Minister Peter Magyar galvanized Hungary with his vision of a national makeover following the Viktor Orban era. Now comes the tough task of delivering the economic centerpiece of that plan: a credible road map for euro adoption.

Magyar’s government electrified markets with a pledge to meet criteria for membership in the European common currency by 2030, sparking a rally in the forint and reaping double-digit returns for bond investors. But that hinges on the painful reality of trying to reduce a bloated budget deficit by more than half over the next three years.

Hungary’s political transformation since Magyar’s landslide election victory in April has been breathtaking. He ended 16 years under Orban that had turned the country into the black sheep of the European Union and a Kremlin ally.

Magyar restored access to €16.4 billion ($18.3 billion) in EU funds and overhauled the powerful state broadcaster, an important propaganda tool of the previous administration. High-profile suspects in alleged corruption cases are being taken to jail with investigations starting to close in on Orban himself. Russian diplomats were expelled.

Fixing the economy and public finances is a wholly different prospect. Magyar acknowledged last Friday that the scale of cuts will have to be significant to keep the euro plan on track.

The chief executive officer of Hungary’s largest lender, OTP Bank Nyrt., cautioned at a Bloomberg event late last month that diverging from the budget-cutting euro path could trigger a rush for the exits by investors. Indeed, some who bought into Hungary’s recovery say the bond market reflects how high the six-month-old government raised expectations.

“We have since reduced our exposure, not because we are negative, but because the good news has happened,” Eric Fine, head of active emerging markets debt at VanEck in New York. “So yes, it was bullish — but going forward, all the good news is priced in.”The government is set to provide details next week on how it plans to achieve what no cabinet in Budapest has sustainably done for decades: trimming state overspending, the key to joining the euro. The plan requires chopping the budget deficit to 3% of gross domestic product from 7.5%, among the highest in the EU.

Forecasting the shortfall declining to around 5% of GDP next year would be “a credible first step,” Kevin Daly, an economist at Goldman Sachs, wrote in a report. He doesn’t expect Magyar’s government to explicitly commit to a date of the currency switch at the moment, but rather show a deficit below 3% of GDP by 2029.

Adopting the euro would complete Hungary’s political rehabilitation and lock the country into the European mainstream it had shunned under Orban, a ringleader for the continent’s nationalist disruptors. It would also be a timely boost for the EU integration project, which has been shaken by the rise of the far right.

How the government in Budapest meets the criteria remains to be seen. At a conference in the Hungarian capital on Oct. 7, Finance Minister Andras Karman pledged savings by eliminating overpriced contracts that used to be awarded to Orban allies. It’s one component of what he says will be a credible plan that will help Hungary’s bonds rally further.

The forint gained 3% against the euro in one day after Magyar’s election victory. It ended up appreciating 8% in the first half of the year. Hungary’s local-currency bonds posted returns of as much as 16% in dollar terms.

“The government has all the tools to succeed and knows what it has to do,” said Malin Rosengren, a fixed income portfolio manager at RBC BlueBay Asset Management in London. “Building credibility will start with setting an ambitious consolidation target and following through, one year at a time.”The business community in Hungary is united behind the euro plan, with recent conferences abuzz with talk of abandoning the forint, whose perennial weakening mostly caused headaches for companies. The population at large is also highly supportive of the change, surveys show.

On the streets of Budapest on a sunny autumn day, several people said the euro looked too distant yet to form strong opinions. But the mood, they said, has palpably shifted since the end of the Orban era, which was marked by standoffs with the EU over Hungary’s rule of law and aid for Ukraine.

“I feel change has been definitely positive, people are feeling more free, that’s the most important,” said Gabor Schmidt-Hajdo, a telecommunications manager. He said he wondered, though, whether the government would still be around to see the Hungarian euro materialize one day. “It’s early days. We’ll see how it goes over the longer run.”While the central bank is led by a former Orban minister, its top brass is now also on board.

Deputy Governor Zoltan Kurali talks almost daily of the need for a rapid entry into the ERM-2 currency mechanism, the prelude to euro adoption that takes at least two years. Depending on the government’s ability to cut the deficit, membership may follow between 2031 and 2033, Kurali said.

To be sure, a sustainable debt reduction path has eluded most governments in Budapest ever since the former communist regime started getting indebted to western lenders from the 1970s. Though Orban declared an end to what he termed a period of “debt slavery,” his own pre-election spree left the state coffers in a perilous state this year, according to Magyar.

The new premier has been loath to touch spending items that would imperil his popularity, such as lavish subsidies on household energy, and he has promised to spend more to improve the dilapidated healthcare and education systems.

To cushion the blow from possible cuts, the government will impose a wealth tax from next year, an election pledge to make the rich shoulder a larger share of the adjustment. A separate exit tax on those who seek to take their money out of Hungary will also be introduced, aimed at the class of politically connected super-rich that emerged under Orban.

Economists still see a viable path to the euro goal. For one, the increased investor trust itself has already sharply reduced the state’s spending on financing its debt.

Together with EU funding and cutting out the overspending that went to pay off allies of the previous government, that may be enough to meet the euro guidelines on the deficit, according to Attila Gyurcsik, chief executive officer of fund management firm Accorde.

Meanwhile, Hungary’s local currency bonds, whose yields have already plunged below higher-rated Poland’s, still promise a lucrative convergence play, according to the state debt management agency. The forint’s advance paused as global energy prices hit the oil-importing nation, but the increased stability of the exchange rate is also itself seen as a benefit now.

“The previous experiment with the forint in the last 16 years made an impression for central bankers and among the economist elite in Hungary that we need to get rid of the forint as soon as possible,” said Gyurcsik, “because it’s just a source of danger, it’s not getting us anything.”