Hungary’s parliament on Tuesday approved the 2023 budget, which sets out to reduce the budget deficit next year to 3.5% of economic output from a targeted 4.9% this year as the government tries to put finances back on a sustainable track.

Nationalist Prime Minister Viktor Orban, who won a fourth consecutive term in office in April, is facing his toughest challenge since taking power in 2010, with inflation at a two-decade high, a weak forint and EU funds still held up amid a dispute over democratic standards.

After a spending spree ahead of the elections, which included hefty tax refunds to families and pension hikes, the government is now trying to rein in the budget deficit at a time when the current account deficit also widened largely due to rising energy import costs.

These have increased Hungary’s external vulnerability and sent the forint to record lows earlier this month.

The government has imposed big windfall taxes on banks and a raft of companies, launched spending cuts and last week scrapped a years-long cap on utility prices for higher-usage households, which – along with tax changes for entrepreneurs – triggered protests against Orban.