Hungary has a comparatively advanced and open economy with a highly skilled labor force. The government's structural reform package, although unlikely to be fully implemented, should help to boost potential growth and put the public finances on a sustainable footing, in our opinion. We believe that the predictability of Hungary's policy framework continues to weaken, weighing on the economy's medium-term growth prospects. There are high external leverage and related external financing needs, despite the shift of the current account into surplus. We expect economic growth in the short term to be dampened by the government's tax and banking sector policies, which we believe will likely reduce the propensity for banks to lend and for foreign investors to provide capital. The
