Recommendation for a COUNCIL RECOMMENDATION endorsing the national medium-term fiscal-structural plan of Hungary
Date: 2025-01-16
Institutions: Directorate-General for Economic and Financial Affairs, European Commission
Subjects: Hungary, budget deficit, coordination of EMU policies, economic reform, fiscal policy, investment, macroeconomics, national planning, public debt, structural adjustment

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   EUROPEAN COMMISSION  Brussels, 16.1.2025  COM(2025) 14 final  Recommendation for a COUNCIL RECOMMENDATION endorsing the national medium-term fiscal-structural plan of Hungary  
 
Recommendation for a 

COUNCIL RECOMMENDATION 

endorsing the national medium-term fiscal-structural plan of Hungary 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Article 121 thereof, 

Having regard to Regulation (EU) 2024/1263, and in particular Article 17 thereof, 

Having regard to the recommendation from the Commission, 

Whereas: 

GENERAL CONSIDERATIONS 

(1) 

(2) 

1 

2 

3 

A reformed EU economic governance framework entered into force on 30 April 2024. 
Regulation  (EU)  2024/1263  of  the  European  Parliament  and  of  the  Council  on  the 
effective  coordination  of  economic  policies  and  on  multilateral  budgetary 
surveillance,1  together  with  the  amended  Regulation  (EC)  No  1467/97  on  the 
implementation  of  the  excessive  deficit  procedure,2  and  the  amended  Council 
Directive  2011/85/EU  on  the  budgetary  frameworks  of  Member  States3  are  the  core 
elements of the reformed EU economic governance framework. The framework aims 
at  promoting  sound  and  sustainable  public  finances,  and  sustainable  and  inclusive 
growth  and  resilience  through  reforms  and  investments,  and  preventing  excessive 
deficits.  It  also  promotes  national  ownership  and  has  a  greater  medium-term  focus, 
combined with more effective and coherent enforcement of the rules.  

The  national  medium-term  fiscal-structural  plans  that  Member  States  submit  to  the 
Council  and  to  the  Commission  are  at  the  centre  of  the  new  economic  governance 
framework. The plans  are to  deliver on two objectives:  i) ensuring that,  inter alia  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  brought  and 
maintained  below  the  reference  value  of  3%  of  GDP  over  the  medium-term,  and  ii) 
ensuring  the  delivery  of  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 is to present a medium-term commitment 

Regulation 

(EC)  No 

Regulation  (EU)  2024/1263  of  the  European  Parliament  and  of  the  Council  of  29  April  2024  on  the 
effective  coordination  of  economic  policies  and  on  multilateral  budgetary  surveillance  and  repealing 
Council 
ELI: 
http://data.europa.eu/eli/reg/2024/1263/oj). 
Council  Regulation  (EU)  2024/1264  of  29  April  2024  amending  Regulation  (EC)  No  1467/97  on 
speeding  up  and  clarifying  the  implementation  of  the  excessive  deficit  procedure  (OJ  L,  2024/1264, 
30.4.2024, ELI: http://data.europa.eu/eli/reg/2024/1264/oj). 
Council Directive (EU) 2024/1265 of 29 April 2024 amending Directive 2011/85/EU on requirements 
(OJ  L,  2024/1265,  30.4.2024,  ELI: 
for  budgetary 
http://data.europa.eu/eli/dir/2024/1265/oj). 

the  Member  States 

frameworks  of 

2024/1263, 

30.4.2024, 

1466/97 

(OJ 

L, 

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to a net expenditure4 path, which effectively establishes a budgetary constraint for the 
duration  of  the  plan,  covering  four  or  five  years  (depending  on  the  regular  term  of 
legislature  in  a  Member  State).  In  addition,  the  plan  is  to  explain  how  the  Member 
State  will  ensure  the  delivery  of  reforms  and  investments  responding  to  the  main 
challenges  identified  in  the  context  of  the  European  Semester,  in  particular  in  the 
the 
country-specific 
macroeconomic  imbalances  procedure  (MIP),  if  applicable),  and  how  the  Member 
State will address the common priorities of the Union. The period for fiscal adjustment 
covers  a  period  of  four  years,  which  may  be  extended  by  up  to  three  years  if  the 
Member  State  commits  to  delivering  a  set  of  relevant  reforms  and  investments  that 
satisfies the criteria set out in Regulation (EU) 2024/1263. 

recommendations 

those  pertaining 

including 

(CSRs, 

to 

(3) 

(4) 

Following the submission of the plan, the Commission is to assess whether it complies 
with the requirements of Regulation (EU) 2024/1263. 

