Fitch downgraded Hungary to junk on Friday (by one notch to BB+). The primary reason was set of unorthodox policies, which complicates the deal with IMF/EU and undermines the confidence in the ability to repay its foreign commitments. We believe finally the Hungarian government should start to cooperate with IMF/EU, but the agreement on new Flexible credit line (FCL) is not going to be easy to find despite the fact that PM (1 2150 CZK, 0,41%) Orban said the country set no preconditions to IMF/EU credit talks. Recall that a delegation of the Hungarian government holds talks with the Fund this week. Meanwhile Czechs continue to be in opposition towards any unorthodox policies. Central bank governor Singer ruled out any direct bond buying programs. He added that he favours classical repo-operation to provide liquidity for the Czech banking sector. Beside that he also remains critical towards European plan to boost the contributions in IMF. Nevertheless the koruna still remains under the pressure despite rather conservative stance of both the Central bank and the government, which is willing to implement new austerity measures in reaction to deteriorating global outlook. Meanwhile the series of Czech macro-figures only confirms weaker prospects for domestic demand. The unemployment rate spiked higher to 8.6% and the retail sales are growing only on auto-sales, which may be partly due to foreign demand. Obviously the Czech consumer still remains very cautious.