The ratings on the Republic of Hungary reflect our view that Hungary benefits from its comparatively advanced economy and a large and competitive export sector. We understand that the Fidesz government, which took office in April 2010 with an unprecedented 68% parliamentary majority, remains committed to reducing the headline government deficit. It has targeted a general government deficit of 3.8% of GDP in 2010 and 2.9% in 2011. The general government deficit reached 5.3% of GDP in the first half of 2010. To achieve its deficit targets and to compensate for the cost of introducing a flat rate for personal income tax as of 2011, the government has introduced largely ad hoc, temporary levies on the banking, telecommunications, energy, and
