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Hungary reform measures positive but risks remain, says Moody's

The effects of Hungary’s fiscal measures announced earlier this week are seen as necessary steps for an uncertain future. A senior official at Moody’s rating agency, Dietmer Hornung, told to Reuters, “I see the announcement as being supportive for the current rating, but there are two main risks with the fiscal package, which need to be monitored.”

Hornung continued, “first is the implementation risk, whether the government is able and willing to implement the measures that are needed to achieve the adjustment as proposed. Second, the growth risk. The outlook is negative and reflects a certain balance of risks here which is still to the downside.”

Relating to the positive, the lead analyst of Hungary told Reuters that, “a stabilization of Hungary’s governmental strength and a decrease in its external vulnerabilities would be rating positive.”

Hungary’s fiscal proposals are aimed at cutting public debt to 50% of GDP by 2018, according to Bloomberg. Currently, Moody’s rates Hungary at Baa3 – one level above “high yield” or “junk” grade, where public debt is approximately 80% of gross domestic product.