Hungary's secret CAD 1.5 billion loan deepens ties with china
This spring, Hungary secretly borrowed one billion euros from Chinese banks. This information was relayed by journalists from "Politico." The agreement allows for maintaining the public debt-to-GDP ratio within 28.9 percent. Budapest had not previously revealed its problems.
Hungary borrowed 1 billion euros this spring. This is 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 April 19th and is to be repaid within three years.
The first to obtain this information was the Hungarian economic portal "Portfolio", which was later confirmed by a government agency.
The significant loans are being taken out at a time when Budapest is strengthening its ties with Beijing. According to Hungarian Foreign Minister Peter Szijjarto, Chinese companies such as electric vehicle manufacturer BYD and technology giant Huawei have so far invested a total of around 16 billion euros (CAD 24 billion) in the country.
The loan agreement allows financing investments in infrastructure and energy, among other things. Thanks to the transaction, the public debt-to-GDP ratio remains within the limit of 28.9 percent, "Portfolio" revealed on Thursday morning.
In May, Szijjarto also announced a number of 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 developed a high degree of political mutual trust. Our bilateral relationship is at its best in history, and has embarked on a golden voyage, declared Chinese President Xi Jinping.
Mysterious loan for Hungary. The situation is not good
With Hungary's record public debt of 140 billion euros (CAD 210 billion) (73.5 percent of GDP) and a budget deficit of 6.7 percent of GDP, 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.
