Hungary Secretly Borrows €1 Billion from Chinese Banks

In the spring, Hungary secretly borrowed €1 billion from three Chinese banks, the largest loan Budapest has ever taken out.

This is reported by Politico, citing data from the Hungarian Debt Management Office.

It is noted that 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 utilised by Hungary on 19 April and must be repaid within three years.

Budapest itself did not announce the deal, which was first reported by the Hungarian business daily Portfolio on Thursday and later confirmed by the government's debt agency.

‘The loan agreement, among other things, allows financing investments in infrastructure and the energy sector. The agreement allows us to keep the ratio of public debt to GDP within the limit of 28.9%,’ the agency explained on Thursday morning.

The Hungarian government did not disclose any details on the interest rate, loan repayment schedule or other details of the deal, despite the fact that Portfolio reported that the interest rate is variable.

The record loan to Hungary comes amid a record increase in its public debt to €140 billion (73.5% of GDP) and a budget deficit of 6.7% of GDP, while the country has no access to EU funds due to the conflict with Brussels.

At the same time, Budapest and Beijing are actively getting closer to each other, as evidenced by Xi Jinping's visit to Hungary in May, during which the parties signed a number of agreements on infrastructure projects, and Hungarian Prime Minister Viktor Orban's ‘peace mission’ to China.