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Veres chalks up S&P downgrade to past fiscal policy

Standard and Poor's downgrade of Hungary's long-term sovereign credit rating to BBB+ from A- by credit rating agency (S&P) reflects past fiscal policy, Finance Minister János Veres said on Thursday.

"The downgrade mirrors the past," Veres said, adding that S&P's move comes after "long negotiations" between the government and S+P representatives.

Veres said measures announced by the government on Tuesday would help to create near-equilibrium in Hungary. He attributed the downgrade to the government’s recent decision to revise its original 4.7% government deficit target to 8% of GDP.

He added that he did not believe S&P's projection of an 11% gap in 2006 was realistic. The ratings agency expects Hungary’s government debt to rise to 60% of GDP this year and sees the figure soar to 74% by 2009. (Econews)