Upon  a  recommendation  from  the  Commission,  the  Council  is  to  then  adopt  a 
recommendation to set the net  expenditure path  of the Member State concerned and, 
investment  commitments 
the  set  of  reform  and 
where  applicable,  endorses 
underpinning an extension of the fiscal adjustment period. 

CONSIDERATIONS  CONCERNING  THE  NATIONAL  MEDIUM-TERM  FISCAL-
STRUCTURAL PLAN OF HUNGARY 

(5) 

On  4  November  2024,  Hungary  submitted  its  national  medium-term  fiscal-structural 
plan to the Council and to the Commission. The submission took place following an 
extension  of  the  deadline  set  out  in  Article  36  of  Regulation  (EU)  2024/1263,  as 
agreed with the Commission. The reason for the delayed submission was to ensure that 
the  plan  presents  an  accurate  picture  of  Hungary's  budgetary  processes  and 
commitments, in line with the 2025 budget planning. On 20 December 2024, Hungary 
submitted  an  addendum  to  the  plan  reflecting  more  recent  data,  with  a  revised  net 
expenditure  path  to  ensure that the government  deficit is  brought  below 3% of GDP 
and  that  the  projected  general  government  debt  is  put  and  kept  on  a  plausibly 
downward path by the end of the adjustment period. 

Process prior to the submission of the plan  

(6) 

To  frame  the  dialogue  leading  to  the  submission  of  national  medium-term  fiscal-
structural  plans,  on  21  June  2024  the  Commission  sent,  according  to  Article  9  of 
Regulation  (EU)  2024/1263,  the  reference  trajectory5  to  Hungary.  The  Commission 

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Net expenditure as defined in Article 2 of Regulation (EU) 2024/1263, namely government expenditure 
net  of  (i)  interest  expenditure,  (ii)  discretionary  revenue  measures,  (iii)  expenditure  on  Union 
programmes fully matched by revenue from Union funds,  (iv) national expenditure on co-financing of 
programmes funded by the Union, (v) cyclical elements of unemployment benefit expenditure and (vi) 
one-offs and other temporary measures.  
Prior  guidance  transmitted  to  the  Member  States  and  Economic  and  Financial  Committee  includes 
trajectories  with  and  without  an  extension  of  the  adjustment  period  (covering  4  and  7  years, 
respectively).  It  also  includes  the  main  initial  conditions  and  underlying  assumptions  used  in  the 
Commission’s  medium-term  government  debt  projection  framework.  The  reference  trajectory  was 
calculated on the basis of the methodology described in the Commission’s Debt Sustainability Monitor 
2023  (https://economy-finance.ec.europa.eu/publications/debt-sustainability-monitor-2023_en).  It 
is 
based on the European Commission  Spring 2024 Forecast and its medium-term extension up to 2033, 
and  long-term  GDP  growth  and  ageing  costs  are  in  line  with  the  joint  Commission-Council  2024 
Ageing  Report  (https://economy-finance.ec.europa.eu/publications/2024-ageing-report-economic-and-
budgetary-projections-eu-member-states-2022-2070_en). 

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published  the  reference  trajectory  on  4  November  20246.  The  reference  trajectory  is 
risk-based  and  ensures  that,  by  the  end  of  the  fiscal  adjustment  period  and  in  the 
absence  of  further  budgetary  measures  beyond  the  adjustment  period,  general 
government debt is on a plausibly downward trajectory or stays at prudent levels over 
the  medium  term,  and  the  general  government  deficit  is  brought  below  3%  of  GDP 
over  the  adjustment  period  and  maintained  below  that  reference  value  over  the 
medium term. The medium term is defined as the ten-year period after the end of the 
adjustment period. In accordance with Article 6, point (d), 7 and 8 of Regulation (EU) 
2024/1263,  the reference trajectory is  also  consistent with  the deficit benchmark, the 
debt  sustainability  safeguard  and  the  deficit  resilience  safeguard.  The  reference 
trajectory  of  Hungary  sets  out  that,  based  on  the  Commission’s  assumptions 
underpinning  the  prior  guidance  transmitted  in  June  2024  and  assuming  a  4-year 
adjustment period, net expenditure should not grow by more than the values provided 
in  Table  1.  This  corresponds  to  average  net  expenditure  growth  of  4.4%  over  the 
adjustment period (2025-2028).  

Table 1: Reference trajectory provided by the Commission to Hungary on  
21 June 2024 

Maximum net 
expenditure growth 
(annual, %) 

2025 

2026 

2027 

2028 

Average 
2025-2028 

4.4 

4.8 

4.5 

4.3 

4.4 

Source: Commission’s calculations. 

