No downgrade from S&P, Governor reconfirms tight MNB policy course

HUNGARY - In Brief 11 Oct 2025 by Istvan Racz

---

S&P said yesterday that they did not change their BBB-/Negative rating for the Hungarian government, on the occasion of their second and last review date for that rating in 2025. S&P did not even issue a new assessment for Hungary this time. So for now, the government have avoided the threat of falling into the junk category at S&P, which maintain the lowest debt rating for Hungary among the top rating agencies. The remaining reviews for this year will be one by Moody's on November 28, and another one by Fitch Ratings on December 5. On these occasions, the likelihood of a negative decision is somewhat more likely than it was in the case of S&P, but not really high, and in none of these latter cases is being downgraded below investment grade is a realistic threat. The top three agencies' rating schedules for 2026 will likely be announced only in December.As a reminder, Economy Minister Nagy travelled to London to talk to the top rating agencies in late August. Since then, he repeatedly reiterated a list of four basic policy objectives regarding fiscal policy, such as: 1. the fiscal deficit ratio will have to decrease each year; 2. the debt ratio will have to be kept on a sustainable course (largely meaning it should not be allowed to rise); 3. Hungary should not fall back under the EU's excessive deficit procedure; and 4. the primary balance will have to be kept around zero. We think these objectives were likely agreed upon with the rating agencies, to eliminate the risk of a downgrade between now and the election in next April, despite the seemingly aggressive loosening course of fiscal policy in that period.Meanwhile, MNB Governor Varga spoke publicly yesterday, resta...