Hungary sees no reason for sovereign rating cut

Ratings

Recent fluctuation in Hungary’s currency is undesirable but shouldn’t put its sovereign-debt rating at risk, as the country continues efforts to balance its books and cut fiscal deficits, Foreign Minister János Martonyi told Dow Jones Newswires on Wednesday.

"By the end of this year - despite this currency fluctuation that is not very welcome - our indebtedness rate will be 73% (of GDP)", down from 82% at the start of 2011, János Martonyi said in an interview during his official visit to Singapore.

"At the same time, we will reduce our fiscal deficit to 2.5% (of GDP) next year. There is absolutely no reason or economic consideration to downgrade Hungary," the minister said.

"We have a very high level of reserves - $50bn to $55bn. So if need be the national bank, which is independent, can intervene (in the currency markets) if it wants to," Martonyi said.

Hungary’s current rating with all three major credit-rating firms is at the lowest investment grade.

The "problem of foreign-currency loans is a burden and it has to be resolved," Martonyi said.

Nonetheless, "for the time being, we have no difficulty in putting our bonds on the market," the minister said, adding Hungary isn’t reliant on the International Monetary Fund for capital needs.

Hungary’s economic growth is likely to slow to 1.5% in 2012 from a 1.9% expansion this year, but officials expect GDP growth in 2013 to surpass both 2011 and 2012 growth levels, Dow Jones quoted the foreign minister as saying.

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