S&P affirms Hungary’s BB/B ratings, outlook stable

By bne IntelliNews September 22, 2014

Standard & Poor’s has affirmed Hungary’s BB/B long- and short-term sovereign credit ratings with a stable outlook but warned that medium-term prospects remain clouded by the government's policy mix and a shrinking population.

Hungary's ratings are supported by the country's comparatively advanced economy, highly-skilled labour force and relatively well-diversified economic and export structures, the ratings agency said in a statement. In addition, the government's success in maintaining general government borrowing needs within EU limits as well as its commitment to financing itself solely in local currency also supports the rating, S&P said.

On the other hand, the ratings remain constrained by the country's external position and the government's foreign exchange exposure on its own stock of debt. 

S&P revised upwards its projection for Hungary’s economic growth to more than 3% in 2014. The agency expects that the size of the Hungarian economy will return to 2007 levels by end-2015. 

The rating agency expects the government to meet its deficit target of 2.9% of GDP. However, the cabinet is not expected to make significant progress on debt reduction and the level of gross general government debt to GDP would remain close to 80% of GDP, S&P warned.

The agency said that it would consider upgrading the country's ratings if there is evidence that the government’s policy encourages investment and promotes sustainable growth.

Related Articles

Non-performing loans hit historic low in CESEE, but early warning signs emerge, says EBRD

Non-performing loans (NPLs) in central, eastern and south-eastern Europe (CESEE) fell to their lowest levels since the global financial crisis in 2024, but early indicators suggest rising risks ... more

Glass wool production restarts in Hungary after 16-year hiatus

Glass wool manufacturing has resumed in Hungary after a 16-year break, as the first trial products rolled off the production line at a new thermal insulation plant built in northeastern Hungary ... more

Dismiss