On July 17, the International Monetary Fund and European Union postponed talks with the Hungary Government. These two world renowned organizations had granted 20 billion-Euros to Hungary to revive out of recession in 2008.
As stated by Moody's Investors Services, it will appraise Hungary's credit rating on account of its suspended discussion with IMF and EU. It is expecting a downfall in the credit rating of the country.
The borrowing cost of the Hungary would increase and the confidence of investors will shake if its credit rating falls.
Hungary's debt has been rated by Moody as Baa1, which is its third-lowest investment grade. But it's higher than Fitch Ratings, which gives Hungary its second-lowest investment grade. Standard & Poor's gives the lowest rating to Hungary's debt.
IMF asked Hungary's Government to plug in the deficit gap of 3.8% of GDP for the ongoing year and the Government expressed that they are determined to meet the same.
On July 21, Hungarian Prime Minister, Viktor Orban stated that they don't seek assistance from IMF for monetary help to compensate the budget deficit. He further added that the economy will be financed from the market only.
Moody said, "We believe that the country's economy remains vulnerable because of the high foreign-currency indebtedness of both its private and public sector".