JCR has also affirmed the A/Stable and A ratings on Hungary's foreign currency long-term senior debts and the bonds, respectively.
JCR has simultaneously assigned a A/Stable and a A/Stable rating to local and foreign currency long-term senior debts of National Bank of Hungary, respectively. It has affirmed the A ratings on the bonds issued by National Bank of Hungary.
“The revision of the rating on local currency long-term senior debs reflects the prospect that the country's persistently large fiscal deficits are unlikely to narrow and that an increase in government debts seems unavoidable in the short run,” JCR said.
No matter which large party (MSZP or Fidesz) wins the general elections in April, “large fiscal deficits will remain unresolved in the short term,” JCR added.
“The affirmation of the foreign currency debt ratings is underpinned by the expectation that Hungry will bring itself into harmony with the euro-zone economy in the medium term, due mainly to implementation of fiscal reforms in view of its strong intention of adopting the euro.”
JCR said it expected Hungary's large fiscal deficits to be stemmed in the medium term through tightening measures as it seeks to adopt the euro in 2010. It added that a lack of effective measures in a deficit-slashing program Hungary must submit to the European Commission by September 2006 may prompt JCR to review its current credit ratings.