Along with market participants, the European Commission and other international organizations, credit rating agencies now also confirm that Hungary has been on the right track, Minister for National Economy Mihály Varga said, commenting on the announcement of Fitch Ratings that the agency has upgraded Hungary’s credit outlook from stable to positive.

The credit rating agency underlined the “marked” improvement of Hungary’s financial vulnerability over the past couple of years, the Minister said. Fitch’s net external debt indicator, showing public and private sector debt owed to foreign lenders which stood at 53 percent of GDP back in 2014, has come down to 9 percent this year. This has been the result of steady debt payments and a high current account surplus, Mihály Varga added. Fitch analysts have also noted that the Hungary’s general government debt has been declining for six years now, and the debt-to-GDP ratio may fall to 69 percent by the end of 2019. This level is still too high in comparison to our peers; the repayment of loans taken out by leftist governments will continue to weigh on us for a long time to come, the Minister pointed out. As not only the ratio but the composition of debt is of significance, Fitch noted among positive factors that the weight of domestic investors has increased and the share of forex debt has slumped, he added.

The agency found that rising domestic demand – fuelled by a high employment rate and rapid wage growth -- was to become a main driver of economic growth. The recovery in lending and EU grants are set to boost investment, and demand from European countries for Hungarian products is also expected to be robust, Mihály Varga stated.

It is clear that the economic stimulus resulting from the six-year wage agreement of November last year is now being recognized abroad and our views differ only with regard to the extent of the impact, he added.

Two out of the three large international credit rating agencies, Fitch Ratings and S&P’s, see Hungary’s rating outlook as positive, a signal of a potential future upgrade.

The Hungarian economy has been based on firm pillars, economic growth has been on a sustainable path; therefore everything is in place for a further advancement within the investment-grade category next year.

(Ministry for National Economy)