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COUNTRY INSIGHTS

FX mortgage loans to households will be converted into HUF at market exchange rates
HUNGARY · In Brief · 16 Nov 2014

Fact: Just as we completed our November monthly, the government announced the rules for the upcoming conversion of FX-denominated mortgage loans by banks to households into HUF. Essentially, these loans (currently EUR10.8bn or HUF 3350bn, which will likely fall to EUR 8bn at net value, following ...

Draft Budget Lacks Policy Turn
HUNGARY · Report · 10 Nov 2014

Executive Summary Monthly indicators reflect still significant growth but also a marked slowdown in industry and construction, exports, wages and retail sales. This cooling trend started 4-5 months ago, and it will likely be reinforced by a weakening Europe and post-election fiscal tightening in ...

Moody's improved outlook to stable from negative for Hungary
HUNGARY · In Brief · 08 Nov 2014

Fact: Moody's improved outlook to stable from negative on its Ba1 government bond rating for Hungary yesterday. The Hungarian sovereign has BB+ from Fitch Ratings and BB from Standard & Poor's on its long-term debt. Moody's based its decision on the following drivers: 1) Improving medium-term eco...

Unexpectedly low fiscal deficit target set for 2015
HUNGARY · In Brief · 28 Oct 2014

Fact: The Fiscal Council released its preliminary assessment of the government's budget draft for next year. The draft itself is not publicly known yet, but from the Council's statement, it became clear that the 2015 general government deficit target has been set at 2.4% of GDP, following the 2.9...

The fiscal status quo for 2015: more taxes, more populism, little reform
HUNGARY · In Brief · 22 Oct 2014

Fact: The draft budget for 2015 is not publicly known yet. This is normal in an election year, when the legal deadline for the draft’s delivery to parliament is end-October. But the draft is now at the Fiscal Council for preliminary assessment, implying that the usual leaks have started, followed...

Long election season ends with Fidesz-KDNP's victory at the nationwide local elections yesterday
HUNGARY · In Brief · 13 Oct 2014

Fact: The governing Fidesz-KDNP won nationwide local elections with a convincing margin yesterday. This vote was a mirror image of the parliamentary election in April, in so far as in both cases, Fidesz-KDNP's results were moderately worse than four years ago, but only compared to their very stro...

Strong Growth in Q2, But Slowdown Has Started Already
HUNGARY · Forecast · 09 Oct 2014

Executive Summary In late September, the Central Statistical Office announced a revision of national accounts and government sector data, as part of a transition to ESA2010, Eurostat’s new methodological standard. So far, only part of the new data has been presented, and as a result, a fully cons...

Important announcement from the Economy Minister on policy reforms prepared for 2015
HUNGARY · In Brief · 23 Sep 2014

Fact: Earlier today, Economy Minister Varga spoke at a conference in Budapest. He made an important announcement on upcoming fiscal and other policy reports, which he expected to be part of the 2015 budget. This statement made the forint strengthen moderately in early trade, to EURHUF 310-311, bu...

The legal issue on banking: status report
HUNGARY · In Brief · 14 Sep 2014

Fact: The government's legal initiative against domestic banks, regarding household loans, is moving ahead with full steam both in the courts and in further legislative work. Recent key events are the following: (1) Courts have issued first-instance rulings so far on 29 out of a total 79 cases in...

Geopolitical Risk Has Started To Materialize
HUNGARY · Report · 04 Sep 2014

Executive Summary As the war in eastern Ukraine was clearly escalating, the forint came under more pressure in recent weeks, its weakening fostered by low domestic interest rates and the central bank’s endeavor to get rid of its non-resident depositors. However, HUF weakness remains measured, as ...

Creditors of over 95% of all household loans decided to sue the State of Hungary
HUNGARY · In Brief · 26 Aug 2014

Fact: 79 out of the existing total of 400 domestic creditors are now suing the State of Hungary, fighting the assumption laid down in a special parliamentary act approved in July 2014 that all their previous unilateral amendments of loan contracts vis-a-vis households were unfair and thus illegal...

Bad news about the government debt ratio
HUNGARY · In Brief · 18 Aug 2014

Fact: The government debt ratio, as calculated by the MNB according to Eurostat standards, rose to 85.1% of GDP by June 2014 from 79.4% in December 2013, to a level that is nearly as high as a peak 85.6% in the middle of 2010. Significance: The government has always claimed that reducing the gove...

CPI, GDP data: Too much of rain and a stronger than expected economy
HUNGARY · In Brief · 14 Aug 2014

Facts: 1. July CPI-inflation was 0.2% mom / 0.1% yoy, the latter up from -0.3% in June; 2. Q2 GDP (preliminary, sda) was up 0.8% qoq / 3.7% yoy, after 1.1% qoq / 3.2% yoy. Both CPI and GDP were somewhat stronger than expected. Significance: 1. Some say that the short period of negative inflation ...

Banks protest the central bank's move to rewrite the past
HUNGARY · In Brief · 11 Aug 2014

Hungary's banking association says that the MNB's recently issued guideline on how banks should calculate the amount of refunds to household credit clients, on account of illegally charging a currency conversion spread under FX loan contracts where no actual currency conversion was involved, is i...

Conflicting Debt Target and Policies
HUNGARY · Report · 04 Aug 2014

Executive Summary This month, our focus is on the recent official measures on the budget, central bank interest rates and FX debt. A similarly important story is the continuation of the domestic banking saga, including compensations payable by banks to borrowers, the planned conversion of the FX ...

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