{ "title": "IMF Executive Board Concludes 2025 Article IV Consultation with Hungary", "publication": "IMF News, August 29, 2025", "sourceUrl": "https://www.imf.org/en/news/articles/2025/08/29/pr-25286-hungary-imf-executive-board-concludes-2025-article-iv-consultation", "canonical": "https://www.imf.org/en/news/articles/2025/08/29/pr-25286-hungary-imf-executive-board-concludes-2025-article-iv-consultation", "overlayPath": "/en/news/articles/2025/08/29/pr-25286-hungary-imf-executive-board-concludes-2025-article-iv-consultation/index.md", "summary": "The Executive Board of the International Monetary Fund (IMF) completed the Article IV Consultation for Hungary. The authorities have consented to the publication of the Staff Report prepared for this consultation.", "publishDate": "2025-08-29", "sections": [ { "heading": "Overview and near-term outlook", "content": "- The Hungarian economy has experienced stagnant output over the past 3 years and inflation remains well above the central bank’s 3 percent target.\n- Regulatory measures—such as price, interest and margin caps, along with windfall taxes and subsidized lending schemes—have distorted market signals and added uncertainty.\n- Despite significant fiscal adjustment in recent years, public debt is elevated given high financing costs.\n- Growth and inflation projections:\n - Modest consumption-driven growth of 0.7 percent is expected in 2025 underpinned by favorable wage dynamics.\n - Growth is projected at 2 percent in 2026 on a recovery in investment and a positive impulse from German fiscal expansion.\n - Inflation is expected at 4.5 percent in Q4:2025 and then to gradually decelerate to the central bank’s 3 percent target by 2027.\n- Under current policies, the fiscal deficit will remain around 4½ percent of GDP through the medium term, with debt-to-GDP rising to around 79 percent by 2030." }, { "heading": "Risks to the outlook", "content": "- Risks are tilted to the downside, including:\n - Deepening geoeconomic fragmentation amid a further escalation in trade measures.\n - Intensification of regional conflicts.\n - Failure to enact a credible fiscal adjustment.\n - Cancelation of EU funds.\n- High domestic and external uncertainty are expected to continue weighing on the outlook." }, { "heading": "Executive Board Assessment — main messages", "content": "- Directors welcomed Hungary’s economic resilience but noted the outlook remains subdued amid weak investment and above target inflation.\n- Directors stressed the need for strong reform efforts to promote macroeconomic stability, rebuild buffers, and boost productivity.\n- Fiscal policy:\n - Emphasized the importance of additional fiscal effort to rebuild fiscal buffers and ensure debt sustainability.\n - Welcomed the authorities’ medium term goal of achieving a structural primary surplus.\n - Underscored the importance of high quality fiscal adjustment.\n - Called for broadening the tax base by reducing exemptions and rationalizing spending—particularly energy subsidies—while reallocating savings to strengthen targeted social support.\n - Stressed the need for reforms to contain long term pension and healthcare spending pressures and improve monitoring and mitigation of fiscal risks, including those stemming from state owned enterprises.\n - Recommended contingency planning, including in case of additional defense spending.\n- Monetary policy and exchange rate:\n - Agreed that the monetary policy stance should remain tight to return inflation to target.\n - Supported a data dependent approach amid high uncertainty.\n - Highlighted the role of continued exchange rate flexibility and adequate reserves in mitigating external shocks.\n - Agreed on the need to phase out price, fee, and margin controls to avoid market distortions and strengthen the effectiveness of monetary policy.\n- Financial sector:\n - Considered the financial sector broadly sound but urged continued vigilance.