Hungary risks a downgrade

As Standard & Poor’s lowers Hungary’s already negative outlook rating, Népszabadság urges the government to call off the propaganda, while Magyar Nemzet believes that the decision disregards the efforts made by the government.

Standard & Poor’s lowered Hungary’s BBB- negative outlook rating to “CreditWatch with negative implications”, which means a cut to junk rating is imminent, expected within the next month. S&P’s action comes after Fitch downgraded the outlook on Hungary’s BBB- rating to negative from neutral. Meanwhile left wing Népszabadság reports “influential sources” who quote PM Viktor Orbán allegedly suggesting behind closed doors that, “if the IMF is back, I am out.” Fidesz floor leader János Lázár reacted with the following words: “I cannot remember such a hint.”

“Enough of the propaganda” – writes Népszabadság in a front page editorial, reacting to a comment from the PM’s spokesman, that Hungary ‘needs no new loans’ from the International Monetary Fund.

“We are facing restrictions disguised as reshuffles on a more brutal, crueller scale than anything the IMF would have imposed,” – argues the left wing daily, noting that investors hardly bought any of the government bonds auctioned on Monday, while the Forint was stuck around its all-time low (317) to the Euro. (6 week liquidity bonds sold badly because the market expected a rise in interest rates, but a 3 month bond auction was successful on Tuesday.)

Standard & Poor’s have already decided that whatever happens, Hungary will be downgraded – believes Magyar Nemzet. Columnist Tamás Nánási remarks that the downgrade would cause huge damage to the country and to its citizens, including all those hostile to the present government.

The cabinet’s half-turn in recent weeks (a compromise with the banks – See BudaPost, November 7) was futile, Nánási believes, for it did not avert the danger of a  downgrade. The credit rating agencies, he continues, intend to downgrade Hungary’s sovereign debt “in order to force us back into the arms of the IMF.” But going back there “would entail a price much higher than what we are forced to pay for following our own path,” – Magyar Nemzet concludes.

Tags: debt, IMF