Fitch affirmed their BBB/Stable sovereign debt rating on Friday

HUNGARY - In Brief 08 Jun 2025 by Istvan Racz

---

Just one week after the latest review by a Top-3 rating agency, Fitch Ratings affirmed their BBB/Stable mark on Hungary on June 6. The report was quite negative in the sense that it identified three key areas where the agency saw deterioration since their previous review: growth outlook, short-term budget deficit prospects, and the 'increasing uncertainty' (we would rather say increasing negative certainty) about the lack of availability of EU development transfers.However, Fitch pushed their rating outlook back up to Stable from Negative only in December, as they had kept Hungary on Negative for a long time then, and they did not find sufficient reason to downgrade the country, they said. This time, it would have looked definitely odd to lower the rating outlook once again, moving in a zig-zag. So, the result of last week's review turned out to be quite positive for Hungary in the end. At this point, Fitch maintains the best rating for Hungary out of the three Top-3 agencies:Our take on Fitch Ratings' conclusions is that they are likely to look primarily at fiscal discipline in the near future, so that they could take a negative rating decision on Hungary mainly if fiscal policy were loosened up in view of the upcoming election. Further deterioration in growth prospects (they expect only 0.7% GDP growth for 2025) could also be looked at by them quite negatively. However, the agency do not expect any improvement in the access to EU funds between now and mid-2026 (until after the election) anyway.The next review by a Top-3 agency will be made by S&P, which maintain the most critically low rating for Hungary at present, on October 10.PS: To remain fair to the government/...