Fitch Ratings published its report on Hungary after the market closed on Friday, leaving Hungary’s credit rating at BBB (good credit quality) but downgrading its stable outlook to negative. The BBB rating, which had been accompanied by a stable outlook since December last year, was not changed in the latest review in June. Fitch Ratings therefore continues to recommend Hungary for investment, but with a negative outlook, as do all three major credit rating agencies – Fitch Ratings, Standard and Poor’s, and Moody’s.
Fitch Ratings’ decision was influenced by the forecast for public finances, with the 2026 parliamentary elections approaching, the budget deficit could rise from 5 percent of GDP in 2025 to 5.6 percent in 2026, significantly exceeding the forecasts in the previous review in June and the government’s original targets (3.7 percent in 2025-2026).
The cost of fiscal loosening is estimated at 0.3% of GDP in 2025 and 2.1% in 2026. The government has extended special taxes until 2026, raised tax rates, and tightened banking tax rules, and Fitch believes that further similar measures cannot be ruled out in early 2026.
The report mentioned the frequent revision of the government’s targets, which weakened the predictability of economic policy and increased fiscal risks, contrary to the government’s previous commitment to gradually reduce public debt. Fitch forecasts that the ratio of public debt to GDP could gradually rise from 73.5 percent in 2024 to 74.6 percent by the end of 2027.
In its report published eight days ago, Moody’s did not change Hungary’s rating, but it sees plenty of dark clouds on the horizon.
Péter Szijjártó, Minister of Foreign Affairs and Trade, responded to Fitch Ratings’ latest report on Facebook on Saturday.
According to a statement from the Ministry of Foreign Affairs and Trade, the minister wrote in his recent post that
the international financial community favors the left because the left raises taxes and imposes austerity measures, just as the Tisza Party wants in Hungary.”
“That is why what always happens before elections is happening now: representatives of the international financial world who want tax increases and austerity measures, the credit rating agencies, are downgrading us. That is how they want to help the left,” he emphasized.
“However, they cannot deter us from our national economic policy: we will continue with tax cuts and support for families and job creation,” he added.
Via Telex, MTI; Featured image: Wikimedia Commons
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