Public debt and the position of foreign currency debtors may also have a positive impact if Hungary’s credit rating is improved, analysts say.
Number of investments were agreed
In April, the foundation stone of Good Finance’s new engine factory was laid in Szentgotthárd, and at the beginning of the month, the foundation stone of Paudi’s new factory unit. And a number of investments were agreed during the visit of the Chinese Prime Minister. Investments, and thus jobs, could continue to grow if high credit ratings improve Hungary’s perception, as London analysts expect it to be, said the News.
Reduce interest expenditures
In its analysis, ABC Capital Markets writes that Hungary’s debt rating was “overzealous” at the beginning of the crisis, but the results achieved since then are only slowly being recognized.
According to ABC analyst Sean Cole, if the country’s perception improves, it can also have a positive effect on the level of government debt, as the state gets cheaper money from the market. When, instead of a ten percent bond, say six percent, the government can issue it, it suddenly won four percent. This will reduce interest expenditures and make it easier to outgrow government debt, he said.
The positive effect of Hungary’s rating on the exchange rate may be most tangible. The interest rate set by the Good Finance of Hungary may also decrease, and as a result, the repayment installment of foreign currency loans may also decrease.
Stable investment location
According to an analyst at Good Finance, many conditions must be met in order to improve Hungary’s perception. Credit rating also depends on the US economy and the eurozone crisis. In order to be regarded as a stable investment location, Hungary also needs to reduce these global market risks. In addition, according to Attin Weinhardt, the budget for next year also depends a lot. He says it will be very important for investors to believe the key figures in the 2012 budget are credible, whether they want to reach next year’s general government deficit target, and by then, the concerns about the US debt ceiling will surmount, he added.
According to analysts, Hungary will not be closer to adopting the euro by the end of the decade, even with a better rating. If there is a single European currency at all.