(7) 

(8) 

In line with Article 12 of Regulation (EU) 2024/1263, Hungary and the Commission 
engaged in a technical dialogue in July and September 2024. The dialogue centred on 
the  net  expenditure  path  envisaged  by  Hungary  and  its  underlying  assumptions,  as 
well  as  the  envisaged  delivery  of  reforms  and  investments  responding  to  the  main 
challenges  identified  in  the  context  of  the  European  Semester  and  the  common 
priorities  of  the  Union  in  fair  green  and  digital  transition,  social  and  economic 
resilience, energy security and the build-up of defence capabilities. 

The  plan  submitted  by  Hungary  does  not  report  on  a  consultation  process  with 
domestic relevant national stakeholders (including social partners) prior to submission. 
According to the information provided in the plan, the parliament can be consulted on 
the  plan  after  the  submission  by  the  government  of  the  2025  draft  budget  to  the 
parliament. 

Other related processes 

(9) 

On  26  July  2024,  the  Council  established  the  existence  of  an  excessive  deficit  in 
Hungary due to non-compliance with the deficit criterion.  

(10)  On  26  November  2024,  the  Commission  recommended  a  Council  Recommendation 
under  Article  126(7)  TFEU  with  a  view  to  bringing  an  end  to  the  situation  of  an 
excessive  deficit  in  Hungary7.  In  the  absence  of  a  national  medium-term  fiscal-

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https://economy-finance.ec.europa.eu/economic-and-fiscal-governance/national-medium-term-fiscal-
structural-plans_en#hungary 
Recommendation for a Council Recommendation with a view to bringing an end to the situation of an 
excessive deficit in Hungary, 26.11.2024, COM(2024)953 final. 

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structural plan endorsed by the Council, the recommended corrective net expenditure 
path  reflected  the  reference  trajectory  with  a  fiscal  adjustment  of  four  years  updated 
based on more recent  data, including  the Commission Autumn 2024 Forecast  (Table 
2). On 16 January 2025, the Commission adopted an amended Recommendation for a 
Council  Recommendation  under  Article  126(7)  TFEU  to  Hungary  following  its 
assessment of the national medium-term fiscal-structural plan of Hungary. The present 
Recommendation  coincides  with  the  Council  Recommendation  under  Article  126(7) 
TFEU  with  a  view  to  bringing  an  end  to  the  situation  of  an  excessive  government 
deficit  in  Hungary.  The  simultaneous  adoption  of  those  recommendations,  which  is 
tailored to and justified by the transition to the new economic governance framework, 
ensures consistency between the recommended adjustment paths. 

Table 2: Reference trajectory updated based on more recent data 

Years 

2025 

2026 

2027 

2028 

Average 
2025-
2028 

Annual 

3.9 

3.3 

3.3 

3.1 

3.4 

Growth rates 
(%) 

Cumulative (*) 

7.6 

11.1 

14.7 

18.3 

n.a. 

(*) The cumulative growth rates are calculated by reference to the base year of 2023. 

(11)  On  19  June  2024,  the  Commission  concluded  that  Hungary  is  experiencing 
macroeconomic  imbalances.  In  particular,  Hungary  faces  vulnerabilities  related  to 
price pressures and external and government financing needs, which remain relevant, 
although an improving external environment has mitigated some short-term risks 8.  

(12)  On  21  October  2024,  the  Council  addressed  to  Hungary  a  series  of  country-specific 

recommendations (CSRs) in the context of the European Semester9.  

SUMMARY OF THE PLAN AND THE COMMISSION’S ASSESSMENT THEREOF 

(13) 

In  line  with  Article  16  of  Regulation  (EU)  2024/1263,  the  Commission  assessed  the 
plan as follows: 

Context: macroeconomic and fiscal situation and outlook 

(14)  Hungary’s  GDP  declined  by  0.9%  in  2023,  driven  by  weak  domestic  and  external 
demand.  According  to  the  Commission  Autumn  2024  Forecast,  GDP  growth  is 
expected  to  pick  up  to  0.6%  in  2024  driven  primarily  by  private  consumption  and  a 
positive  contribution  of  net  exports.  In  2025,  real  GDP  is  set  to  increase  by  1.8%, 
supported by consumption and a moderate rebound in investment. In 2026, real GDP 
growth is forecast to increase by 3.1%, driven by domestic demand and a recovery of 
exports. Potential GDP in Hungary is expected to pick up from 1.4% in 2024 to 1.7% 
by 2026, driven by investments  and increasing  productivity. The unemployment rate 
stood at  4.1% in  2023, and is  projected by the Commission to  increase somewhat  to 

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Communication from the Commission to the European Parliament, the Council, the European Central 
Bank, the European Economic and Social Committee, the Committee of the Regions and the European 
Investment Bank’, COM (2024) 600 final, Appendix 4 
Council  Recommendation  of  21  October  2024  on  economic,  budgetary,  employment  and  structural 
policies of Hungary. 

