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S&P downgrades Hungary to 'BBB-/A-3', outlook 'stable'

(Reuters) – Credit rating agency Standard & Poor’s downgraded Hungary’s long- and short-term foreign and local currency ratings to ‘BBB-/A-3’ from ‘BBB/A-2’ on Friday, citing persistently high Inflation and external pressures.

With a slowing economy, a surge in energy bills and the suspension of most EU funds, Hungary has the power to put pressure on the state’s finances, while the central bank has the highest interest rate in the EU.

The rating agency revised its outlook to “stable” from “negative” as it expects the Hungarian economy to avoid a sharp economic downturn for the next two years and weather the indirect effects of the Russia-Ukraine war.

S&P expects the Hungarian government to gradually reduce the fiscal deficit, which has pledged to reduce the 2023 budget deficit to GDP 3.9%

Last week, Fitch lowered the outlook on Hungary’s long-term foreign currency issuer default rating to “negative” from “stable”.

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