Standard and Poor’s puts Hungary back in investment grade

Budapest, September 16 (MTI) – Standard and Poor’s Global Ratings on Friday said it raised its long- and short-term foreign and local currency sovereign credit ratings on Hungary to ‘BBB-/A-3’ from ‘BB+/B’, putting the country back in investment grade.

S+P also raised its rating for the National Bank of Hungary (NBH) to ‘BBB-‘ from ‘BB+’. The outlook on both Hungary and the NBH is stable.

The upgrade reflects stronger economic performance, fiscal improvements, declining external financing and leverage needs and “a gradual moderation of activist monetary policies”.

S+P said it now expects Hungary’s economy to grow at an average clip of 2.5 percent a year in 2016-2019, up from a 2.0 percent forecast in the rating agency’s previous review in March.

S+P pointed out a “marked improvement” in Hungary’s external financial profile after the 2008-2009 global financial crisis. Hungary has not had a current-account deficit since 2009, and it was a net lender to the rest of the world to the tune of 8 percent of GDP in 2015, it noted.

S+P sees the contribution of tax-rich domestic demand to overall GDP growth increasing, positively impacting government finances. The agency projects the public finance deficit will narrow further to 1.8 percent of GDP in 2016 from 2.0 percent in 2015, though widen slightly to 2.5 percent in 2017.

S+P forecasts Hungary’s state debt-to-GDP ratio will “maintain its downward trajectory over the medium term”, falling to 68 percent in 2019 from 72 percent in 2015.

Source: MTI