U.S. ratings agency Moody’s has changed Hungary’s outlook from ‘stable’ to ‘negative’ over fears that a rift with the EU may cause it to lose “substantial” funding.
Budapest and Brussels have been at loggerheads for years over a range of issues with the country’s funding from the bloc dependent on various conditions, including its adherence to the rule of law.
"Our decision to change the outlook to negative reflects downside risks related to the quality of Hungary's institutions and governance," Moody’s said in a Friday statement.
The ratings agency pointed out that EU funding constitutes around 3.4% of Hungary’s annual economic output and warned the country could lose out on "substantial" sums over failure to meet the criteria.
“If Hungary’s institutions are not able or willing to meet the remaining conditions set by the EU for the release of its funds, Hungary may ultimately lose out on a substantial amount of grants and low-cost loans,” the statement said. “Like its peers in Central and Eastern Europe, Hungary has in the past received significant EU funds which have boosted GDP growth and supported fiscal and debt metrics.”
The agency said failure to secure funding could cut GDP growth and weaken Hungary’s fiscal and debt standing.
At the same time, the agency confirmed Hungary’s foreign- and local-currency credit rating of Baa2.
Hungary’s currency – the forint – has slipped against the euro by almost 7% so far this year, hitting a two-year low on Thursday, Bloomberg reported.
"Our decision to change the outlook to negative reflects downside risks related to the quality of Hungary's institutions and governance," Moody’s said in a Friday statement.
The ratings agency pointed out that EU funding constitutes around 3.4% of Hungary’s annual economic output and warned the country could lose out on "substantial" sums over failure to meet the criteria.
“If Hungary’s institutions are not able or willing to meet the remaining conditions set by the EU for the release of its funds, Hungary may ultimately lose out on a substantial amount of grants and low-cost loans,” the statement said. “Like its peers in Central and Eastern Europe, Hungary has in the past received significant EU funds which have boosted GDP growth and supported fiscal and debt metrics.”
The agency said failure to secure funding could cut GDP growth and weaken Hungary’s fiscal and debt standing.
At the same time, the agency confirmed Hungary’s foreign- and local-currency credit rating of Baa2.
Hungary’s currency – the forint – has slipped against the euro by almost 7% so far this year, hitting a two-year low on Thursday, Bloomberg reported.
