The decision, announced late Friday night in London, highlights Budapest's significant role in the Hungarian economy, its decreasing and manageable debt levels, and adequate budget management amidst a challenging operational environment.

The reiteration of the “Baa3” issuer rating and the “baa3” baseline credit assessment (BCA) with a stable outlook reflects:

- The city's crucial role in the Hungarian economy

- Its decreasing and manageable level of debt

- Adequate budget management despite the challenging operational context

Moody's emphasizes that as the most developed city in the country, Budapest generates 37 percent of Hungary's Gross Domestic Product (GDP), consistently outperforming the national average due to its diversified economy.

The organization points to Budapest's economy, which is based on high value-added services, noting that the GDP per capita in the capital exceeds the national average by more than 200 percent.

Expectations shared by Moody's suggest real growth for Hungary's GDP at 3 percent this year and 3.2 percent by 2025, contributing to the growth of Budapest's primary income source tax revenues from the business sector.

According to Moody's, the city's gross operating balance is expected to significantly improve to a plus of 4.7 percent this year and 3.4 percent next year, compared to the 27 percent operating deficit recorded in 2020.

Over the past few years, Budapest has demonstrated a good debt tolerance, reducing its debt to 42 percent of operating revenues last year a manageable level from the 56 percent recorded in 2022.

Moody's expects this rate to further decrease to around 35 percent of operating revenues this year, thanks to a favorable maturity profile, indicating that the city faces no immediate refinancing risks. However, Budapest's rating is constrained by its challenging liquidity position.

The stable outlook on Budapest's rating mirrors the country's favorable economic prospects and the city's ability to control its debt levels.