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(15) 

4.5%  in  2024  before  decreasing  to  4.3%  in  2025  and  4.1%  in  2026.  Inflation  (GDP 
deflator) is  projected to  decrease from 14.6% in  2023 to  7.2% in  2024, and to  reach 
4.1% in 2025 and 3.3% in 2026. 

In 2023 Hungary’s general government deficit amounted to 6.7% of GDP. According 
to  the  Commission  Autumn  2024  Forecast  on  a  no-policy  change  basis,  it  is  set  to 
reach 5.4% of GDP in 2024 and to decline to 4.6% and to 4.1% of GDP in 2025 and 
2026  respectively.  The  Commission  forecast  does  not  incorporate  Hungary’s  budget 
for  2025  adopted  by  the  national  parliament  in  December  2024.  The  general 
government debt was 73.4% of GDP at end-2023 and is expected to increase to 74.5% 
of  GDP  at  end-2024.  It  is  projected  to  stabilise  at  74.5%  of  GDP  at  end-2025  and 
decline  to  73.8%  at  end-2026.  The  fiscal  forecast  by  the  Commission  incorporates 
only credibly announced and sufficiently specified policy  commitments and does not 
include all the measures put forward by Hungary in the plan. 

Net expenditure path and main macroeconomic assumptions in the plan  

(16)  Hungary’s  national  medium-term  fiscal-structural  plan  covers  the  period  2025-2028 

and presents a fiscal adjustment over four years.  

(17)  The  plan  contains  all  information  required  by  Article  13  of  Regulation  (EU) 

2024/1263.  

(18)  The  plan,  as  complemented  by  the  addendum,  commits  to  the  net  expenditure  path 
indicated  in  Table  3,  corresponding  to  average  net  expenditure  growth  of  4.0%  over 
the years 2025-2028. The average net expenditure growth reported in the plan over the 
adjustment period (2025-2028) is lower than the reference trajectory transmitted by the 
Commission on 21 June 2024, but higher than the reference trajectory updated based 
on more recent data. The plan assumes potential GDP growth to increase to 1.5% in 
2025  (from  1.4%  in  2024),  before  increasing  to  1.7%  in  2028.  In  addition,  the  plan 
expects the growth rate of the GDP deflator to decrease to 4.1% in 2025 (from 7.2% in 
2024), before decreasing to 3.4% in 2028. 

Table 3: Net expenditure path and main assumptions in Hungary’s plan  

2024 

2025 

2026 

2027 

2028 

Average over 
the period of 
validity of the 
plan 

2025-2028 

Net expenditure growth 
(annual, %) 

Net expenditure growth 
(cumulative, from base 
year 2023, %) 

Potential GDP growth (%) 

Inflation (GDP deflator 
growth) (%) 

4.6 

4.3 

4.0 

3.9 

3.7 

4.0 

4.6 

9.1 

13.5 

17.9 

22.2 

n.a. 

1.4 

7.2 

1.5 

4.1 

1.7 

3.5 

1.7 

3.4 

1.6 

3.4 

1.6 

3.6 

Source: Medium-term fiscal-structural plan of Hungary and Commission calculations.  

Implications of the plan’s net expenditure commitments for general government debt  

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(19) 

If the net  expenditure path  committed to  in  the plan and the underlying assumptions 
materialise, general government debt would, according to the plan, decrease gradually 
from 74.0% in 2024 to 68.2% of GDP at the end of the adjustment period (2028), as 
per the following table. After the adjustment period, over the medium term (i.e. until 
2038),  the  debt  ratio  is  expected  to  continue  to  decrease  according  to  the  plan,  to 
54.5% of GDP by 2038. Thus, according to the plan, general government debt would 
be brought below the Treaty reference value of 60% of GDP over the medium term. 
This is plausible based on the plan’s assumptions, as debt would be projected to stand 
below 60% of GDP by 2038 under all deterministic stress tests of the Commission’s 
Debt Sustainability Analysis. Therefore, based on the plan’s policy commitments and 
macroeconomic  assumptions,  the  net  expenditure  path  put  forward  in  the  plan  is 
consistent with the requirement for debt as set out in Articles 6, point (a), and 16(2) of 
Regulation (EU) 2024/1263. 

