the central budget. Agriculture will receive 1.3 trillion forints.

EU funds are expected to flow into the budget; for 2026, 2.36 trillion forints in EU funding is projected. The budget also includes the costs of "weapon money", a 13 per cent increase in the minimum wage is projected, and teachers' salary increases will continue.

Marton Nagy added that the central bank base rate remains at 6.5 percent. Half of the 360 billion forint bank tax will be deductible if banks purchase government bonds. The windfall tax will remain in place as long as the affected economic actors are realizing extra profits.

The minister also spoke about tax simplification and announced the digitalization of on-site inspections. He addressed R&D tax incentives as well: a 150 million forint deductible tax base will be available if entrepreneurs spend the funds on research and development.

He highlighted that the EU is considering exempting defense spending from fiscal rules. While all the details are not yet known, the government is preparing for it and will establish a defense reserve, which can be activated with parliamentary authorization, making the budget more flexible.

The 2025 budget was planned as a "peace time budget", which is why it is based on higher macroeconomic numbers. The government believed that after Trump’s re-election, economic security would accompany physical security. The government continues to believe Hungary will stay out of the war, and peace will come, which will set the economy on a growth trajectory.

"If this year's budget hadn't been designed as a peace time budget, we wouldn't have been able to implement pension and wage increases this year," the economic minister pointed out.