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发帖数: 10098 | 1 By Veronika Gulyas
Of DOW JONES NEWSWIRES
BUDAPEST (Dow Jones)--Hungary may see its assets suffer losses or
underperform its central-European peers at best when markets open Monday,
after rating companies published harsh criticism on its economic policies.
After weeks of looming fears of a downgrade of Hungary's sovereign debt,
Standard & Poor's Ratings Services placed it on watch for possible downgrade
Saturday and Fitch Ratings on Friday lowered its outlook to negative from
stable.
The comments warn of Hungary balancing on the edge--the country's sovereign
debt is rated just one notch above junk category with all three ratings
companies. This is an issue touching at the wrong time, especially with the
Hungarian forint having weakened last Wednesday to a two-year low versus the
euro and an undersubscribed 12-month treasury bill auction last Thursday.
Both opinions focus on the Hungarian government's unsustainable ways of
trying to lead the country out of the dark: from under the excessive deficit
procedure, extremely high debt and slowing economic growth.
However, the governance might be taking the wrong turns; S&P said
increasingly unpredictable policy decisions are downright threatening growth
prospects and Fitch cited high exposure to the euro zone's deteriorating
economic and financial conditions.
The ratings companies mainly criticized temporary "crisis" taxes imposed on
certain sectors, and a scheme enabling households' prepayments of foreign-
currency-based mortgages at discount rates.
S&P said the latter may reduce the supply of credit to the economy, and
noted the measures will constrain growth prospects, may put fiscal targets
in jeopardy, and could prevent a sustained reduction in general government
debt levels.
Fitch noted it saw a sharp deterioration in the external growth and
financing environment facing Hungary's small, open and relatively heavily
indebted economy.
The Hungarian government was quick to respond to the criticism, saying it is
committed to reaching its strict budget deficit target of 2.5% of gross
domestic product in 2012 and to cut public debt to an eventual 60% by 2014
and to 73% of GDP at the end of this year.
"Based on the economic policy of the country, the government's policies and
budget figures, there's no realistic reason for a downgrade," Prime Minister
Viktor Orban's spokesman, Peter Szijjarto, said Saturday in an emailed
response.
Nomura economist Peter Attard Montalto warned there is a risk that the
government may misunderstand rating companies' comments and may take them as
criticism on their inability to meet targets.
"The government must understand it's simply not good enough to push public
debt down; it must be done sustainably," Attard Montalto said.
He also noted that Hungarian assets' performance also depends on external
developments: If the euro-zone debt saga takes a turn for the better--and
Mario Monti becomes Italy's prime minister Sunday--Hungarian assets may stay
flat, although that would still mean underperformance versus a likely
rallying Polis zloty, Attard Montalto added.
-By Veronika Gulyas, Dow Jones Newswires; +36-20-433-2074; veronika.gulyas@
dowjones.com
(END) Dow Jones Newswires
11-12-11 1555ET
Copyright (c) 2011 Dow Jones & Company, Inc.BT201111120007362011-11-12 20:55
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