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Hungary's Economy Ministry said Friday's downgrade to junk by Fitch Ratings was unwarranted considering the state of the country's economy.
Hungary will start talks with the International Monetary Fund next week on securing financial backing and expects these talks to be successful, the ministry said in a statement. The deal will reassure investors and bring a quick correction in the prices of Hungarian assets, it said.
The ministry stressed that Hungary will be able to keep its 2012 budget deficit under 3%, the central bank has ample foreign currency reserves and the country is capable of securing finances from the markets.
Fitch followed Moody's Investors Services and Standard & Poor's Corp which also downgraded Hungary last year, also to junk status.
The rating firm's announcement comes in spite of the fact that the government expressed willingness to make concessions in legislation that led to strong international objections and the breakdown of talks with the EU/IMF in December.
Markets responded favorably to the government's change of approach whereas the Fitch announcement hardly caused any impact, since it was priced in that the firm would follow its peers.
-By Gergo Racz, Dow Jones Newswires, +361-267-0622; email@example.com