In the report published together with the new rating, the credit rating agency stresses that "Hungary's external imbalances have unwound substantially since the onset of the global financial crisis”, thanks primarily to the forint conversion of forex mortgages and the Government's policy of borrowing primarily in local currency.

The agency is projecting that GDP growth will average 2.5 percent in 2015-2017, up from their previous estimate of 2 percent. The report also emphasises that due to the MoU concluded with the European Bank for Reconstruction and Development lending activity is set to accelerate.

The decision to upgrade was made earlier than the usual protocol would permit, as a rating upgrade is usually preceded by a positive outlook; in this case, S&P has directly placed Hungary into a higher category.

Following the decision of S&P, Hungary is but one notch below investment grade category at all three major credit rating institutions (Standard&Poor’s, Moody’s and Fitch Ratings). In light of Hungary’s economic performance it is justified to expect that rating agencies will give a positive outlook to the country or even upgrade it in the coming months: accordingly, Hungary may be again recommended for investment.

The current decision proves that Hungary has been heading in the right direction; improving financial stability and decreasing general government debt have improved the country’s image and this is set to bring more investment.

Better ratings also result in lower yields on government securities, which reduce debt servicing costs and thus cut the interest payment expenditures of the budget. As a consequence, more taxpayer money can be allocated for other objectives to be funded by the budget.

(Ministry for National Economy)