Hungary defence spending to be raised, if Ukraine war drags into 2025 -PM Orban

Hungary will require to increase defence splurging further next year if the war in the adjacent Ukraine drags into 2025, cutting down the amount of funds being there, for other expenditure, Prime Minister Viktor Orban revealed to public radio on Friday.

Russia’s 2022 invasion of Ukraine has led to a surge in defence spending on NATO’s eastern flank led by Poland, which has doubled defence expenditure to 3.9% of economic output by 2023 from 2014 levels based on NATO figures.

While majorly opposing Western military and financial support to Ukraine over concerns of the conflict spilling over into Europe, Hungary has also increased majorly its defence spending sharply, to 2.43% of GDP last year, above a 2% NATO guideline.

If the war drags on into 2025, then the 2023-2024 defence spending levels will not be good enough and will have to be increased,” Orban said in an interview, adding that the move would leave less funding for other purposes.

In power since 2010, Orban has struggled since the COVID-19 pandemic to hold onto Hungary’s budget deficit, with the shortfall averaging nearly 7% of gross domestic product over the past four years, well above EU average levels.

His government made a declaration last month it would postpone about 1% of GDP worth of investments to cut this year’s shortfall to a recently-increased 4.5% of GDP target.

S&P Global Ratings credit analyst Gabriel Forss told Reuters on Tuesday that was a step in the accurate direction, but more will be required, likely after European Parliament and local elections in June.