The Japan Credit Rating Agency (JCRA) revised Hungarys’s rating of foreign currency denominated debt upward from “BBB” to “BBB+” and that of forint denominated debt from “BBB+” to “A”, by one notch each, with stable outlook.
Analysts of the Tokyo-based agency visited Hungary at the end of January. They have evaluated the six-year wage and tax reduction agreement and examined the change in the composition of state debt. The JCRA Inc., established in 1985, provides primarily Japanese investors with credit ratings and analyses. Therefore, the upgrade is important mainly for Hungary’s debt issued in Japanese Yen. The Japanese agency is one of the very few which has consistently maintained Hungary’s investment grade status.
“Hungary’s economy is on an upward path and the recent upgrade by Japan Credit Rating Agency (JCR) will help Hungary to reduce risks while maintaining economic growth and a stable budget”, Economy Minister Mihály Varga said in response to JCRA’s move. Varga told public news channel M1 that JCR’s decision indicated a positive image of Hungary. He said “the upgraded ratings are a reflection of last year’s economic performance, the government’s disciplined fiscal policies, the continually falling public debt as well as the six-year programme of tax cuts and wage hikes…” All this will mean that Hungary’s economic growth will strengthen in 2017 and 2018, he added.
The most influential western credit rating agencies have also acknowledged Hungary’s results in 2016. The first of the big three to have restored the country’s investment grade status was Fitch in May 2016, followed by S&P in September and Moody’s in November last year.