Budget deficit still cause for concern, analysts say
Monday, May 16, 2005, 00:00
Leading London-based investment groups have expressed doubts regarding the validity of the Finance Ministrys budget forecasts, according to news portal Index.hu. The analysts of JP Morgan believe the Ft 40-50 billion budget surplus predicted by the ministry for July and the Ft 150 billion estimated December surplus is unlikely.
According to JP Morgan, expenditure will be boosted by several unexpected items, while revenues will be lower than planned due to slower-than-expected economic growth.
In the opinion of Dresdner Kleinwort Wasserstein, the London investment division of Allianz Group, the budget deficit will be definitely higher than the 4.7% ministry forecast. Analysts say Hungarys macroeconomic trends threaten to lead to the downgrading of the countrys credit rating. Of the three greatest credit rating agencies, Fitch Ratings and Standard and Poor's currently rates long-term Hungarian foreign currency debt as A-, while Moody's Investors Service evaluates it as A1.
As BBJ reported earlier, the state of Hungarys national economy was also described as a cause for concern in a report by Merrill Lynch last week.