Fitch Ratings Expects Agreement between Hungary and the EU

Hungary Today 2022.07.25.

Ratings agency Fitch affirmed Hungary’s ‘BBB’ investment grade rating with a stable outlook at a scheduled review on Friday.

“Hungary’s ratings are supported by strong structural indicators relative to ‘BBB’ peers and by its record of stable economic growth fueled by investments,” according to Fitch.

“These are balanced against high public debt, a record of unorthodox fiscal-and-monetary policy moves, and a worsening of governance indicators in recent years,” the credit rating agency added.

Fitch said the stable outlook reflects its expectations of sustained economic growth, gradual improvement in external balances,

and fiscal consolidation resulting in an improvement of the state debt ratio in the next three years.

In its analysis, Fitch also expects Hungary to reach an agreement with the European Commission over its National Recovery Plan by end of September 2022, which would secure access to Next Generation EU funding.

Accoding to the rating agency, negotiations have been more constructive in past weeks and the Hungarian government seems to be willing to make further concessions on public procurement and anti-graft procedures.

Finance Minister: Fitch Sees Successful Relaunch of Hungary’s Economy

Fitch continues to mark Hungary's rating as investment grade with a stable outlook, Mihály Varga noted.Continue reading

“Securing EU funds would facilitate funding for planned investment projects, which would otherwise have to be financed through market issuance,” Finch emphasized.

Finance Minister welcomes Fitch affirmation of Hungary sovereign rating

Finance Minister Mihály Varga has welcomed Fitch’s decision to affirm Hungary’s investment grade sovereign rating with a stable outlook, in spite of the war in Ukraine and fears of a European recession.

In a Facebook post on Saturday, the Finance Minister noted that rating agencies had downgraded the outlooks on Czechia’s and Slovakia’s ratings in recent months.

Fact

In its Friday review, Fitch also decided to lower Slovakia’s rating by a small margin, dropping it from level A+ to A with a stable outlook, primarily due to the economic effects of the pandemic. The agency also slightly lowered the Czech Republic’s rating, changing its outlook from neutral to negative. The rating itself however remains at the previously set “AA-” level.

“Fitch Ratings considers Hungary’s growth potential to be strong compared with countries with similar ratings,” Varga said, adding that the agency expects the Hungarian economy to grow by more than five percent in 2022.

He said Hungary having investment grade status from all three major credit rating agencies after the pandemic and during the war was a testament to the work done over the last decade.

via MTI

Featured photo illustration via Pixabay