MNB: upgrade is expected

The rating agency announced on Friday that it will maintain a BBB minus credit for Hungarian government debt with a positive outlook.

The central bank underlined in a press release: the update of the upgrade is underpinned by the fact that although Fitch's better initial creditworthiness is mitigated by the qualitative assessment of the macroeconomic and external equilibrium dimensions to the current level of "BBB minus" ", these two dimensions have seen spectacular improvements in recent years.

The external balance assessment is improved by Hungary's net external debt from the record high GDP of more than 70 per cent of GDP at the beginning of the decade this year to close to almost 10 per cent by the end of the year. expected to disappear completely in 2020. Within the macroeconomic dimension, average economic growth has steadily increased over the past five years, stable in the following years by around 3-4 percent, which is also a positive factor according to the rating methodology, MNB notes.

The improvement of these two factors alone would have made the upgrade possible only and although Fitch did not do so, it would still be possible to improve the rating early next year – the MNB believes that Hungary has been positive for almost a year. prospect for the institution, and another factor next year, and the variability of economic growth may fall below the average level of countries with similar ratings.

It was also stressed that the Hungarian economy is still characterized by stable fundamentals due to the efforts of economic operators and the successful economic policies. For example, in addition to the dynamic and low volatility growth, the country's external debt has declined considerably, the financing capacity is permanently high, fiscal processes are sustainable, the budget deficit is low, the government debt ratio decreases and the interest on foreign currencies falls significantly.

The MNB expects a positive rating for the three main rating agencies in the future. Moody's rating will review the unchanged debt level of Hungary in November for nearly two years, while S & P will review the Hungarian rating next year. The institutions can improve Hungary's creditworthiness through the improved image of growth, inflation volatility and the rapid pace of growth of the domestic financial system, according to the MNB's announcement.

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