Fitch Ratings on Wednesday announced it changed the outlook on the Republic of Hungary's foreign currency and local currency Issuer Default ratings ("IDRs") to negative from stable, following public protests calling for the resignation of the Prime Minister Ferenc Gyurcsány.
The foreign currency and local currency IDRs are affirmed at 'BBB+' and 'A-' (A minus), respectively.
"Recent developments have increased the chances that the government's much-needed reform program, spearheaded by the Prime Minister, will be diluted," said David Heslam, Associate Director in Fitch's Sovereigns team.
It is very difficult under Hungary's constitutional system to force the resignation of a government or prime minister if they are unwilling to go voluntarily, and highly unlikely that fresh general elections will be called ahead of schedule in 2010. However, recent political events have increased the risk that the current leadership will not survive, Fitch said.