Hungary’s new Prime Minister Peter Magyar has warned that the country’s public finances are in such a fragile state that it is impossible to make firm economic forecasts, even as he expressed hope for modest growth of around 2% this year.
Magyar, who won a landslide victory over long-time incumbent Viktor Orban in April, said early assessments of the state budget suggest serious irregularities inherited from the previous administration.
Speaking earlier this week, he alleged there were signs that the former government had falsified budget figures — accusations strongly denied by Orban’s Fidesz party.
“Sometimes we’re not seeing skeletons tumbling out of closets but entire graveyards,” Magyar said in an interview with RTL television, pointing to a trillion-forint defense contract signed shortly before the election with Fidesz-aligned contractor 4iG.
The new prime minister said his government aims to preserve key social benefits introduced under Orban, including income tax exemptions for mothers of two children.
However, he warned that maintaining such programs would require significant cuts in other areas of public spending as Hungary reassesses its fiscal priorities.
Magyar, a former insider within Orban’s political circle who broke away following a child protection scandal two years ago, built his campaign around public frustration with corruption, weak economic growth, and deteriorating public services.
His victory marked a dramatic political shift in a country where Orban had positioned himself as one of Europe’s most prominent right-wing populist leaders, known for close relations with both Donald Trump and Vladimir Putin.
Magyar now inherits an economy that has struggled to generate meaningful growth since the end of the COVID-19 pandemic, with stagnation weighing heavily on households and businesses.
Hungary’s economic challenges have been further compounded by the suspension of billions of euros in European Union funding.
Brussels has frozen these funds amid concerns over governance standards and allegations of systemic corruption under the previous administration.
The loss of EU financing has added pressure to Hungary’s strained fiscal position, limiting investment in infrastructure and public services.
Magyar said his administration is currently conducting a comprehensive review of state finances to determine the true condition of the budget.
He warned that early findings suggest a need for strict fiscal discipline and structural reforms.
As part of his austerity approach, Magyar announced that he will cap his own salary at 3.8 million forints ($12,292.56), significantly below the 7.8 million forints previously earned by Orban.
He also pledged to reduce the salaries of senior officials, cut legislative benefits, and streamline government expenditures.
However, he emphasized that the full scale of reforms will depend on the outcome of the ongoing financial audit.
Magyar spoke from his new office in the more commercial district of Pest in Budapest, marking a symbolic shift away from the hilltop Buda Castle offices previously used by Orban.
The change was presented as part of a broader effort to distance the new administration from what Magyar described as an era of political excess and fiscal mismanagement.
Despite the challenges, Magyar expressed optimism that Hungary could regain access to frozen EU funds in the near future.
He said he expects to finalize a political agreement with European Union officials during a visit to Brussels on Thursday.
Such a deal, if successful, could unlock approximately €10 billion ($11.6 billion) in suspended funding before it expires at the end of August.
The potential inflow of EU money is seen as critical to stabilizing Hungary’s budget and supporting investment in key sectors.
Economists say the country’s near-term outlook will depend heavily on whether the new government can restore investor confidence while managing domestic spending pressures.
Magyar’s administration has also signaled its intention to rebuild relations with EU institutions after years of tension under Orban’s leadership.
Brussels has repeatedly clashed with Hungary over rule-of-law issues, judicial independence, and media freedom, all of which contributed to the suspension of EU funds.
The new government hopes that policy reforms and improved transparency will help unlock financial support and restore Hungary’s standing within the bloc.
Still, analysts caution that the scale of fiscal damage may take years to fully assess.
For now, Magyar faces the dual challenge of stabilizing public finances while maintaining political support in the wake of a historic electoral shift.
His success or failure is likely to shape Hungary’s economic trajectory and its relationship with the European Union for years to come.
