Hungary Projects 5% Budget Deficit for This Year and Next

Deficit Projection Overview

Hungary's Prime Minister, Viktor Orban, announced that the country's budget deficit is projected to be approximately 5% of Gross Domestic Product (GDP) for both the current year and the upcoming year. The statement was made during an interview with state radio.

Economic Context and Rating Agency Concerns

This fiscal projection comes as the nation's leadership works to stimulate the economy ahead of a scheduled April election. In a related development, Fitch Ratings revised Hungary’s credit rating outlook to 'negative' in December. The agency cited a deteriorating trajectory for public finances driven by fiscal loosening in the period leading up to the national elections.

Potential Impact on the Economy

A sustained high deficit could place further pressure on Hungary's public finances and sovereign credit rating. The government's fiscal policy and its impact on economic stability will be closely monitored by investors and rating agencies, especially with the upcoming election and Fitch's negative outlook.

Summary

Hungary anticipates a budget deficit of around 5% of GDP for two consecutive years amid pre-election economic challenges. This fiscal stance has already drawn concern from credit rating agencies, highlighting risks to the country's financial stability.

FAQ

Q: What is Hungary's projected budget deficit?
A: The budget deficit is projected to be around 5% of GDP for this year and the next.

Q: Why did Fitch Ratings issue a 'negative' outlook for Hungary?
A: Fitch cited a worsening public finance trajectory due to fiscal loosening policies implemented before the national elections.

Source: Reuters via Investing.com