Moody's cuts Hun­gary rat­ing, warns of risks

The Pak Banker - - International3 -

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

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