S&P: Four European countries could be limited

Standard & Poor's said in a report that political unwillingness or inability to tackle structural reforms and further consolidate public finances could limit improvements in credit quality of the four largest Central and Eastern European countries.

Most economies are still performing strongly and external accounts have improved or remain generally strong in the CEE-4, comprising the Czech Republic (foreign currency A-/positive/A-2, local currency A/positive/A-1), Republic of Hungary (BBB+/stable/A-2), Republic of Poland (foreign currency A-/stable/A-2, local currency A/stable/A-1) and the Slovak Republic (A/stable/A-1).

Growth remains particularly strong in the Slovak Republic, where it will exceed 7% this year and in Poland, the report stated.

This is also reflected in these countries' very rapidly falling unemployment rates, although they remain high at 12% and 11%, respectively, the agency noted.

"Political determination or ability to pursue structural reforms and further consolidate public finances is generally limited, however and governments are not using the currently favorable economic conditions to reduce structural deficits," said S&P credit analyst Kai Stukenbrock.

The notable exception in this regard is Hungary, where the unsustainable state of public finances has pressed the government to embark on a comprehensive course of fiscal consolidation, S&P added.

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