February 18, 2025 (press release) –
In the context of the implementation of the EU’s new economic governance rules, the Council endorsed Hungary’s medium-term fiscal-structural plan and set its net expenditure path.
The Council also recommends that Hungary should put an end to the excessive deficit situation by 2026. Hungary should ensure that the nominal growth rate of net expenditure does not exceed 4.3% in 2025 and 4.0% in 2026. This is in line with Hungary’s objectives, expressed in its medium-term fiscal-structural plan.
Now that the Council has adopted its recommendations, Hungary has certainty as regards the budgetary path it will follow in the upcoming years, and can plan accordingly.
Background
Under the new economic governance framework, in force since 30 April 2024, member states are asked to submit national medium-term fiscal-structural plans which cover 4 to 5 years. The plans are a cornerstone of the new economic governance framework.
They aim to ensure that by the end of the adjustment period, general government debt is on a plausibly downward trajectory, or stays at prudent levels, and that the government deficit is kept below or brought and maintained below the reference value of 3% of GDP over the medium term.
The plans also lay out reforms and investments responding to the main challenges identified in the context of the European Semester and addressing the common priorities of the EU.
To that end, each plan includes a commitment to a net expenditure path, which effectively establishes a budgetary constraint for the duration of the plan.
Based on an assessment of the plan by the Commission, the Council adopts a recommendation in which it sets the net expenditure path of the member state concerned.
If an excessive deficit occurs in a member state, the aim of the excessive deficit procedure is to prompt its correction by putting the member state under enhanced scrutiny and providing a recommendation for it to take effective action to correct the deficit. Ultimately, the goal is to strengthen member states’ debt sustainability.
Member states must comply with budgetary discipline on the basis of criteria and reference values set in the EU Treaties: their deficit should not exceed 3% of their gross domestic product (GDP) and their debt should not exceed 60% of their GDP. All member states have to respect these Treaty reference values.
Under the new economic governance framework, once an excessive deficit procedure has been launched, the Council shall make a recommendation to the member state concerned to take effective action to bring the situation of excessive deficit to an end within a set deadline.
- Council recommendation endorsing the national medium-term fiscal-structural plan of Hungary
- Council recommendation with a view to bringing an end to the situation of an excessive deficit in Hungary
- Economic governance framework (background information)
- Excessive deficit procedure (background information)
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