\n - Noted banks are well capitalized, liquid and profitable, but vulnerabilities remain, including from risks in the corporate sector, banks’ growing sovereign and FX exposures, and buoyant housing prices.\n - Recommended phasing out housing related incentives to contain price pressures.\n - Concurred that differentiation in borrower based macroprudential measures should be introduced only on financial stability grounds.\n- Structural and energy policy:\n - Emphasized the need for structural reforms to boost productivity and competitiveness.\n - Stressed the importance of improving energy security and expanding the use of renewables to strengthen economic resilience.\n - Called for advancing governance reforms to foster a more predictable business environment and unlock EU funding." }, { "heading": "Key quantitative indicators and projections (selected)", "content": "- Real GDP (percentage change)\n - 2020: -4.3\n - 2021: 7.2\n - 2022: 4.3\n - 2023: -0.8\n - 2024: 0.5\n - 2025: 0.7\n - 2026: 2.0\n - 2027: 2.2\n - 2028: 2.4\n - 2029: 2.5\n - 2030: 2.6\n- CPI inflation (average)\n - 2020: 3.3\n - 2021: 5.1\n - 2022: 14.6\n - 2023: 17.1\n - 2024: 3.7\n - 2025: 4.6\n - 2026: 3.5\n - 2027: 3.0\n- CPI inflation (end year)\n - 2020: 7.4\n - 2021: 24.5\n - 2022: 5.5\n - 2023: 4.5\n - 2024: 3.1\n- Public debt (percent of GDP)\n - 2020: 78.7\n - 2021: 76.2\n - 2022: 73.9\n - 2023: 73.0\n - 2024: 73.5\n - 2025: 74.8\n - 2026: 75.3\n - 2027: 76.3\n - 2028: 77.3\n - 2029: 78.0\n - 2030: 78.6\n- General government overall balance (percent of GDP)\n - 2020: -7.5\n - 2021: -7.1\n - 2022: -6.2\n - 2023: -6.7\n - 2024: -4.9\n - 2025: -4.7\n - 2026: -4.5\n - 2027: -4.6\n - 2028: -4.4\n- Primary balance (percent of GDP)\n - 2020: -5.3\n - 2021: -5.0\n - 2022: -3.9\n - 2023: -3.2\n - 2024: -1.2\n - 2025: -0.7\n - 2026: -0.3\n- Gross fixed capital formation (percent of GDP)\n - 2020: 26.5\n - 2021: 27.3\n - 2022: 27.8\n - 2023: 25.6\n - 2024: 23.4\n - 2025: 21.6\n - 2026: 21.5\n - 2027: 21.8\n- Gross external debt (percent of GDP)\n - 2020: 80.7\n - 2021: 86.4\n - 2022: 91.8\n - 2023: 85.8\n - 2024: 84.8\n - 2025: 79.1\n - 2026: 75.1\n - 2027: 71.7\n - 2028: 70.2\n - 2029: 68.3\n - 2030: 67.5\n- Reserves (billions of Euros)\n - 2020: 33.7\n - 2021: 38.4\n - 2022: 38.7\n - 2023: 41.4\n - 2024: 44.6\n - 2025: 49.3\n - 2026: 50.9\n - 2027: 51.1\n - 2028: 55.0\n - 2029: 55.8\n - 2030: 60.7\n- Gross official reserves in percent of the IMF ARA metric\n - 2020: 120.2\n - 2021: 117.5\n - 2022: 107.0\n - 2023: 105.0\n - 2024: 109.6\n - 2025: 112.1\n - 2026: 111.4\n - 2027: 110.8\n - 2028: 114.7\n - 2029: 114.0\n - 2030: 121.3\n- Exchange rate, HUF per euro, period average\n - 2020: 351.2\n - 2021: 358.5\n - 2022: 390.9\n - 2023: 381.8\n - 2024: 395.4" }, { "heading": "Policy recommendations (summary)", "content": "- Rebuild fiscal buffers through additional fiscal effort and high quality adjustment; pursue the medium term goal of a structural primary surplus.\n- Broaden the tax base by reducing exemptions and rationalizing spending, particularly energy subsidies; reallocate savings to strengthen targeted social support.\n- Undertake reforms to contain long term pension and healthcare spending pressures and to improve monitoring and mitigation of fiscal risks, including those from state owned enterprises.\n- Maintain a tight, data dependent monetary stance and preserve exchange rate flexibility and adequate reserves.\n- Phase out price, fee, and margin controls, and phase out housing related incentives to contain price pressures.\n- Advance structural reforms to boost productivity and competitiveness, improve energy security and expand renewables, and advance governance reforms to unlock EU funding.\n\nIMF Communications Department, Press Release No. 25/286, August 29, 2025. Authorities consented to publication of the Staff Report.