Analysis of Moody’s decision
As Moody’s verdict is perfectly unfounded, the Hungarian government cannot but interpret it as part of the financial offensive against Hungary.
It is unfounded, as in the past one-and-a-half years there has been a markedly favourable change in most sectors of the Hungarian economy in spite of all external turbulences.
The Hungarian budget will end the year of 2011 in surplus.
The current account balance is also in surplus; that is, the revenue side is in surplus.In 2011, for the first time in seven years since the country is an EU member, the budget deficit could be reduced to below 3 percent of GDP. This fact is reiterated by the latest survey of the European Commission. Since Hungary joined the EU in 2004, we will achieve for the very first time that next year’s budget deficit is below 3 percent. Besides Hungary, there will only be six countries in the 27-strong European Union which can deliver the same result.
According to the latest available data, in Q3 2011 Hungarian GDP growth surpassed the pace of expansion of the EU 27 and the Euro-zone, and in the past four quarters Hungary was almost on par with the average GDP growth of the EU.
In regard to the ever deepening debt crisis of the Euro-zone, the government has earmarked in next year’s budget substantial reserves amounting to 1 percent of GDP. Consequently, even a potentially lower than anticipated economic growth could not endanger meeting Maastricht criteria.
This year Hungary has reduced government debt by almost ten percent, and the low budget deficit, which the European Commission also acknowledges, will contribute to the further gradual reduction of government debt. And all this will be carried out in a European environment characterized much rather by increasing debt levels.
Furthermore, forint depreciation is obviously not justified by either the performance of the Hungarian economy or the fiscal balance; it can only be a speculative attack which is understandably fuelled by professionally unfounded verdicts by credit rating agencies just like this.
Budapest, 25 November 2011, Ministry for National Economy
