Credit rating agency Moody's Investors Service raised the outlook on Hungary's Ba1 rating to "positive" from "stable" on Fiday, bringing the country a step closer of regaining the investment-grade status it lost four years ago. The economy ministry welcomed the decision viewing it as the “ante-room” to an upgrade.
Moody’s cited a sustained downward trend in government debt, prudent fiscal policy and improving economic outlook for the change in outlook. The rating company expects the government debt ratio to decline to 74.3% of gross domestic product this year and to below 73 percent in 2016 compared with a 2011 peak of 81%
Hungary’s economy expanded 3.7% last year, the third-fastest pace in the EU after Ireland and Luxembourg. Moody’s believes that going forward real GDP growth rates of 2% 2.5% can be sustained," according to the statement.
The resilience of the Hungarian economy has been materially strengthened through the completion of the foreign-currency loan conversion program earlier this year," they said in a statement, adding that households' foreign-currency debt has been almost completely transformed into domestic liabilities, which in turn should provide support for private consumption, they added.
Moody’s was the first rating agency to strip Hungary of its investment grade in 2011, which was followed by sector peers, Fitch and S&P.
Moody’s outlook upgrade testifies to the success of reform measures implemented by Hungary, the Ministry of National Economy said in a statement. It noted Moody’s is second among the three major international rating agencies that has given Hungary a “positive” outlook for an upgrade after Fitch. The ministry said that Hungary will keep on gradually reducing its public debt over the next years and it reaffirmed the government’s commitment to keeping the public finance deficit below 3% of GDP.
