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S&P upgrades Hungarian outlook rating to positive

August 31st, 2017

A pro-government commentator thinks that S&P’s decision to raise Hungarian credit outlook to positive indicates that the Hungarian economy is on a steady growth path. A left-wing columnist, on the other hand, thinks the upgrade is due to the private sector’s performance.

Last week, S&P maintained Hungary’s sovereign credit rating at BBB-, but raised the Hungarian sovereign debt outlook to positive from stable. The credit rating company in its report said that Hungary’s economic prospects are steady, the financial sector is improving and government debt is declining.

In Magyar Idők, Gergely Kiss interprets S&P’s decision as proof that international investors welcome the Hungarian government’s economic policies and acknowledge their success. The pro-government columnist believes that Hungarian growth, deficit and debt trajectories fully justify the decision. Kiss adds that without the government’s intervention, banks would still suffer from the burden of non-performing FX loans. Kiss notes that major credit rating companies are hesitant to revise their rating before Parliamentary elections, so S&P’s unexpected decision to upgrade Hungary’s credit outlook sends a very positive message both to Hungarians and international markets.

Népszava’s Tamás Bihari, on the other hand, thinks that the revised outlook rating is due to the performance of the private sector rather than the government. The left-wing commentator maintains that S&P upgraded Hungarian credit outlook because banks reduced the volume of non-performing loans. Bihari adds that Hungarian economic output increases because of multinational companies. Bihari acknowledges that the Orbán government has succeeded in reducing the deficit, but this, Bihari claims, was done through severe cuts in health care, education and the welfare system. In conclusion, Bihari finds it peculiar that the same government that downplayed the importance of credit rating when Hungary was downgraded to junk now sees the upgrade in credit outlook as proof of a healthy economy.

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