External risks, including potential cuts to EU funds and reduced gas flows, could weigh on Hungary's growth prospects and endanger post-pandemic fiscal consolidation. Rising wage and price inflation, a volatile exchange rate, and upward pressure on borrowing costs could also narrow the government's policy flexibility. We therefore revised our outlook to negative from stable and affirmed our 'BBB/A-2' sovereign credit ratings on Hungary. On Aug. 12, 2022, S&P Global Ratings revised its outlook on Hungary to negative from stable. At the same time, we affirmed our 'BBB/A-2' long- and short-term foreign and local currency sovereign credit ratings. The transfer and convertibility assessment is unchanged at 'A-'. The negative outlook reflects an at least one-in-three chance of a downgrade over the