Table 4: General government debt and balance developments in Hungary’s plan  

2023 

2024 

2025 

2026 

2027 

2028 

2038 

Government debt 

73.4 

74.0 

73.5 

71.3 

69.9 

68.2 

54.5 

(% of GDP) 

Government balance 

-6.7 

-4.9 

-3.6 

-2.5 

-2.0 

-1.5 

-2.2 

(% of GDP) 

Source: Medium-term fiscal-structural plan of Hungary 

Implications  of  the  plan’s  net  expenditure  commitments  for  the  general  government 
balance 

(20)  Based  on  the  plan’s  net  expenditure  path  and  assumptions,  the  general  government 
deficit would decline from 4.9% of GDP in 2024 to 2.5% of GDP by 2026 and to 1.5% 
of GDP in 2028. Thus, according to the plan, the general government balance would 
not exceed the 3% of GDP reference value at the end of the adjustment period (2028). 
In  addition,  in  the  ten  years  following  the  adjustment  period  (i.e.  until  2038),  the 
government  deficit  would  not  exceed  3%  of  GDP.  Therefore,  based  on  the  plan’s 
policy  commitments  and  macroeconomic  assumptions,  the  net  expenditure  path  put 
forward  in  the  plan  is  consistent  with  the  requirement  for  the  deficit  as  set  out  in 
Articles 6, point (b), and 16(2) of Regulation (EU) 2024/1263. 

Time profile of the fiscal adjustment  

(21)  The  time  profile  of  the  fiscal  adjustment,  measured  as  the  change  in  the  structural 
primary balance, as described in the plan, is linear, as required by Article 6, point (c), 
of  Regulation  (EU)  2024/1263.  Therefore,  based  on  the  plan’s  policy  commitments 
and macroeconomic assumptions, the net expenditure path put forward in the plan is 
consistent  with  the no-backloading safeguard clause set  out  in  Article 6,  point (c) of 
Regulation (EU) 2024/1263.  

Table 5: Structural primary balance developments in Hungary’s plan  

2023 

2024 

2025 

2026 

2027 

2028 

Structural primary balance 

-1.7 

0.6 

1.2 

1.7 

2.3 

2.8 

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(% of GDP) 

Change in structural 
primary balance 

(pps.) 

na. 

2.3 

0.5 

0.5 

0.5 

0.5 

Source: Medium-term fiscal-structural plan of Hungary 

Consistency of the plan with the excessive deficit procedure  

(22)  The net expenditure path set out in the plan is in line with the requirements under the 
excessive  deficit  procedure  (in  particular  with  the  minimum  annual  structural 
adjustment established in Article 3(4), third subparagraph of Council Regulation (EC) 
1467/97). 

Consistency of the plan with the deficit resilience safeguard 

(23)  The  requirement  of  the  preventive  arm  set  out  in  Article  8  of  Regulation  (EU) 
2024/1263 regarding the deficit resilience safeguard, which aims to provide a common 
margin relative to the deficit reference value of 3% of GDP, applies to Hungary as of 
2027, as the deficit is planned to be below 3% of GDP as of 2026. In the years 2027 
and  2028,  in  accordance  with  Article  8  of  Regulation  (EU)  2024/1263,  the  annual 
adjustment  in  the  structural  primary  balance  should  not  be  less  than  0.4  percentage 
points if the structural deficit remained above 1.5% of GDP in the preceding year, to 
achieve  a  common  resilience  margin  in  structural  terms  of  1.5%  of  GDP.  The  fiscal 
adjustment  that  results  from  the  plan’s  policy  commitments  and  macroeconomic 
assumptions is  0.5% of  GDP in  both  2027 and  2028. Therefore, based  on the plan’s 
policy  commitments  and  macroeconomic  assumptions,  the  net  expenditure  path  put 
forward in the plan is consistent with the deficit resilience safeguard. 

Consistency of the plan with the debt sustainability safeguard 

(24) 

In  accordance  with  Article  7  of  Regulation  (EU)  2024/1263,  as  general  government 
debt will be between 60% and 90% of GDP over the adjustment period according to 
the  plan,  the  debt  ratio  is  required  to  decline  by  at  least  0.5  percentage  points  on 
average  per  year  until  it  falls  below  60%.  This  decline  is  calculated  over  the  period 
2027-2028, i.e. starting in the year in which the excessive deficit procedure would be 
abrogated  according  to  the  plan,  and  amounts  to  1.7  percentage  points.  Therefore, 
based  on  the  plan’s  policy  commitments  and  macroeconomic  assumptions,  the  net 
expenditure  path  put  forward  in  the  plan  is  consistent  with  the  debt  sustainability 
safeguard. 

