Fiscal slippage: Rating agency issues warning to Hungary
Hungary’s fiscal slippage is increasing uncertainty over debt relief, rating agency Fitch Ratings warned on Friday. It projects a rising public debt ratio by the end of this year and sends a clear message that a sustained loosening of fiscal policy could lead to a negative rating move.
“Hungary’s (BBB/Negative) weak 1Q24 fiscal performance underscores the challenge of hitting this year’s deficit target, Fitch Ratings says. Recent fiscal slippage adds to uncertainty around the public debt trajectory,” the rating agency reported.
Rating agency issues warning
The rating agency expects Hungary to be placed under the excessive deficit procedure in 2024. They believe that the government should therefore present a multi-year consolidation strategy, Portfolio reports based on the rating agency. Fitch also recalled that the government has set a deficit target of 3.7% in 2025 and 2.9% in 2026. “Given increased budget rigidities and parliamentary elections in early 2026, we expect a 2025 deficit of at least 3.9%,” they wrote.
Fitch Ratings also noted that it does not expect Hungary to face financing challenges despite a higher budget deficit this year.
The analysts of the rating agency believe that this year’s weak fiscal performance in the first quarter highlights the risks surrounding the achievement of this year’s deficit target.
As we reported, the Hungarian budget deficit has almost reached its full-year target by the end of the 3rd month:
Read also:
- What is happening here? Hungary’s budget deficit almost reached its full-year target by the end of March
- Hungary doomed to be the assembly line of Europe?
Source: