Hungarian Prime Minister Viktor Orban ordered his finance minister to map out cuts in social spending as mounting fiscal pressures and the absence of fresh European Union funds corner his government. The forint plunged against the euro.

Plans include initially cutting at least 3% of spending in politically sensitive areas like family support, home subsidies and health care this year, according to a decree published late Tuesday. The government plans to eventually review 20% of spending in these areas by the end of next year.

Hungary racked up a record shortfall in the first five months of the year as the fastest inflation and highest borrowing costs in the EU battered consumption and revenue, especially value-added taxes that have anchored inflows. The government responded in May by cutting state investments and extending extraordinary industry taxes, including on energy and banking.

More needs to be done to consolidate the budget, according to economists at OTP Bank Nyrt., Hungary’s largest lender, which boosted its deficit projections for this year and next, citing the effects of borrowings costs and a worsening economic outlook. The budget gap reached 9.8% of gross domestic product in the first quarter.

“Higher interest rate expenses and the deteriorating macro outlook increase the deficit compared to our previous projection,” a month ago, OTP economists led by Gergely Tardos said in a report on Wednesday. They forecast a shortfall of 6% of GDP for this year compared with the 3.9% government target, and 3.8% for 2024 versus the 2.9% cabinet goal.

The forint extended its slide against the euro for a seventh day, dropping as much as 1.1% to 379.24. the weakest level in more than two months.

Hungary is facing EU pressure to rein in budget spending. The European Commission plans to re-launch its excessive-deficit procedure next year, which includes tighter oversight of fiscal profligates and potential fines. The bloc is withholding more than $30 billion in funding from Hungary on rule-of-law and corruption concerns.

Hungary plans to approve the 2024 budget on Friday. Even before the vote, the government has faced criticism, including from the state Fiscal Council, which has said next year’s fiscal plan was “stretched” and will likely require an overhaul.

--With assistance from Mark Sweetman.

(Updates with forint, analyst projections from first.)