Macroeconomic assumptions of the plan 

(25)  The plan is based on a set of assumptions which is consistent with those underpinning 
the reference trajectory updated based on more recent data (including the Commission 
2024 Autumn Forecast) in Table 2 except for two variables, namely the starting point 
(structural  primary  balance  for  2024)  and  GDP  deflator  growth  for  2026.  A  careful 
assessment  of  these  differences  in  assumptions  is  necessary  to  ensure  they  are 
underpinned  by  sound  and  data-driven  economic  arguments.  An  assessment  of  these 
differences  in  assumptions  is  provided  below,  together  with  an  assessment  of  each 
difference considered in isolation. 

• 

The  plan  assumes  a  more  favourable  initial  fiscal  position,  assuming  a 
structural  primary  balance  of  0.6%  of  GDP  compared  to  0.2%  in  the 
Commission’s  Autumn  2024  Forecast.  The  higher  structural  primary 

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• 

balance in the plan reflects a better-than-expected budgetary outcome for 
January-November  2024,  in  particular  higher-than-expected  non-tax 
revenue and slightly lower-than-expected expenditure. Consequently, this 
assumption is deemed to be justified and contributes to a higher average 
net expenditure growth over the adjustment period. 

The plan assumes inflation (GDP deflator) of 3.5% for 2026 compared to 
3.3% in the Commission’s Autumn 2024 Forecast. The plan explains this 
difference  by  higher  wage  increases  in  2026  given  the  three-year  wage 
agreement  signed  on  25  November  2024  between  business  and  labour 
associations in Hungary. Accordingly, the minimum wage will grow by 
9%  in  2025,  which  is  in  line  with  the  Commission’s  Autumn  2024 
Forecast.  In  2026,  the  agreement  sets  minimum  wage  growth  at  13%, 
which implies higher wage growth and inflation than the projection of the 
Commission’s Autumn 2024 Forecast. This assumption is deemed to be 
justified  and  contributes  to  higher  average  net  expenditure  growth  over 
the adjustment period in the plan.  

Overall, the difference between the net expenditure path in the plan and the reference 
trajectory  updated  based  on  more  recent  data  is  explained  by  differences  in 
assumptions  that  are  duly  justified,  in  line  with  Article  13(b)  of  Regulation  (EU) 
2024/1263.  Overall,  all  the  differences  in  assumptions  taken  together  lead  to  an 
average net expenditure growth in the plan that is higher than the reference trajectory 
updated  based  on  more  recent  data.  Based  on  this  assessment,  the  plan  fulfils  the 
requirement under Article 13(b) of Regulation (EU) 2024/1263.  

The  Commission  will  take  into  account  the  above  assessment  of  the  plan’s 
assumptions in future assessments of compliance with the net expenditure path. 

Fiscal strategy in the plan 

(26)  The  plan  does  not  include  a  fully-fledged  and  quantified  fiscal  strategy.  The  precise 
specification  of  the  relevant  policy  measures  is  to  be  confirmed  or  adjusted  and 
quantified  in  the  annual  budgets.  The  adopted  budget  for  2025  specifies  the  policy 
measures  through  which  the  government  plans  to  achieve  the  net  expenditure 
commitment  for  2025.  The  plan  further  includes  a  number  of  unquantified  deficit-
increasing measures across different areas, which may affect the fiscal outcomes in the 
medium  term.  Further  fiscal  measures  may  thus  be  needed  to  achieve  the 
commitments in the plan.  

Reform  and  investment  intentions  in  the  plan  responding  to  the  main  challenges 
identified in the context of the European Semester and addressing the common priorities 
of the Union 

(27)  The plan describes policy intentions concerning reforms and investments to respond to 
the main challenges identified in the context of the European Semester, especially the 
CSRs, including those pertaining to the MIP, and to address the common priorities of 
the EU. The plan includes about 132 reforms and investments intending to address the 
common priorities of the EU, of which 41 are financially supported by the Recovery 
and Resilience Facility and 29 by the cohesion policy funds. 

