Hungary’s Credit Outlook Cut to Negative by Moody’s Ratings

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Prime Minister Viktor Orban’s governing party is facing a strong political challenger leading up to the 2026 parliamentary elections — and investors expect heavy governmental spending before the vote.



Moody’s Ratings lowered the outlook of Hungary’s debt to negative from stable, citing weaker governance that risks losing grants and low-cost loans from the European Union. 

The agency affirmed Hungary’s rating at Baa2, the second-lowest investment-grade level and on par with Mexico and Colombia. The locked money from the EU may lower economic growth and worsen debt metrics, Moody’s said in a statement.

“If Hungary’s institutions are not able or willing to meet the remaining conditions set by the EU for the release of its funds, Hungary may ultimately lose out on a substantial amount of grants and low-cost loans,” analysts including Heiko Peters and Dietmar Hornung wrote in the Friday statement. “Like its peers in Central and Eastern Europe, Hungary has in the past received significant EU funds which have boosted GDP growth and supported fiscal and debt metrics.”

Hungary’s currency has lost almost 7% against the euro so far this year, reaching a two-year low on Thursday as the weakness of the domestic economy and the unfavorable global sentiment made investors focus on the country’s financial vulnerabilities.

In October, S&P Global Ratings pointed to risks that the “2026 elections could complicate the government’s ability to reduce the large budgetary deficit.” It affirmed Hungary’s rating at the lowest investment grade, BBB-.

Prime Minister Viktor Orban’s governing party is facing a strong political challenger leading up to the 2026 parliamentary elections — and investors expect heavy governmental spending before the vote. For now, the government has promised to lower the deficit and stimulate the economy via more limited measures, including housing incentives and subsidies for smaller companies. 

Fitch Ratings has Hungary’s rating at BBB, two notches above junk, with a negative outlook. S&P has the country a level lower at BBB- with a stable outlook. 

©2024 Bloomberg L.P.

By Marton Kasnyik , Maria Elena Vizcaino

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