Page 26 - bne_newspaper_May 5 2017

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May 5, 2017 www.intellinews.com I Page 26
bne:Credit Czech rate setters hint
at benchmark hike in late 2017
Hungarian government announces ambitious state debt target
The Czech Monetary Policy Council (MPC) maintained the bench- mark at 0.05% as expected at its meeting on May 3.
The meeting was the first since the Czech National Bank dropped its cap on the koruna on April 6, with attention having now turned to the timing of further steps towards the normalisation of mon- etary policy. The limit on the currency ran from November 2013; the benchmark has sat at virtual zero since the end of 2012.
While members of the MPC have suggested a rise in the bench- mark could come as early as the third quarter of the year, the pullback in the inflation surge seen around the region suggests that may be premature. However, despite clear dovish signals, there were also hints that a hike is still on the cards for later in the year.
Hungary aims to bring its gross state debt ratio by 12.8pp over the next five years, according to an updated convergence plan submit- ted to Brussels on May 3.
Budapest has succeeded in reducing the level of foreign currency debt to reduce external exposure in recent years. While that effort earned the country an escape from junk status with all three major rating agencies last year, it has struggled for traction in dropping the overall burden. Hungary's state debt ratio remains by far the highest in Central & Eastern Europe.
The government now targets a drop to 72% by the end of 2017, followed by falls to 70.5% in 2018 and 67.3% in 2019. By the end of 2020, the burden should reach 63.9%. The state debt burden peaked at 80.7% in 2011. The new target, therefore, demands that the pace of the fall since be more than doubled over the coming five years.
Fitch Ratings has affirmed Ukraine's long-term foreign- and local- currency Issuer Default Ratings (IDRs) at 'B-' with a stable outlook.
Ukraine's ratings balance weak external liquidity, a high public debt burden and structural weaknesses, in terms of a weak banking sector, institutional constraints and geopolitical and political risks, against improved policy credibility and coherence, the sovereign's near-term manageable debt repayment profile and a track record of multilateral support, Fitch said in a statement published in late April.
The issue ratings on Ukraine's senior unsecured foreign- and local- currency bonds have also been affirmed at 'B-' and the sovereign's short-term senior unsecured local currency bonds at 'B'.
Fitch affirms Ukraine at 'B-' with stable outlook