Another hurdle passed: Moody's affirmed its Baa2/Negative sovereign credit rating for Hungary

HUNGARY - In Brief 29 Nov 2025 by Istvan Racz

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On Friday, November 28, Moody's affirmed its investment grade credit rating for the Hungarian government, despite fears that a negative rating decision may follow the most recent loosening up of fiscal targets for this year and 2026. There is only one rating review date still scheduled by a Top-3 agency for the rest of this year, by Fitch Ratings for December 5:By content, Moody's appears to have no high expectations regarding Hungary macro, but most importantly, they expect fiscal adjustment to take place after the election, whatever the voting results may be. The agency also said it could improve Hungary's rating if relations between the government and the EU got materially better. We agree on the first conclusion, although carrying out fiscal adjustment will be politically difficult. As regards EU-Hungary relations, a Tisza government would almost automatically lead to improving significant improvement, but in case of a Fidesz win, the latter would be pretty much hopeless.Previously, on November 27, the government announced they backtracked from the idea to reduce the social contribution tax by 1%-point from January, which will save some HUF 200 bn (0.2% of GDP) for next year's budget. Simultaneously, they announced that the lower tier of the mandatory minimum wage will be increased by 11% and the upper tier by 7% from January. On average, this means an 8% wage increase for about one million employees (22% of total employment), rather than the originally intended 12-13% minimum wage hike.We do not know to what extent Thursday's fiscal/wage policy announcement and Friday's news on the rating decision were related. But anyway, all three decisions (the rating affirmati...