\n\n---\n\n\n References\n\n- Hungary and the IMF\n- IMF Policy Advice -- A Factsheet\n- Press Releases\n- PRESS CENTER\n- http://www.IMF.org/external/np/sec/misc/qualifiers.htm\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2025/08/29/pr-25286-hungary-imf-executive-board-concludes-2025-article-iv-consultation" } ], "bullets": [ "[Markdown version](/en/news/articles/2025/08/29/pr-25286-hungary-imf-executive-board-concludes-2025-article-iv-consultation/index.md)", "[Structured JSON version](/en/news/articles/2025/08/29/pr-25286-hungary-imf-executive-board-concludes-2025-article-iv-consultation/index.json)", "[Bundle manifest](/en/news/articles/2025/08/29/pr-25286-hungary-imf-executive-board-concludes-2025-article-iv-consultation/bundle-manifest.json)", "Published: August 29, 2025", "The Hungarian economy has experienced stagnant output over the past 3 years and inflation remains well above the central bank’s 3 percent target.", "Regulatory measures—such as price, interest and margin caps, along with windfall taxes and subsidized lending schemes—have distorted market signals and added uncertainty.", "Despite significant fiscal adjustment in recent years, public debt is elevated given high financing costs.", "Growth and inflation projections:", "Under current policies, the fiscal deficit will remain around 4½ percent of GDP through the medium term, with debt-to-GDP rising to around 79 percent by 2030.", "Risks are tilted to the downside, including:", "High domestic and external uncertainty are expected to continue weighing on the outlook.", "Directors welcomed Hungary’s economic resilience but noted the outlook remains subdued amid weak investment and above target inflation.", "Directors stressed the need for strong reform efforts to promote macroeconomic stability, rebuild buffers, and boost productivity.", "Fiscal policy:", "Monetary policy and exchange rate:", "Financial sector:", "Structural and energy policy:", "Real GDP (percentage change)", "CPI inflation (average)", "CPI inflation (end year)", "Public debt (percent of GDP)", "General government overall balance (percent of GDP)", "Primary balance (percent of GDP)", "Gross fixed capital formation (percent of GDP)", "Gross external debt (percent of GDP)", "Reserves (billions of Euros)", "Gross official reserves in percent of the IMF ARA metric", "Exchange rate, HUF per euro, period average", "Rebuild fiscal buffers through additional fiscal effort and high quality adjustment; pursue the medium term goal of a structural primary surplus.", "Broaden the tax base by reducing exemptions and rationalizing spending, particularly energy subsidies; reallocate savings to strengthen targeted social support.", "Undertake reforms to contain long term pension and healthcare spending pressures and to improve monitoring and mitigation of fiscal risks, including those from state owned enterprises.", "Maintain a tight, data dependent monetary stance and preserve exchange rate flexibility and adequate reserves.", "Phase out price, fee, and margin controls, and phase out housing related incentives to contain price pressures.", "Advance structural reforms to boost productivity and competitiveness, improve energy security and expand renewables, and advance governance reforms to unlock EU funding.", "[Hungary and the IMF](http://www.imf.org/external/country/HUN/index.htm)", "[IMF Policy Advice -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-surveillance)", "[Press Releases](https://www.imf.org/en/news/searchnews)", "[PRESS CENTER](http://presscenter.imf.org/)", "[http://www.IMF.org/external/np/sec/misc/qualifiers.htm](http://www.imf.org/external/np/sec/misc/qualifiers.htm)", "[https://www.imf.org/en/home](https://www.imf.org/en/home)" ], "alternates": { "markdown": "/en/news/articles/2025/08/29/pr-25286-hungary-imf-executive-board-concludes-2025-article-iv-consultation/index.md", "json": "/en/news/articles/2025/08/29/pr-25286-hungary-imf-executive-board-concludes-2025-article-iv-consultation/index.json", "bundleManifest": "/en/news/articles/2025/08/29/pr-25286-hungary-imf-executive-board-concludes-2025-article-iv-consultation/bundle-manifest.json" }, "generatedAtUtc": "2026-09-26T04:05:52.199Z" }