Scope Ratings GmbH (Scope) monitors and reviews its credit ratings on an ongoing basis and at least annually, or every six months in the cases of sovereigns, sub-sovereigns and supranational organisations that may act as a lender of last resort.

Scope performs monitoring reviews to determine whether material changes and/or changes in macro-economic or financial-market conditions could have an impact on the credit ratings. Scope considers all available and relevant information when undertaking the monitoring review.

Monitoring reviews are conducted by performing a peer comparison, benchmarking against the rating-change drivers, and/or reviewing the credit rating’s performance over time, as deemed appropriate by the Lead Analyst or Analytical Team Head, in addition to an assessment of all aspects of the relevant methodology/ies, including key rating assumptions and model(s). Scope announces the result of each monitoring review on its website and/or on its subscription platform ScopeOne.

Scope completed the monitoring review for Hungary (long-term local- and foreign-currency issuer and senior unsecured debt ratings: BBB/Stable; short-term local- and foreign-currency issuer ratings: S-2/Stable) on 29 April 2025.

This monitoring note does not constitute a credit-rating action, nor does it indicate the likelihood that Scope will conduct a credit-rating action in the short term. Information about the latest credit-rating action connected with this monitoring note along with the associated ratings history can be found on scoperatings.com.

Key rating factors

For the updated rating report accompanying this review, please see here.

Hungary's BBB credit ratings are supported by: i) a strong track record of robust economic growth and solid medium-term growth prospects, bolstered by substantial foreign investments and significant EU funding, which enhance Hungary's export capacities and competitiveness; and ii) a robust structure of its external and public liabilities, along with an improved external position, which supports the country’s resilience to external shocks. Hungary's credit ratings face constraints due to: i) elevated public debt with a heightened interest-payment burden; ii) a sustained fiscal deficit reflecting limited fiscal flexibility; iii) weak governance indicators and lingering uncertainty regarding the inflow of substantial EU funds; and iv) heightened vulnerability to external shocks.

Scope expects a recovery of economic growth to around 2% in 2025, from 0.5% in 2024, supported by private consumption while investment activity is projected to remain subdued. While major capacity-expanding foreign direct investment projects are expected to continue to support Hungary’s growth, uncertainty persists, including with regards to the contribution of net exports considering global trade disruptions. In addition, economic growth could be adversely impacted by lingering uncertainty on the inflow and absorption of EU funds. Around EUR 19bn in EU funds remain suspended, representing part of the 2021-2027 Cohesion Operational Programmes and the Recovery and Resilience Plans (Recovery and Resilience Facility and RepowerEU funds).

Scope expects the general government fiscal deficit at 4.2% of GDP in 2025 and 3.8% of GDP in 2026, from 4.9% in 2024. This also reflects fiscal costs of recent measures introduced by the government, including gradual expansion of personal income tax exemptions for mothers, starting from October 2025. Hungary’s general government debt-to-GDP ratio increased to 73.5% in 2024, from 73.0% in 2023. Scope projects a modest decline over the forecast period to around 70% by 2030. This trajectory is primarily driven by a robust nominal growth outlook and broadly balanced primary fiscal balances, which is partially offset by elevated net interest payments, which Scope forecasts at an average 3.7% of GDP over 2025-30.

The Stable Outlook reflects Scope’s view that the risks Hungary faces over the next 12 to 18 months are balanced.

Upside scenarios for the long-term ratings and Outlooks are (individually or collectively):

1. Public finances improved, resulting in a significant reduction in public debt over the medium term;
    
2. External metrics improved materially, supporting reserve adequacy.

Downside scenarios for the long-term ratings and Outlooks are (individually or collectively):

1. A protracted fiscal deterioration materially weakened debt sustainability;
    
2. External metrics deteriorated significantly, and reserve adequacy weakened substantially, for example, due to cuts in the disbursement of EU funds and/or notably constrained energy supplies or supply chain disruptions.

The methodology applicable for the reviewed ratings and/or rating Outlooks (Sovereign Rating Methodology, 27 January 2025) is available on scoperatings.com/governance-and-policies/rating-governance/methodologies.
This monitoring note is issued by Scope Ratings GmbH, Lennéstraße 5, D-10785 Berlin, Tel +49 30 27891-0.
Lead analyst: Julian Zimmermann, Director

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