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Moody's says Hungary communication “credit negative”

Hungarian communications last week about the state of the country's finances are a “credit negative,” Moody's ratings agency said on Monday.

On Thursday, Lajos Kósa, the vice president of governing Fidesz - whom Moody's incorrectly identified as “deputy prime minister” - said Hungary had “a slim chance” to avoid fiscal and debt troubles similar to those of Greece, and on Friday, government spokesman Péter Szijjártó said likening Hungary to Greece was “no exaggeration”.

“The statements are a credit negative because they bring renewed attention to Hungary's high public and external debts, which, by threatening to drive up interest rates and push down the exchange rate, endanger Hungary's economic recovery,” Moody's analyst Dietmar Hornung said in the rating company's weekly credit outlook.

“The new government's apparent willingness to adopt unorthodox measures to stimulate economic growth is also sparking concerns. In our view, these uncertainties threaten to further impair Hungary's creditworthiness,” Hornung added, saying Hungary's Baa1-rated government bonds are on negative outlook.

Mihály Varga, state secretary at the Prime Minister's Office and the head of a fact-finding commission established to determine the true state of the economy, said on Saturday that comparisons between Hungary and countries in danger of defaulting on sovereign debt were exaggerated.

National Economy Minister György Matolcsy noted in an interview with CNBC on Monday that the statements likening Hungary to Greece were made by a leading politician, “not the government”. (MTI-Econews)