## IMF Executive Board Concludes 2025 Article IV Consultation with Hungary

_IMF News, August 29, 2025_

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## Bibliographic details
- Published: August 29, 2025

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### Overview and near-term outlook
- 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:
  - Modest consumption-driven growth of 0.7 percent is expected in 2025 underpinned by favorable wage dynamics.
  - Growth is projected at 2 percent in 2026 on a recovery in investment and a positive impulse from German fiscal expansion.
  - 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.
- 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 to the outlook
- Risks are tilted to the downside, including:
  - Deepening geoeconomic fragmentation amid a further escalation in trade measures.
  - Intensification of regional conflicts.
  - Failure to enact a credible fiscal adjustment.
  - Cancelation of EU funds.
- High domestic and external uncertainty are expected to continue weighing on the outlook.

### Executive Board Assessment — main messages
- 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:
  - Emphasized the importance of additional fiscal effort to rebuild fiscal buffers and ensure debt sustainability.
  - Welcomed the authorities’ medium term goal of achieving a structural primary surplus.
  - Underscored the importance of high quality fiscal adjustment.
  - Called for broadening the tax base by reducing exemptions and rationalizing spending—particularly energy subsidies—while reallocating savings to strengthen targeted social support.
  - 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.
  - Recommended contingency planning, including in case of additional defense spending.
- Monetary policy and exchange rate:
  - Agreed that the monetary policy stance should remain tight to return inflation to target.
  - Supported a data dependent approach amid high uncertainty.
  - Highlighted the role of continued exchange rate flexibility and adequate reserves in mitigating external shocks.
  - Agreed on the need to phase out price, fee, and margin controls to avoid market distortions and strengthen the effectiveness of monetary policy.
- Financial sector:
  - Considered the financial sector broadly sound but urged continued vigilance.
  - 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.
  - Recommended phasing out housing related incentives to contain price pressures.
  - Concurred that differentiation in borrower based macroprudential measures should be introduced only on financial stability grounds.
- Structural and energy policy:
  - Emphasized the need for structural reforms to boost productivity and competitiveness.
  - Stressed the importance of improving energy security and expanding the use of renewables to strengthen economic resilience.
  - Called for advancing governance reforms to foster a more predictable business environment and unlock EU funding.

### Key quantitative indicators and projections (selected)
- Real GDP (percentage change)
  - 2020: -4.3
  - 2021: 7.2
  - 2022: 4.3
  - 2023: -0.8
  - 2024: 0.5
  - 2025: 0.7
  - 2026: 2.0
  - 2027: 2.2
  - 2028: 2.4
  - 2029: 2.5
  - 2030: 2.6
- CPI inflation (average)
  - 2020: 3.3
  - 2021: 5.1
  - 2022: 14.6
  - 2023: 17.1
  - 2024: 3.7
  - 2025: 4.6
  - 2026: 3.5
  - 2027: 3.0
- CPI inflation (end year)
  - 2020: 7.4
  - 2021: 24.5
  - 2022: 5.5
  - 2023: 4.5
  - 2024: 3.1
- Public debt (percent of GDP)
  - 2020: 78.7
  - 2021: 76.2
  - 2022: 73.9
  - 2023: 73.0
  - 2024: 73.5
  - 2025: 74.8
  - 2026: 75.3
  - 2027: 76.3
  - 2028: 77.3
  - 2029: 78.0
  - 2030: 78.6
- General government overall balance (percent of GDP)
  - 2020: -7.5
  - 2021: -7.1
  - 2022: -6.2
  - 2023: -6.7
  - 2024: -4.9
  - 2025: -4.7
  - 2026: -4.5
  - 2027: -4.6
  - 2028: -4.4
- Primary balance (percent of GDP)
  - 2020: -5.3
  - 2021: -5.0
  - 2022: -3.9
  - 2023: -3.2
  - 2024: -1.2
  - 2025: -0.7
  - 2026: -0.3
- Gross fixed capital formation (percent of GDP)
  - 2020: 26.5
  - 2021: 27.3
  - 2022: 27.8
  - 2023: 25.6
  - 2024: 23.4
  - 2025: 21.6
  - 2026: 21.5
  - 2027: 21.8
- Gross external debt (percent of GDP)
  - 2020: 80.7
  - 2021: 86.4
  - 2022: 91.8
  - 2023: 85.8
  - 2024: 84.8
  - 2025: 79.1
  - 2026: 75.1
  - 2027: 71.7
  - 2028: 70.2
  - 2029: 68.3
  - 2030: 67.5
- Reserves (billions of Euros)
  - 2020: 33.7
  - 2021: 38.4
  - 2022: 38.7
  - 2023: 41.4
  - 2024: 44.6
  - 2025: 49.3
  - 2026: 50.9
  - 2027: 51.1
  - 2028: 55.0
  - 2029: 55.8
  - 2030: 60.7
- Gross official reserves in percent of the IMF ARA metric
  - 2020: 120.2
  - 2021: 117.5
  - 2022: 107.0
  - 2023: 105.0
  - 2024: 109.6
  - 2025: 112.1
  - 2026: 111.4
  - 2027: 110.8
  - 2028: 114.7
  - 2029: 114.0
  - 2030: 121.3
- Exchange rate, HUF per euro, period average
  - 2020: 351.2
  - 2021: 358.5
  - 2022: 390.9
  - 2023: 381.8
  - 2024: 395.4

### Policy recommendations (summary)
- 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.

*IMF Communications Department, Press Release No. 25/286, August 29, 2025. Authorities consented to publication of the Staff Report.*

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## References

- [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)
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- [PRESS CENTER](http://presscenter.imf.org/)
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_Source: https://www.imf.org/en/news/articles/2025/08/29/pr-25286-hungary-imf-executive-board-concludes-2025-article-iv-consultation_