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Economy Minister: Hungary Deserves Higher Credit Rating

Tamás Székely 2015.05.26.

Hungary has been deserving of a higher credit rating for two years, Hungary’s Economy Minister told daily Magyar Hírlap after Fitch Ratings affirmed Hungary’s “BB plus” sovereign credit rating, one notch under investment grade, and raised the economy’s outlook to “positive” from “stable.” Mihály Varga said public debt growth had been halted in the country, external exposure had been reduced and fiscal discipline was now in place.

Asked whether the Hungarian government’s early submission of the 2016 budget bill served a potential credit rating upgrade, Mihály Varga said the budget was aimed at regulating the country’s finances. “Of course, it is a pleasure if this effort is appreciated by the rating agencies, but the primary aim of the government is to allocate sufficient funds to its various tasks.” Mihály Varga said prices on government bonds are currently “favourable”, a sign that the markets have greater confidence in the Hungarian economy than rating agencies do.

Meanwhile a medium-term outlook supplementing of next year’s budget bill proposal has revealed that the Hungarian government expects gross domestic product (GDP) to grow by 3% in 2019.  The outlook calculates with an inflation rate of 3% and a budget deficit of 1.5% of GDP in 2019. Company tax will be a multi-bracket tax in the 2017-2019 period and the personal income tax rate will stay at 15%, it said. The tax on tobacco companies will stay, banking tax will fall by 22 billion forints (EUR 71.5m) in 2017 and remain at that level in 2018 and 2019.

via and photo: Zoltán Tuba –