Hungary's billion-euro loan from China: Secrecy and strategic ties
This spring, Hungary secretly borrowed one billion euros from Chinese banks. This information was relayed by journalists from "Politico." The agreement allows the public debt-to-GDP ratio to be maintained at 28.9 percent. Budapest had not previously disclosed its fiscal challenges.
Hungary borrowed 1 billion euros this spring, marking the largest loan ever taken out by Budapest from three Chinese banks. The China Development Bank, the Export-Import Bank of China, and the Hungarian branch of the Bank of China granted the loan. It was fully disbursed on 19 April and will be repaid within three years.
The first to obtain this information was the Hungarian economic portal "Portfolio," with confirmation later provided by a government agency.
These significant loans are being taken out when Budapest strengthens its ties with Beijing. According to Hungarian Foreign Minister Peter Szijjarto, Chinese companies such as electric vehicle manufacturer BYD and technology giant Huawei have invested around 16 billion euros in the country.
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 several joint infrastructure projects with China, including a high-speed rail link to Budapest airport, a freight railway 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 140 billion euros (73.5 percent of GDP) and a budget deficit of 6.7 percent, Budapest desperately needs cash.
Budapest is still awaiting billions of euros from EU funds. The new Chinese loan constitutes the highest state debt.
It is worth noting that Hungary, the only EU country participating in the Chinese Belt and Road Initiative (BRI), has the best relations with Beijing among all EU countries.
