Hungary's secret €1 billion loan from China: A financial lifeline
This spring, Hungary secretly borrowed one billion euros from Chinese banks, as reported by journalists from the "Politico" portal. The agreement allows Hungary to maintain a public debt to GDP ratio of 28.9 percent. Budapest had not previously disclosed this financial move.
4:43 PM EDT, July 26, 2024
Hungary borrowed 1 billion euros this spring. This is the largest loan ever taken by Budapest from three Chinese banks. The loan, provided by the China Development Bank, the Export-Import Bank of China, and the Hungarian branch of the Bank of China, was fully disbursed on April 19 and is to be repaid within three years.
The first to report this information was the Hungarian economic portal "Portfolio”, and it was later confirmed by a government agency.
The significant borrowing comes when Budapest is strengthening its ties with Beijing. According to Hungarian Foreign Minister Peter Szijjarto, Chinese companies such as electric car manufacturer BYD and tech giant Huawei have invested approximately 17 billion dollars in the country so far.
The loan agreement allows, among other things, to finance investments in infrastructure and the energy sector. The agreement allows to keep the ratio of public debt to GDP within the limit of 28.9%, "Portfolio" revealed on Thursday morning.
In May, Szijjarto also announced a range of joint infrastructure projects with China, including a high-speed rail link to Budapest Airport, a freight rail line around the Hungarian capital, oil pipelines between Hungary and Serbia, and nuclear cooperation.
We have established a high degree of mutual political trust. Our bilateral relations are the best in history and have embarked on a golden journey, declared Chinese President Xi Jinping.
Mysterious loan for Hungary. The situation is not good
With Hungary's record public debt of 148 billion dollars (73.5 percent of GDP) and a budget deficit of 6.7 percent of GDP, Budapest desperately needs cash.
Budapest is still waiting for billions of euros from EU funds. The new Chinese loan constitutes a significant portion of the national debt.
It is worth noting that Hungary, currently the only EU country participating in the Chinese Belt and Road Initiative (BRI), has the best relations with Beijing among all EU countries.
