S&PGR downgrades Hungary outlook to negative, cites external pressures

By Stephen Nakrosis

S&P Global Ratings said on Friday it was lowering its outlook on Hungary from negative to stable, citing external pressures that could “significantly weaken Hungary’s economic and fiscal performance.”

S&P also announced that it was confirming its “BBB/A-2” sovereign credit rating on Hungary.

Among the external risks cited by S&P was energy supply, particularly from Russia. According to the agency, “Hungary is currently experiencing the most significant negative effects of rising prices due to the energy crisis in Europe.” S&P also said Hungary’s dependence on energy imports was particularly high, with “the country buying about half of its oil imports and more than 80% of its natural gas imports from Russia.”

S&P also noted rising political tensions between Hungary and the European Commission, which delayed the disbursement of European funds from the Recovery and Resilience Facility “and the triggering of the rule of law conditionality mechanism by the THIS”.

S&P said it could revise the outlook to stable “if external pressures remain manageable.” Hungary’s ratings could be lowered if “significant delays or substantial reductions in EU funds occur or if the country’s energy supply is significantly constrained,” S&P said.

Write to Stephen Nakrosis at [email protected]

Shirlene J. Manley