Hungary feels bitter about downgrade by S&P

The Hungarian Economy Ministry said Wednesday the country's credit rating downgrade was a scapegoat of the euro crisis and an indirect victim of "financial attacks" against the EU. The ministry said in a statement that the country's downgrade was "not based on an analysis of the current economic and financial state of the Hungarian economy," but was forced by "pressure from market players whose interests are in a strengthening of the dollar and weakening of the euro zone." Hungary's credit rating was downgraded Wednesday by Standard & Poor's to "junk" level. S&P cited Hungary's sovereign debt level, the highest in the EU, and its low economic growth as reasons for lowering long-and short-term foreign- and local-currency sovereign credit ratings by one notch to BB+ from BBB. "The predictability and credibility of Hungary's policy framework continues to weaken, harming Hungary's medium-term growth prospects," an S&P statement said, "The weakening is due, in part, to official actions that, in our opinion, raise questions about the independence of oversight institutions and complicate the operating environment for investors." The International Monetary Fund (IMF) and the EU broke off preliminary negotiations with Hungary on a precautionary loan last week, due to concerns over a proposed law to reduce central bank independence and increase parliament's influence in setting interest rates. According to the European Commission's forecast last month, Hungary would have the highest debt level and lowest economic growth rate among the EU's eastern members next year. Earlier in late November, another major ratings agency Moody's also downgraded Hungary's credit ratings, while Fitch Ratings currently has Hungary holding the lowest-possible investment-grade rating.