Fitch Cuts IDR Rating of Hungary

November 10th 2008

International credit-rating agency Fitch announced in the morning on November 10 that it had downgraded the sovereign ratings of Hungary, Romania, Bulgaria and Kazakhstan as a result of the vulnerability of these European emerging-market countries to the deterioration in the global financial and economic environment.
Fitch said that it had downgraded Hungary's long-term foreign-currency Issuer Default Ratings (IDR) rating to 'BBB' Stable Outlook from 'BBB+' Negative Outlook, its long-term local-currency rating to 'BBB+' Stable Outlook from 'A-' Negative Outlook, its short-term foreign-currency rating to 'F3' from 'F2' and its country ceiling to 'A' from 'A+'.
Fitch changed Hungary's outlook from stable to negative on October 17.

GKI Offers Better Growth Outlook than Government for 2009

November 10th 2008

In a forecast prepared jointly by Hungary's Erste Bank, economic think tank GKI expects Hungary's economy to expand by 0.5 pct in 2009, well under projected 2 pct growth for 2008, but a more optimistic forecast than the government's own prognosis.
The government sees the economy contracting by as much as 1 pct in 2009.
GKI said domestic demand as well as demand on export markets will grow only slightly, if at all, in the coming months and in 2009. Stagnation or recession in the EU will hurt exports, though export growth will still exceed import growth.

PSZAF Suspends Trade in Property Fund Units to Prevent Wave of Withdrawals

November 10th 2008

Hungary's financial market regulator PSZAF suspended trade in property fund units because of a sharp drop in some funds' liquidity and to prevent a wave of withdrawals from the funds, the Association of Hungarian Investment Fund and Asset Management Companies (BAMOSZ) said on November 10th. PSZAF on November 7th announced that it had suspended all trade in units of open-ended property funds for ten days to give investment fund managers time to inform investors of the prospects regarding prices and risks.
Investors have made big withdrawals from property funds in the past weeks because of the poor outlook for the property market and more attractive government securities yields as well as bank deposit rates, causing the liquidity of the funds - at 40-50 pct, which is well over the legal requirement and high in international comparison - to fall significantly, BAMOSZ said.

ITDH Takes Hungarian Biotech Companies on Roadshow to Canada

November 7th 2008

Hungarian Investment and Trade Development Agency (ITDH) is taking Hungarian biotech companies on a roadshow to Montreal and Toronto, Canada on November 3-7, ITDH announced on November 6th.
The Hungarian companies will meet Canadian pharmaceutical and biotech companies, technology transfer agencies and investors.
ITDH, which also offers support for foreign investors in Hungary, says it is currently administering five biotechnology projects in Hungary that are worth a combined EUR 55 million and will create 170 jobs in the country. (HUF 100 = EUR 0.3825)

Moody's Downgrades Hungary

November 7th 2008

Moody's Investors Service announced on November 7th that it had lowered the local- and foreign-currency government-bond ratings and the country ceiling for foreign currency bank deposits of the Republic of Hungary to A3 from A2.
All new ratings carry a negative outlook, Moody's said.

NBH Proposes HUF 600 billion Financial Package for Banks in Framework of IMF Agreement

November 6th 2008

The National Bank of Hungary proposed that a HUF 600 billion financial package be made available to Hungarian banks as part of an agreement with the International Monetary Fund (IMF) on a EUR 20 billion support package for the country, National Bank governor Andras Simor said at a press conference with Finance Minister Janos Veres on November 6th.
Up to HUF 300 billion of the package for the banks would be used to improve their capital position and HUF 300 billion would be used as a guarantee fund. The money to boost banks' capital would be available until January 31, 2009, and the guarantee fund could be used until the end of 2009. If banks do not call in the entire amount intended to boost capital, the amount left over could be put into the guarantee fund, he added. (HUF 100 = EUR 0.3889)

Veres: OTP, CIB, MKB Meet Requirement to Draw on HUF 600 billion Support Package

November 6th 2008

Three banks in Hungary meet the requirement for drawing on a HUF 600 billion support package for banks the government wants to make available as part of a EUR 20 billion stand-by agreement with the IMF, the EU and the World Bank. The three banks are OTP Bank, CIB Bank and MKB Bank, Finance Minister Janos Veres said on November 6th.
Banks must have warranty capital of at least HUF 200 billion to draw on the support, Mr Veres said. (HUF 100 = EUR 0.3825)

