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Election results leave Hungary’s ratings unaffected

Standard & Poor's Ratings Services said today the outcome of general elections in Hungary has no immediate impact on the ratings on the Republic of Hungary (BBB-/Stable/A-3). The two-thirds majority of parliamentary seats gained by center-right opposition party Fidesz should enable the new government to implement far-reaching administrative and fiscal reforms that require a constitutional change.

“Should the government choose to implement such potentially unpopular reforms, such as reforming the municipality system and reducing the overprovisioning of public services, we believe this would eventually contribute to strengthening Hungary's public finances, and could support rating improvements over the medium term,” Standard & Poor said in its press release. It believes improvements in Hungary's creditworthiness will depend on the government's overall policy agenda and policy implementation, including the perspective for the evolution of government deficits and debt levels, the company said. “We expect the government to present these in more detail over the coming weeks and months.” (press release)