Research Update: Hungary Downgraded To 'BBB-/A-3' From 'BBB/A-2' On Inflation And External Pressures; Outlook Stable

Persistently high inflation, exchange rate volatility, and external pressures have prompted the Hungarian National Bank to tighten its policy stance through a series of conventional and unconventional measures. High energy prices, an uncertain economic outlook, and rising interest costs against an already high stock of public debt will pose challenges to the Hungarian government's consolidation plans. Ongoing disagreements with the EU have substantially delayed EU funds to Hungary; although none have been cut so far, their release is contingent on the government implementing a challenging set of political reforms. We have lowered the long- and short-term foreign and local and currency ratings on Hungary to 'BBB-/A-3' from 'BBB/A-2'. The outlook is stable. On Jan. 27, 2023, S&P Global Ratings lowered

...- Persistently high inflation, exchange rate volatility, and external pressures have prompted the Hungarian National Bank to tighten its policy stance through a series of conventional and unconventional measures. - High energy prices, an uncertain economic outlook, and rising interest costs against an already high stock of public debt will pose challenges to the Hungarian government's consolidation plans. - Ongoing disagreements with the EU have substantially delayed EU funds to Hungary; although none have been cut so far, their release is contingent on the government implementing a challenging set of political reforms. - We have lowered the long- and short-term foreign and local and currency ratings on Hungary to '###-/A-3' from '###/A-2'. The outlook is stable....

Research Update