Hungary to Make 6 pct Reduction in Greenhouse-Gas Emissions by 2012

November 6th 2008

Hungary will make a 6 pct cut in the country's emissions of greenhouse gases by 2012 as compared to 1985-1987, in accordance with the stipulations of the Kyoto Protocol, State Secretary of the Environment Ministry Laszlo Diossy said at a press conference on November 6th.
The revenue from emissions trading should be used exclusively to supplement EU funding for emission-reduction investment, since Hungary's government budget will not contain sufficient resources for this purpose as a result of the global financial crisis.
After 2012, Hungary will continue to reduce its greenhouse-gas emissions in conformance with European Union inter-state agreements.

October Fiscal Deficit Preliminary HUF 11.6 billion

November 6th 2008

Hungary posted a cash flow-based general government deficit of HUF 11.6 billion in October, excluding local governments, the Finance Ministry said on November 6th. The figure is slightly under the ministry's forecast for a HUF 13.5 billion deficit.
The January-October deficit came to HUF 742.6 billion, also slightly under the ministry's mid-October HUF 744.5 billion forecast, calculated on a cashflow basis and excluding local governments. The January-October deficit was equivalent to 2.7 pct of projected GDP, unchanged from the end of September.
All the three subsystems of the general government closed October with slight deficits. (HUF 100 = EUR 0.3825)

EU Finance Ministers Approve EUR 6.5 billion Credit Line for Hungary

November 5th 2008

EU finance ministers on November 4th approved a EUR 6.5 billion credit line for Hungary to support the country's economy, which has been hit hard by the global financial crisis.
The loan is part of a EUR 20 billion financial support package from the EU, the IMF and the World Bank.
Last week, the European Commission officially proposed to Member States to organize a credit line for Hungary in order to support the balance of its current account. It said at the time that the credit would be disbursed over five years in maximum five tranches. The EU's Economic and Monetary Affairs Commissioner Joaquin Almunia said at the time of the announcement that the Commission expects Hungary to stick to its targets and reduce its general government deficit, improve bank regulations and oversight, and take structural steps to boost the level of employment.

Dunaferr Cuts Costs

November 4th 2008

Dunaferr cuts costs and reschedules investments because of the financial crisis.
Steel maker ISD Dunaferr, a unit of Ukraine's Donbass, announced on November 4th that it had decided to cut costs and put off investments in order to reduce the effects of the global financial crisis on the company.
The costs cuts are expected to counter a drop in steel prices.
ISD Dunaferr's management is also optimising production in light of a fall in manufacturing sector demand.
ISD Dunaferr had revenue of HUF 280 billion in 2007.
(HUF 100 = EUR 0.3888)

August Trade Deficit EUR 76 million, Down from Preliminary

November 4th 2008

Hungary posted a EUR 76.1 million trade deficit in August, the Hungarian Central Statistical Office (KSH) said in a second reading on November 5th. The figure is under the preliminary deficit of EUR 103.7 million announced on October 9th, and down from a EUR 176.5 million deficit in the same month a year earlier.
The deficit is the second one in a row after five months of consecutive surpluses. The deficit was EUR 365 million in July. The January-August trade surplus narrowed EUR 24.8 million, from a January-June surplus of EUR 466 million. Hungary ran a EUR 457 million trade deficit in January-August 2007.
Both exports and imports fell in euro terms in August, in the first year-on-year drop since February 2003.

Financial Ministerium and National Bank Publish Letter of Intent on EUR 12.5 billion IMF Support Package

November 4th 2008

The Finance Ministry and the National Bank of Hungary (NBH) on November 6th published a letter of intent on a EUR 12.5 billion, 17-month stand-by arrangement with the International Monetary Fund (IMF) to support a program that aims to "firmly anchor macroeconomic policies and reduce financial market stress".
The main objectives of the program are to reduce the government's financing needs and improve long-term fiscal sustainability, maintain adequate capitalisation of the domestic banks and liquidity on domestic financial markets, and underpin confidence and secure adequate external financing. The government is in the process of considering additional steps - consistent with the program - to improve the competitive position of the economy, the letter said.