Hungary has secured a loan from Chinese banks as it continues to wait for billions of euros in European funds frozen by Brussels due to concerns over the rule of law, according to Reuters.
In April, Hungary borrowed €1 billion from Chinese banks to finance infrastructure and energy projects, the government’s debt agency AKK announced on Thursday.
The three-year floating rate loan was provided by the China Development Bank, the Export-Import Bank of China, and the Hungarian branch of Bank of China Limited, AKK stated, confirming a report initially published by the financial news website Portfolio.hu.
Under the leadership of Prime Minister Viktor Orbán, Hungary has become an important trade and investment partner for China, at a time when other European Union countries are considering reducing their dependence on Beijing.
In May, Chinese President Xi Jinping met with Orbán in Budapest during his first European tour in five years, declaring that China and Hungary would embark on a “golden journey” in their bilateral relations.
Loan Terms Undisclosed
The cost and repayment terms of the loan were not disclosed by AKK. However, AKK did note that the new loan brought the share of foreign currency debt in Hungary’s total debt closer to the recently raised threshold of 30%.
AKK declined to provide further comments.
In April, Hungary announced it would defer nearly $2 billion in investments as part of a campaign to reduce the budget deficit amid weak economic recovery.
Despite some progress made by the Budapest government in unblocking EU funds, billions of euros in financing remain frozen by Brussels due to rule of law issues.
Since taking office in 2010, Viktor Orbán has frustrated his EU allies with his self-proclaimed “peace mission” to Ukraine, which included talks with Donald Trump and leaders from Russia and China without EU support.
