Frank Gill, head of European debt rating at the credit-rating agency, said Hungary does not need a large loan urgently, because its current account is in surplus and its labour market is relatively flexible.

However, he continued, the efficacy of its economic policy has worsened in the past 18 months in sectors where foreign investments are important. This policy curbs foreign investment and therefore growth, he noted.

Stating that “a consistent economic policy matters the most for Standard & Poor's in grading Hungary’s sovereign debt,” Gill said the agency will restore Hungarian debt to investment grade only if its economic policy becomes more consistent.

An agreement with the IMF and the EU might bring an improvement in this respect, but it is not a guarantee, Gill underlined."

Source: Hungary Around the Clock

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