The CreditWatch on Hungary's ratings reflects our view of the likelihood of a downgrade if economic growth prospects and fiscal and external performance are impaired by a weakening of the predictability and credibility of Hungary's policy framework. However, the terms of an IMF/EU program, particularly one including a financing package, may overtake those policy consequences. Our view of Hungary's policy framework is informed, in part, by official actions that we believe have diminished the independence of Hungary's oversight institutions, and complicated the operating environment for investors. Moreover, in our opinion, the downside risks to Hungary's creditworthiness are also increasing as the global and domestic economic environments weaken. In particular, the imposition of temporary tax hikes on various services--including telecoms, energy,
