Moody’s raises Hungary’s rating with strong rebound, a boon for Orban
By Krisztina Than
BUDAPEST (Reuters) – Rating agency Moody’s raised Hungary’s sovereign credit rating to “Baa2” from “Baa3” on Friday evening due to the strong rebound in the economy after the pandemic, which is a boon for Prime Minister Viktor Orban in the middle of a campaign for the 2022 snap elections.
Orban, the country’s longest-serving leader since Communist times, faces what could be Hungary’s first close election in more than a decade.
Stepping up his campaign, Orban inundated the electorate with freebies, including a $ 2 billion income tax refund for families, an income tax exemption for young workers, home renovation grants and additional retirement payments.
The nationalist leader has also stepped up his anti-immigration campaign in the wake of the Taliban takeover in Afghanistan and has become increasingly radical on social policy to protect what he says are traditional Christian values of the Western liberalism.
Orban says the strong recovery allows for additional spending, despite calls from the central bank to bring Hungary’s budget deficit under control more quickly.
Moody’s said the strong recovery in expected growth and medium-term outlook over the coming years “will support fiscal consolidation and reduction of the government’s debt burden.”
“Overall, Moody’s expects only very limited scars from the coronavirus pandemic,” the agency said in its statement.
Hungary’s economic growth could reach 7-7.5% this year, Finance Minister Mihaly Varga said on Friday.
The recovery has accelerated since the second quarter, helped by fiscal and monetary stimulus measures which boosted loans to businesses and households.
Moody’s said Hungary’s medium-term outlook through 2025 was supported by high investment rates.
The central bank expects a “positive credit rating trajectory” for the economy after the upgrade, she said on Saturday.
An August survey by think-tank Zavecz Research estimated support for Orban’s Fidesz party at 37% of all voters, while combined support for the six opposition parties stood at 39%.
The Hungarian six-party opposition alliance is currently holding a first round of primary elections to choose Orban’s challenger.
They criticized the government for alleged corruption, skyrocketing prices and the growing wealth gap.
(Reporting by Krisztina Than, additional reporting by Richard Rohan Francis; editing by Jason Neely)