27 Nov 2011

Hungary debt downgraded

9:07 am on 27 November 2011

Moody's has cut its rating of Hungarian government debt to junk status.

High levels of debt and weak prospects for growth were blamed by the agency for the cut, as well as uncertainty about whether the government can achieve its goals for the economy.

Last week, the government said it would seek a financial safety net from the European Union and the International Monetary Fund, but no new loans.

Standard & Poor's has decided not to downgrade Hungary until the talks with the EU and IMF are completed.

Hungary was given a 20 billion euro standby loan by the IMF in 2008 to prevent a default on its debts.

But Prime Minister Viktor Orban decided not to renew the facility last year.

The BBC reports the government has dismissed the views of ratings agencies, saying that they are biased against Hungary because its economic policies do not favour banks.