As shockwaves from the eurozone crisis radiate outwards, Hungary has felt the full force of their impact.

Maybe. Or maybe not?

Budapest has endured three difficult bond auctions in a week, yields have shot up, and the forint has tumbled to record lows. That, in turn, is fuelling inflation and increasing the pain for hundreds of thousands of Hungarians who took out mortgages in foreign currencies when the forint was much

Fitch and Standard & Poor's on Friday shifted their credit outlook for Hungary, rated on the lowest investment grade, to negative – making a downgrade to junk status appear only a matter of time.

With the highest government debt among central and east European countries, Hungary has seen credit flows slow as investors have fled risk and the growth outlook for its biggest market – the eurozone – has darkened.

There are now fears that Hungary's predicament could foreshadow a new wave of contagion to CEE countries, which were particularly badly hit by the 2008 financial crisis.

Hungary's centre-right Fidesz government is nonplussed. It says it has worked hard to control the budget deficit, targeting 2.5 per cent of gross domestic product next year, and started reducing government debt from the 80 per cent of GDP inherited from the previous administration.

"We are not Greece," says Zoltan Kovacs, a government communications minister. "We suspect some speculative steps behind this. It is not justified at all."

But some market observers are struggling with trying to determine the extent to which the announcements may be a result of political maneuvering to back away from campaign pledges to reduce taxes all the way to concerns that there may be a similar credibility gap to Greece regarding past budget numbers.

Is it possible that that the Hungarian government is trying to make the economy sound worse that it is? They would certainly have the incentive. Promising tax cuts, Fidesz won parliamentary elections in a landslide in April, unseating a Socialist governing that had instituted painful austerity measures in order to restore investor confidence. FT's Alphaville notes:

It's certainly not out of the question that the Socialists were engaging in some creative accounting. Concealing the true state of the economy is becoming something of a tradition in Hungarian politics. In 2006, former Socialist Prime Minsiter Ferenc Gyurcsany was caught on tape telling members of his party that he had concealed the true state of the economy in order to win an election, saying, "Evidently, we lied throughout the last year-and-a-half, two years. It was totally clear that what we are saying is not true."

A recent Pew survey found that an astounding 77 percent of Hungarians describe themselves as "not satisfied" with democracy. That number's becoming a little easier to understand.