Rating agency Standard & Poorʼs decision late Friday to change the outlook on Hungaryʼs sovereign rating from ʼstableʼ to ʼpositiveʼ shows that the government has handled challenges well with its economic policies, Minister for National Economy Mihály Varga told state news wire MTI Monday.

The governmentʼs economic policies support financial stability as well as economic growth, Varga said, noting that all three of the big ratings agencies put Hungary back into investment grade last year with ʼstableʼ outlooks. Standard & Poorʼs has now become the first to change the outlook to ʼpositive,ʼ he added.

Although it is uncommon for the ratings agencies to upgrade sovereign ratings directly before general elections, Moodyʼs and Fitch Ratings are also soon expected to change their outlooks for Hungaryʼs rating to ʼpositive,ʼ Varga claimed.

Investors earlier formed their own positive opinions of Hungary, argued the minister, as evidenced by yields on Hungarian government securities, which have been around the same level as sovereign debt issued by countries with higher ratings for a while, he added.

Standard & Poorʼs acknowledged in its announcement of the rating action that the governmentʼs innovative economic policy measures have contributed to a reduction in the countryʼs vulnerability and supported its macroeconomic stability, Varga asserted.

In its analysis, S&P said that Hungaryʼs biggest strength is the stability of its economic outlook and the reduction in its external vulnerability, Varga noted. The change in the outlook, he argued, reflects its view that non-performing loans (NPLs) in the banking sector will likely decline further in future and banking sector lending will expand at a sustainable pace in the long term.