(28)  Concerning  the  common  priority  of  a  fair  green  and  digital  transition,  including  the 
climate objectives set out in Regulation (EU) 2021/1119, the plan includes more than 
40 reforms and investments. Several reforms and investments on the green transition 
feature as measures in the Hungarian Recovery and Resilience Plan (RRP), including 

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improve 

the  water 

the REPowerEU chapter, or are supported by cohesion policy funds. The plan includes 
measures  to  support  the  transition  to  climate  neutrality  and  green  transport, 
specifically  by  increasing  the  rollout  of  electric  cars,  developing  railways,  charging 
networks  and  biking  paths.  Other  reforms  and  investments  aim  to  improve  the 
country's  waste  management  and  support  the  circular  economy  in  particular,  for 
instance  by  devising  a  waste  management  plan  and  deploying  smart  waste 
infrastructure. The plan also includes measures aimed at supporting environmentally-
friendly manufacturing processes and strengthening green skills. Other measures aim 
in  water 
to 
management, deliver nature conservation investments and introduce a CO2 quota tax. 
Several  reforms  and  investments  also  aim  to  contribute  towards  Hungary's  digital 
transition  by  offering  digital  solutions  in  tax  reporting  and  monitoring  (eVAT, 
eReceipt  and  eCashier),  developing  digital  skills,  reforming  the  single  national  tariff 
and  passenger  information  system,  and  improving  the  digital  readiness  of  businesses 
and  public  services,  energy  system  and  waste  management.  The  measures  related  to 
the common priority of a fair green and digital transition aim to address (2019, 2020, 
2022 and 2023) CSRs on sustainable transport, waste and water management, energy 
transition,  tax  simplification,  quality  of  decision-making,  digitalisation  of  businesses 
and labour market. The plan does not include measures related to the 2023 and 2024 
CSR on phasing out fossil fuel subsidies.  

infrastructure,  accelerate  climate  adaptation 

(29)  Concerning  the  common  priority  of  social  and  economic  resilience,  including  the 
European Pillar of Social Rights, the plan includes about 80 reforms and investments 
that  Hungary  expects  will  contribute  to  strengthening  the  country's  social  and 
economic  resilience.  Several  reforms  and  investments  targeting  social  and  economic 
resilience  feature  as  measures  in  the  Hungarian  RRP,  including  the  REPowerEU 
chapter,  or  are  supported  by  cohesion  policy  funds.  The  plan  includes  measures  to 
improve the labour market access to some vulnerable groups (for example, by creating 
new  creche  places)  including  the  young  and  the  elderly,  housing  (including  the 
development of new social houses as part of the Catching-up Settlements Programme 
and  various  Home-Creation  programmes),  education  (including  by  increasing 
teachers’  wages),  and  healthcare  (for  example,  the  development  of  primary  care  and 
hospitals). The plan also includes measures to promote social cohesion, the digital and 
infrastructural  development  in  public  and  higher  education  as  well  as  in  vocational 
training  and  education.  There  are  several  measures  on  improving  employability  with 
reskilling,  and  to  support  the  development  of  enterprises.  Measures  such  as 
preferential  loans  for  small  and  medium-sized  enterprises  aim  to  improve  the  export 
capacities of firms. In the field of research and innovation, the plan lists measures such 
as  the  establishment  of  national  laboratories  which  aims  to  foster  innovation. 
Furthermore,  the  plan  includes  reforms  and  investments  that  aim  to  modernise  the 
public  administration  and  taxation.  The  plan  includes  measures  to  implement  the 
adopted  national  anti-corruption  strategy  and  action  plan  and  to  carry  out  spending 
reviews on a regular basis. The reforms and investments contained in the plan intend 
to  address  the  2019,  2020,  2022,  2023  and  2024  CSRs  on  education,  research  and 
development,  social  policy,  business  environment,  budgetary  framework,  taxation, 
anti-corruption,  judicial  independence,  labour  market  and  healthcare.  The  plan  does 
not include measures intended to address the 2022 CSR on long-term sustainability of 
the  pension  system  as,  according  to  the  plan,  the  government  does  not  plan  any 
changes to the pension system in the near future. It also does not include measures to 
address  the  2023  and  2024  MIP-related  CSRs  on  effective  coordination  of 
macroeconomic  policies  and  phasing  out  interest  and  price  caps  to  reduce  their 

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distortive effect. The plan does not include measures to address the 2019, 2020, 2022, 
2023  and  2024  CSRs  on  the  adequacy  of  unemployment  benefit  as  the  plan  informs 
that the government does not intend to modify the duration of unemployment benefit. 
The plan does not include measures intended to address the 2023 and 2024 CSRs on 
social  dialogue.  Finally,  the  plan  does  not  include  measures  which  would  intend  to 
address the 2020, 2023 and 2024 CSRs on the limited use of emergency measures in 
line with the principle of single market and the rule of law. 

