Markets less bothered by EDP than government, says City
Hungary's risk metrics suggest that the market is less bothered by Hungary's Excessive Deficit Procedure than the government, London-based emerging markets analysts said on Friday after fresh forecasts published by the European Commission suggested that Hungary's fiscal deficits may overshoot official projections. The EC said it expects the Hungarian budget deficit at 3% of GDP this year and 3.3% next year. Analysts at Morgan Stanley said that based on these forecasts, "it is difficult to see" Hungary leaving the Excessive Deficit Procedure without further corrective policies. "Not that the market seems too bothered, given the continued fall in yields". However, the government does care about the EDP suspension for two reasons. First, prestige: the authorities want to claim success in joining "the club of the fiscally virtuous". Second, and more importantly, the government wants to have a free hand in drafting "next year's electoral budget", without having to worry about potential sanctions under the EDP, Morgan Stanley's London-based analysts said.
SUPPORT THE BUDAPEST BUSINESS JOURNAL
Newspaper organizations across the globe have struggled to find a business model that allows them to continue to excel, without compromising their ability to perform. Most recently, some have experimented with the idea of involving their most important stakeholders, their readers.
We would like to offer that same opportunity to our readers. We would like to invite you to help us deliver the quality business journalism you require. Hit our Support the BBJ button and you can choose the how much and how often you send us your contributions.