Hungary's ambitious pro-natalist policy creates debt trap

Young couples in Hungary face mounting debt and infertility challenges after committing to childbirth for substantial government subsidies, under strict conditions that often lead to financial ruin.

In a park in Debrecen, eastern Hungary, Barbara Elric anxiously checked her email. She and her husband, Levi, were awaiting the results of their third in vitro fertilization (IVF) attempt, performed 10 days prior.

"If this fails, it's a huge emotional shock. Not only that, my husband and I will have to bear all the pressure ourselves, at least financially", Elric shared.

Elric, 33, a social worker, and Levi, 34, a chef, like many young couples in Hungary, committed to having two children to receive subsidies and interest-free preferential loans. However, they struggled with natural conception. If they cannot prove pregnancy by 1/11, they are required to repay the entire loan with overdue interest.

Their loan, taken with the commitment to have two children, was worth about 10 million Forint (over 700 million dong). Under regulations from the previous administration, if they failed to conceive by the deadline, the interest penalty would amount to 1,5 to 3,5 million Forint (106-247 million dong). Both stated this amount was beyond their means. Additionally, they have a housing loan with similar binding conditions.

Barbara Elric and her husband. Photo: BBC

In 2010, then-Prime Minister Viktor Orban launched what was considered the world's most ambitious pro-natalist policy, offering subsidies and preferential credit to those who committed to having children. Currently, Hungary's birth rate remains significantly lower than the replacement level of 2,1 needed to maintain a stable population. The country also faces a brain drain, while immigration is very limited.

This issue is not unique to Hungary. Since the 1980s, birth rates across Europe have fallen below the level needed to sustain the population without immigration. Today, a similar phenomenon is occurring in more than half of the world's countries, affecting about two-thirds of the global population.

When Orban was re-elected in 2010, Hungary had Europe's lowest birth rate. The ruling Fidesz party then pledged to fully address this demographic decline. While Western countries chose immigration to compensate for labor shortages, Hungarians held a different view: they needed children of Hungarian blood, not merely statistics, according to Euro News.

To achieve this, Orban's administration introduced large-scale tax exemptions, interest-free loans, and mortgage support for young married heterosexual couples with stable employment. The state even subsidized the purchase of large family cars or home renovations. However, these benefits were only available to married heterosexual couples with official jobs. After a defeat in the April election this year, Orban left the prime minister's office.

Initially, this policy showed clear effectiveness, with the birth rate increasing from 1,25 in 2010 to 1,59 in 2020. Hungary was once lauded by US conservatives as a model of success. However, the birth rate later reversed, plummeting to 1,31 in 2025. "Considering its initial goal, this policy clearly failed", noted Thomas Sobotka of the Vienna Institute of Demography, Austria.

Why did Hungary's birth rate only increase briefly before continuing to decline? Many experts explain that the policy primarily encouraged couples who already planned to have children to do so a bit earlier to secure benefits. This explains why the birth rate only saw a temporary increase for 1-2 years before falling again.

In fact, Hungary's fluctuations merely reflected a broader trend across Eastern Europe. Evidence shows that neighboring Czech Republic, despite not implementing large-scale stimulus measures, recorded similar growth and decline patterns.

Mate and his wife with their children. Photo: BBC

Conversely, Pruzhina Skravski, a representative of the NGO Three Princes and Three Princesses, which protects family values, believes that without this policy, hundreds of thousands fewer children would have been born. Mate, 43, and his wife Aagi, 37, living on the outskirts of Budapest, fully agree. Raising five children under 10, they maximized interest-free loans and support for car purchases and home renovations. Aagi also received a lifetime income tax exemption for those with four or more children when she returned to work.

"The situation has changed in the past 16 years. In this neighborhood, families with 4-5 children are no longer rare", Mate shared.

Statistics indicate that the number of households with three or more children in Hungary increased after 2010, peaking at 146,000 households in 2020, before decreasing to 125,000 households in 2024.

However, the policy faces criticism for uneven resource distribution. Professor Janos Toth, a demography expert at the University of Szeged, Hungary, stated that special incentive packages were effective in rural areas but had little impact in large cities. The initial 10 million Forint loan might have helped young couples, but its value has been eroded by runaway inflation. Toth suggested that the government should focus on supporting couples having their first child, rather than trying to persuade those who already have children to have more.

For many parents, the biggest obstacle is often not financial but the quality of public services. Antonia Miskolci, 29, living in Budapest, said her fear of the public healthcare system during childbirth was the deciding factor. She had seen TikTok videos warning expectant mothers to bring their own tissues and disinfectant when giving birth in public hospitals. Consequently, she accepted high costs to deliver her children at a private hospital and firmly decided to stop at two children.

"If fundamental factors like healthcare and education are guaranteed, people will naturally want to have more children", she asserted.

A survey by Eva Fodor, co-director of the Democracy Institute at Central European University, Austria, among highly educated women working in Hungarian government agencies, showed that most viewed these benefits as "one-time subsidies" rather than "long-term investments". What they truly needed was an efficient social security, healthcare, and childcare system.

Surveys in other countries also indicate that economic factors are not a magic wand. South Korea poured approximately 436,000 billion won into addressing its demographic crisis, yet throughout that period, South Korea's total fertility rate continuously plummeted, reaching a record low of 0,8 in 2025. Conversely, France and the Nordic countries, despite not spending as much direct money per child as Hungary, succeeded in maintaining high birth rates (1,6-2,0) by fostering flexible workplace cultures, encouraging men to share household chores, and ensuring completely free public services.

In Hungary, the rigid workplace culture and gender role barriers inadvertently prevented monetary efforts to boost birth rates from achieving long-term expectations.

Currently, Hungary's new government announced it would review the entire pro-natalist policy system (which consumed up to 5% of GDP under Orban) to find appropriate solutions for couples who received funds but could not have children. According to the Central Bank of Hungary, one in five couples who borrowed money five years ago ended up without children.

Ultimately, Barbara received an email notification from the hospital: the implanted embryo did not survive. Levi held his wife tightly: "This is terrible. It's too difficult for us". In a country that prides itself on being "family-friendly", this couple is now caught in the very trap of a policy system that once promised to support them. Their longed-for child is gone, and now even their economic stability is severely threatened.