(30)  Concerning  the  common  priority  of  energy  security,  the  plan  includes  reforms  and 
investments that Hungary expects will contribute towards strengthening the country's 
energy  security.  Several  of  these  reforms  and  investments  are  included  in  the 
Hungarian  RRP,  including  the  REPowerEU  chapter,  or  are  supported  by  cohesion 
policy funds. The plan includes measures aimed at supporting the deployment of wind 
power plants, increasing the energy efficiency of dwellings, supporting the installation 
of residential solar panels and electrifying heating systems. Other reforms in the plan 
aim  to  deploy  alternative  renewable  energy,  modernise  public  buildings  (such  as 
hospitals, education institutions) and improve the energy efficiency of the industry and 
companies.  The  plan  also  includes  measures  aimed  to  develop  energy  networks  and 
increase  energy  storage  capacities.  The  measures  in  the  plan  related  to  the  common 
priority of energy security aim to address (2022, 2023 and 2024) CSRs on energy.  

(31)  Concerning the common priority of defence capabilities, the plan does not include any 
measures. The plan assumes that the level of defence spending will be maintained at a 
level of 2% of GDP over the time horizon of the plan. 

(32)  The  plan  provides 

information  on 

the  consistency  and,  where  appropriate, 
complementarity, with the Cohesion policy funds and Hungary’s RRP. The reform and 
investment  chapter  of  the  plan  explicitly  mentions  whether  a  measure  is  included  in 
the  RRP  or  in  the  cohesion  policy  programmes.  In  addition,  Table  9  in  the  plan 
provides a comprehensive overview of the measures and their linkage with the RRP, 
cohesion  policy  programmes  and  common  priorities.  The  plan  explains  that  the 
government does not agree with the policy measures to reform the pension system as 
proposed  by  the  independent  expert  in  relation  to  the  reform  envisaged  in  the  RRP. 
The plan  also  mentions that the government will phase out  some windfall  profit and 
sectoral  taxes  later  than  committed  under  the  respective  measure  of  the  RRP,  while 
others are not planned to be phased out.  

(33)  The plan provides an overview of the public investment needs of Hungary related to 
the  common  priorities  of  the  EU  with  the  exception  of  the  4th  priority  related  to 
defence capability building. Regarding the common priority of a fair green and digital 
transition, including the climate objectives, investment needs in the plan include more 
investment  in  the  green  and  digital  transition  of  businesses,  and  the  digitalisation  of 
public administration. New investments aim to equip the education system with digital 
tools  and  related  infrastructure.  As  for  the  common  priority  of  social  and  economic 
resilience,  the  plan  includes  investment  needs  for  businesses  to  improve  their  export 
and  innovation  capacities.  According  to  the  plan  there  are  investments  needs  to 
develop  active  labour  market  policies,  in  particular  through  re-  and  upskilling 
programmes  and  to  support  the  poorest  households.  In  healthcare,  investments  to 
digitise healthcare processes aim to facilitate access to health services and improve the 
quality of care. Public investment in the renovation of railway lines and digitalisation 
contributes to making the transport sector more sustainable. Concerning the common 
priority  of  energy  security,  the  plan  includes  investment  needs  on  renewable  energy 
generation,  improvement  of  energy  efficiency  in  residential  houses  and  public 

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buildings  as  well  as  electricity  network  developments  and  electromobility,  including 
the related infrastructure.  

Conclusion of the Commission’s assessment 

(34)  Overall, the Commission is of the view that Hungary’s plan fulfils the requirements of 

Regulation (EU) 2024/1263. 

OVERALL CONCLUSION 

(35) 

In accordance with Article 17 of Regulation (EU) 2024/1263, the net expenditure path 
as set in the plan should be recommended by the Council to Hungary. 

HEREBY RECOMMENDS that Hungary: 

(1) 

Ensure  that  net  expenditure  growth  does  not  exceed  the  maxima  established  in 
Annex I to this Recommendation. 

In  addition,  the  Council  invites  Hungary  to  ensure  the  delivery  of  reforms  and  investments 
responding  to  the  main  challenges  identified  in  the  context  of  the  European  Semester,  in 
particular in the country-specific recommendations, and addressing the common priorities of 
the Union.  

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ANNEX I 

Maximum growth rates of net expenditure 
(annual and cumulative growth rates, in nominal terms) 

Hungary 

Years 

Growth rates 
(%) 

Annual 
Cumulative (*) 

2025 
4.3 
9.1 

2026 
4.0 
13.5 

2027 
3.9 
17.9 

2028 
3.7 
22.2 

(*) The cumulative growth rates are calculated by reference to the base year of 2023. The cumulative growth 
rates are used in the annual monitoring of ex-post compliance in the control account. 

Done at Brussels, 

For the Council 
The President 

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