S+P affirms Hungary credit rating

S+P "has affirmed its BBB-/A-3 long- and short-term foreign and local currency sovereign credit ratings on the Republic of Hungary. The outlook on the ratings remains negative," its statement said.

    "The ratings on the Republic of Hungary reflect our view of the potential for improvement in the Hungary s medium-term economic growth prospects based on the implementation of the Szell Kalman plan," Standard & Poor s credit analyst Trevor Cullinan said.

    The statement added that the plan could "significantly offset the negative impact of the government s previously announced taxes on the financial, energy, telecom, and retail sectors" and "help close the fiscal gap" as a result of the flat 16 percent personal income tax.

    It said, however, that the government "may not be willing or able to achieve the 60 percent of the structural reform program that we have factored into our

baseline forecast." 

    "We could lower the ratings if we believe that the government s commitment to pursue its growth-supportive reform plan has weakened," S+P said.

    "Conversely, we could affirm the ratings and revise the outlook to stable if the government were to use its strong majority in parliament to start to proactively address some of what we see as Hungary s long-standing impediments to economic growth, and increase the prospects that the high public debt burden will begin to decline [...]" the statement said.