News about Hungary

Hungary is reviewing the Paks II nuclear expansion, valued at over US$14 billion, and is considering replacing Russia's Rosatom as main contractor, according to two sources, with a final decision expected late this year or early next year. The contract was awarded to Rosatom in 2014 without tender, and by the first concrete pour in February Hungary had paid over 2 billion euros (about US$2.24 billion). Dropping Rosatom could cost Hungary the 1.1 billion euros already paid plus possible penalties, and no replacement has been named, though one source suggests a European firm could simplify sanctions issues. Rosatom says it is on schedule and has received no official notice, while Budapest still plans to keep nuclear power and is considering extending the life of four Russian-built reactors by 20 years.

Hungarian police arrested former central bank governor György Matolcsy, who also served as finance minister, as the new government of Prime Minister Péter Magyar pursues suspected financial abuses under Viktor Orbán. Matolcsy led the central bank from 2013 to 2025 and was long one of Orbán's closest economic allies; he has denied any wrongdoing. His lawyer said he was detained on suspicion of economic fraud causing significant financial damage and using a forged private document. The case involves foundations endowed with hundreds of billions of forints in public funds and real estate bought at inflated prices, though it is unclear which matter the detention relates to. In July, the government launched the National Asset Recovery and Protection Office, which has investigative and prosecutorial powers.

Eurasia Group says Hungary is likely to join the eurozone in 2032 despite short-term budget slippage from drought and geopolitical shocks. The firm forecasts the general government deficit rising to around 7.7–7.8% of GDP this year, while public debt, at 75.6% mid-year, is likely to approach 77% of GDP by end-2026. Markets have already reacted, with credit default swap prices rising as deficit expectations weakened. Analysts expect Prime Minister Péter Magyar to lean toward additional taxes on large corporations and to aim for ERM II membership by 2030, a prerequisite that would pave the way for eurozone entry after at least two years in ERM II. Fitch separately projects a 7.3% deficit this year, falling to 5.8% by 2027.

Hungarian Prime Minister Péter Magyar said ahead of the European Council that the current EU budget proposal is not acceptable, as the contribution expected from Hungary and cohesion countries such as Poland would rise significantly, even though the common agricultural and cohesion policy frameworks have not been cut. He stressed that getting the content right matters more than a quick deal, since the long-term EU financial framework shapes Hungary's budget, water management and competitiveness investments for the next seven years. He said mainstream European migration positions are converging with Hungary's, calling it a 'good direction'. The Council closed rule-of-law conditionality proceedings, which should return several billion euros to Hungary, and the Tisza government further tightened child protection law. He plans to meet Ukrainian President Volodymyr Zelensky in Brussels and may meet him in Berehove in the autumn.