Hungary

Hungary’s national airline, Malev, has ceased operations in the latest development to shake the country’s ailing economy and pile pressure on prime minister Viktor Orban, the Irish Times reported. Malev abruptly announced yesterday morning that it was grounding all flights, amid fears that its aircraft could be impounded abroad after they were not allowed to take off from Dublin and Tel Aviv airports.

Hungary's government Thursday appointed a controller to monitor finances at troubled national airline Malev after the state-owned company went into bankruptcy protection at the beginning of the week, Dow Jones DBR Small Cap reported. The airline has amassed a debt of HUF60 billion ($271.7 million), and has to repay the government HUF100 billion of state aid after it was found in breach of European Union rules.

The Hungarian government decreed Monday that troubled national airline Malev Zrt was a company of "strategic importance" in a move to shield the state-owned company from bankruptcy, Dow Jones DBR Small Cap reported. The government's move came as the airline's chief executive, Lorant Limburger, said in a statement that Malev lacked the funds to continue operating beyond the end of January. Malev held an emergency board meeting earlier Monday.

Hungary's prime minister moved to soothe anxious markets Friday, meeting with the central bank governor and showing a new willingness to discuss changes to a controversial law curbing the bank's independence that has become a stumbling block to international financial help, The Wall Street Journal reported.

A selloff in Hungarian financial markets is forcing investors to weigh the possibility of a default in the European Union state and the risk of contagion to other regional economies, Reuters reported. The rising cost of insuring government and bank debt in neighbouring euro zone member Austria because of exposure to Hungary is a case in point.

Hungary defended its economic management after a second credit-rating firm stripped the country of its investment-grade status, the Wall Street Journal reported today. Announcing its decision to lower Hungary to junk status, Standard & Poor's Ratings Services said late Wednesday that the economy was suffering from policies that lack predictability and credibility. Moody's Investors Service already downgraded Hungary to junk status last month and analysts expect Fitch Ratings to follow suit early next year.

The European Union and the International Monetary Fund broke off preliminary talks Friday with Hungary on a financial aid package because of concerns that the government aimed to curtail the independence of the country's central bank, the Associated Press reported. Hungary said last month it would seek to work out a deal for unspecified aid from the IMF and the EU, a "security net" to reassure investors about its creditworthiness and financial stability.

Hungary lost its investment-grade rating at Moody’s Investors Service after 15 years as the Cabinet seeks International Monetary Fund help to boost confidence in the European Union’s most-indebted eastern member, Bloomberg News reported today. The foreign- and local-currency bond ratings were cut one step to Ba1, the highest junk-level score, from Baa3, Moody's said. Moody's, which awarded Hungary its investment grade in 1996, assigned a negative outlook. The country is rated the lowest investment grade at Standard & Poor’s and Fitch Ratings.

After almost a year of haggling, the Hungarian government struck a deal this week with the country’s banks to, in the words of Prime Minister Viktor Orban, “save the homes” of those who have mortgages in foreign currencies, the Emerging Europe blog reported. Home owners who financed their property with foreign-currency mortgages were hit hard over the past eight years because “nobody warned them,” not even the people whose job it was, about the risks of foreign currency fluctuations, Mr. Orban said referring to the previous Socialist government’s term in power.

The acres of demolition rubble surrounding the faded glories of the Ferencváros football stadium on the outskirts of Budapest speak volumes for the state of the Hungarian economy, InsolvencyJournal.ie reported. This stalled reconstruction project is one of dozens pointed out by the driver en route into town, all of them abandoned for lack of cash.