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Hungary denounces 'financial attack' as Moody's cuts its rating to 'junk'

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Published 26/11/2011 | 05:00

CREDIT rating agency Moody's has cut Hungary's debt to 'junk' grade, dealing a blow to Prime Minister Viktor Orban's unorthodox economic policies and prompting his government to denounce the move as a "financial attack".

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S&P downgraded Belgium's credit rating to AA from AA-plus yesterday, saying funding and market risk pressures are raising the chances the country's financial sector will need more support.

S&P said difficulties in the country's banking system and the government's inability to respond to economic pressures contributed to the downgrade.

Moody's lowered Hungary's sovereign rating by one notch to Ba1, just below investment grade, with a negative outlook, hours after rival S&P held fire on a flagged downgrade after Budapest said it would seek international aid.

The move followed warnings from all three major ratings agencies that Orban's policies, which have eschewed traditional austerity in favour of revenue-boosting steps - like a special bank tax and the nationalisation of €10.5bn in pension assets - had put Hungary's finances at risk.

Moody's cited rising uncertainty about Hungary's ability to meet fiscal goals, high debt levels and what it called increasingly constrained medium-term growth prospects. ((Reuters)

Irish Independent

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