Are you sure?

Gov't accepts downgrade with regret but not surprise

A downgrade of Hungary's sovereign rating by Moody's was “no surprise” for the government, but it did “accept it with regret”, National Economy Minister György Matolcsy told MTI.

Moody's Investors Service said it downgraded Hungary's foreign- and local-currency government bond ratings by two notches to Baa3 from Baa1. Moody's said the main reasons for the downgrades were “increased concerns about the country's medium- to long-term fiscal sustainability and higher external vulnerabilities than most of Hungary's rated peers.”

“We see the need to announce a package of structural reforms next spring,” Matolcsy said. “We hope Moody's will take this into consideration in its next assessment,” he added.

Matolcsy said at the end of November that the government would announce in February structural reforms that will result in HUF 600 billion-800 billion of savings.

Matolcsy told MTI on Monday that Moody's had failed to consider several things in their assessment of Hungary: Hungary will have the fifth-lowest general government deficit in the European Union in 2010 and 2011; it will be the only member state, with the exception of Sweden, whose level of state debt will fall; and the country has a current account surplus.

Spokesman for the prime minister Péter Szijjártó told MTI that the downgrade took place because of “measures that hurt the interests and view of international capital in the short term”.

“Measures to stabilize the budget and help economic growth will prove they are favorable for everybody in the long term. The success of the government and its economic policy will be validated when short-term downgrades turn into long-term upgrades,” he added. (MTI – Econews)