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Hungary PM's commitment to 60% debt cap “positive”, says City

Prime Minister Viktor Orbán's reiterated commitment to lowering the public debt level is “positive”, London-based emerging markets analysts said.

Orbán told a press briefing the previous day that debt is “enemy number one” and added that the sustainable debt level is around 60% of GDP - in line with the Maastricht limit.

Commenting on the PM's statement, research analysts at Bank of America Merrill Lynch in London said that a constitutional limit for public debt at 60% would be a major positive development for long-term fiscal outlook. “We have (already) highlighted before that he (Orbán) could try to bring the deficit down to 60% with a phase-in period of 5-7 years, thanks to the bonus from the returning money from private pensions and the cyclical upswing in the economy - coupled with prudent spending management”, BofA Merrill Lynch Global Research said.

Meanwhile, the cost of insuring Hungary's sovereign debt plunged to new multi-month lows in Thursday's London trading, reflecting an improving investor sentiment in anticipation of a major structural adjustment package expected to be announced later this month.

CMA DataVision said that the benchmark 5-year mid-spread of Hungary's credit default swaps contracts (CDS) was hovering around 300bps but started off from a 299.3bps close, sinking below the 300bps mark for the first time in the past six months. (MTI – Econews)