Varga: Fitch upgrade acknowledges Hungarian reforms

Ratings

Economic reforms started by the government in 2010 resulted in an upgrade of Hungary back to investment grade by ratings agency Fitch on Friday, Economics Minister Mihály Varga said at a press conference Saturday, according to Hungarian news agency MTI. Critics maintained that it was precisely those reforms that initiated the downgrades five years ago.

Hungaryʼs Economic Minister Mihály Varga evaluates the upgrade on Saturday during his press conference. (Photo: MTI/Zsolt Szigetváry)

According to Varga, the upgrade by Fitch is evidence that the economic restructuring in the country has been a success and that the Hungarian reforms are working. Varga also said that the upgrade by Fitch is an acknowledgement of improving fiscal developments, falling public debt, a favorable current account balance and the improving situation of the banking sector, MTI reported. 

The minister called the upgrade good news for the country as it means the state will spend less on debt, leaving more money for investments, tax reductions and raising wages, according to MTI. If another ratings agency upgrades Hungary, savings could reach HUF 40-60 bln in the next year to year and a half, he added.

Raiffeisen bank chief analyst Zoltán Török told MTI that the upgrade confirms efforts to stabilize the economy over the past 4-5 years. He said a fiscal loosening this year and next was "not to serious" and that the effect would be countered, in part, by policy measures that boost demand and contribute to economic growth.

According to Erste analyst Vivien Barczel, Moodyʼs could upgrade Hungary in a review scheduled for July 8. An upgrade from Standard and Poorʼs is not expected this year, she added.

Opposition: Downgrades came with Fidesz rule 

The opposition Socialists said on Saturday that government officials were celebrating a return to the way things had been before Fidesz was elected. Under Socialist governments, Hungary’s credit rating was permanently in investment grade, they said. The country was placed in junk category as a result of the unpredictable economic policies of Prime Minister Viktor Orbán and central bank governor György Matolcsy, Socialists said.

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