Govt says Moody’s downgrade part of financial attacks on Hungary

Hungary’s National Economy Ministry said a downgrade of the country’s sovereign rating by Moody’s Investors Service late Thursday was "groundless" and it could do nothing else but consider it "part of financial attacks against Hungary".

The ministry said the downgrade was unfounded because most areas of the Hungarian economy have undergone favourable change in spite of external difficulties. The country will run a fiscal surplus in 2011 and it has a current account surplus, the ministry added.

"The weakening of the forint is obviously justified neither by Hungary’s economic achievement nor by its fiscal position, thus only a speculative attack against Hungary can be behind [the weakening], which is exacerbated by such professionally groundless ratings agency opinions," the ministry said.

The ministry said the latest data show Hungary’s GDP growth in Q3 exceeded the average for the EU-27 and the country’s growth in the previous four quarters had come close to the EU average.

Reserves equivalent to 1% of GDP have been built into the 2012 budget in light of the worsening debt crisis in the eurozone, thus any possible slowdown in economic growth under the projection would not keep Hungary from keeping its fiscal deficit under the cap in the Maastricht criteria, the ministry said.

The ministry stressed that Hungary had reduced is state debt by almost 10% of GDP in 2011, while the state debt of other European countries was growing. Hungary will be one of just seven EU member states that will bring their fiscal deficits under 3% of GDP in 2012, it added.

Antal Rogan, an MP of governing Fidesz who chairs Parliament’s Economy and IT Committee, said on a commercial television programme early Friday that he too thought the downgrade was baseless.

"I don’t believe Moody’s action to be justified, because Hungary’s fundamentals are not worse, but better than some countries in the region," he said on TV2’s Mokka programme. "We feel that a concentrated and strong series of attacks against the forint started weeks earlier is continuing, and I think that the action by Moody’s...belongs in this category," he added.