Hungary’s Outlook Cut to Negative at Fitch on Budget Loosening

Fitch Ratings cut the outlook on Hungary’s credit score to negative from stable, after a loosening of budget targets to accommodate Prime Minister Viktor Orban’s pre-election spending.

The long-term rating was affirmed at BBB, Fitch said in a statement Friday. Moody’s left its assessment at Baa2 a week ago, on par with Fitch, with a negative outlook. S&P Global Ratings has its score one step lower at BBB-.

“Fitch has significantly worsened its projections for public finances, reflecting new measures as 2026 parliamentary elections approach,” analysts Malgorzata Krzywicka and Erich Arispe Morales wrote.

Orban, who is trailing the opposition in polls ahead of parliamentary elections in April, has ramped up spending amid a stagnant economy. Steps undertaken include expanding eligibility for lifetime income tax exemption for mothers, hiking wages and subsidizing mortgages.

Hungary’s bond yields jumped last month when the government announced the budget shortfall would probably rise to 5% of gross domestic product this year from a previous target of 4.1%. The gap will stay at 5% in 2026, instead of the 3.7% deficit anticipated in next year’s budget.

Read more: Orban Is Preparing for a Crisis and Investors Are Asking Why

Yields have receded in the past two weeks amid demand for emerging-market assets. The forint has been trading around the strongest since early 2024 against the euro, buoyed by the 6.5% central bank base rate, the highest in the European Union on par with Romania.