Negative Outlooks for Hungary, Romania Credit Ratings Reflect Fiscal Risks
Fiscal Risks and Credit Ratings in Central and Eastern Europe
By Libby George and Gergely Szakacs
S&P Global Ratings' Warnings and Key Fiscal Risks
LONDON, May 6 (Reuters) - S&P Global Ratings' downgrade warnings for the credit ratings of Hungary and Romania reflect the fiscal risk facing the two emerging European countries, the ratings agency told Reuters on Wednesday.
Factors Contributing to Fiscal Risks
• Fiscal risks have been the key credit risks for CEE sovereigns for a few years, said Karen Vartapetov, Lead Analyst for CEE & CIS Sovereign Ratings at S&P Global Ratings.
• The stagflationary impact of the global energy price shock together with energy-related support measures will likely add pressure to fiscal positions, already stretched by high defence spending and generous social transfers, he added.
Negative Outlooks and Recent Downgrades
• "Our negative outlooks on Hungary and Romania and the recent downgrade of Slovakia’s credit ratings clearly reflect these risks," Vartapetov said.
Political Developments and Budgetary Implications in Romania
Government Instability and Fiscal Consolidation
• Speaking about Romania, Vartapetov said the collapse of the coalition government could complicate budget discussions for 2027.
• "This is important as Romania’s commitment to cut fiscal deficits implies additional consolidation measures in the coming years."
Recent Political Events
• Romanian lawmakers toppled Prime Minister Ilie Bolojan's pro-EU government in a no-confidence vote on Tuesday.
(Reporting by Libby George and Gergely Szakacs, editing by Karin Strohecker)
