Fitch upgrades Hungary's debt rating

In line with market expectations, Fitch Ratings has upgraded Hungary's sovereign debt rating by one notch to BBB, just a week after a similar move by Standard & Poor's.

Fitch Ratings highlighted in its press release that “Hungary has undergone rapid deleveraging”, especially with regard to its external debt. While Fitch expects a short-term deterioration in the current account with a recovery in 2019, the current account surplus also helped Hungary's BBB rating.

Fitch also said the downward trend in the general government debt-to-GDP ratio was favorable, forecasting further improvement in the coming years. While Hungary still has a relatively high public debt, the debt service is lower than the median of all BBB-rated countries.

Regarding the ongoing EU procedure against Hungary, Fitch said that it ”does not expect the ongoing Article 7 disciplinary proceedings by the EU to make much headway in the short term".

The Hungarian National Bank welcomed the decision saying it was an overdue recognition of Hungary's economic performance and stability, adding that it hopes that during its next scheduled rating release the third of the "big three" rating agencies, Moody's will also acknowledge the "sustainable improvement of the economic fundamentals of Hungary".

The next Moody's rating for Hungary is scheduled for May.

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