The ratings on the Republic of Hungary are supported by a comparatively advanced and well-diversified economy, solid growth prospects driven by investment and export growth, and low inflation levels. The ratings are constrained, however, by very high fiscal deficits as well as high and rapidly rising public debt levels, which together with high current account deficits risk undermining macroeconomic stability The Hungarian government's December 2005 convergence program foresees a swift reduction in deficits to 3.4% of GDP by 2008 (all quoted deficit and debt figures include the cost of second-pillar pension reform), despite simultaneous cuts in taxes and social security contributions. Both the convergence program and the government's wider agenda lack concrete structural measures necessary to bring about the required
