Moody's cuts Hungary rating, warns of risks
BUDAPEST: Credit rating agency Moody's cut Hungary's sovereign rating by two notches, to just above "junk" grade, on Monday and said it may cut further if the government fails to put public finances on a sustainable footing.
Hungary's government has rejected austerity and aims to close its budget deficit with hefty new taxes on banks and other businesses as well as a diversion of private pension savings into state coffers. "Today's downgrade is primarily driven by the Hungarian government's gradual but significant loss of financial strength," Moody's Investors Service analyst Dietmar Hornung said in a statement. "The negative outlook reflects the uncertainties regarding the government's financial strength, as the country's structural budget deficit is set to increase and external vulnerabilities make the country susceptible to event risk." Hungarian assets have been hit in the last month as the spreading euro zone debt crisis has driven a decline in global appetite for risk. -Reuters