TEXT-S&P summary: Hungary

Tue Nov 27, 2012 9:30am EST

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(The following statement was released by the rating agency)

Nov 27 -

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Summary analysis -- Hungary --------------------------------------- 27-Nov-2012

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CREDIT RATING: BB/Stable/B Country: Hungary

Primary SIC: Sovereign

Mult. CUSIP6: 445545

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Credit Rating History:

Local currency Foreign currency

23-Nov-2012 BB/B BB/B

21-Dec-2011 BB+/B BB+/B

30-Mar-2009 BBB-/A-3 BBB-/A-3

17-Nov-2008 BBB/A-3 BBB/A-3

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Rationale

Our ratings on Hungary reflect our assessment of its still-high fiscal and external liabilities and recurrent use of unorthodox, and possibly unsustainable, economic policies against its success in reducing fiscal deficits to less than 3% of GDP and containing external liquidity pressures by achieving current account surpluses.

The government's unorthodox policies, including exceptional measures applied to the financial sector, could erode the country's medium-term growth potential. This could eventually undermine the government's efforts to sustainably reduce general government debt. Although we expect the government's fiscal targets to be met in the short term, we believe that this could become increasingly difficult if, as we expect, economic growth remains muted.

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