The State of Hungary and the European Investment Bank (EIB) concluded a loan contract of more than HUF 70bn (EUR 400 million) to be used by Hungary as own funds required for the co-financing of EU-funded projects, Minister of Finance Mihály Varga said. The contract signed by Minister of Finance Mihály Varga and EIB Vice-President Vazil Hudák aims to help the implementation of projects in the fields of, among others, transport infrastructure, drinking water supply and energy efficiency.

Hungary concluded an agreement with the EIB in 2015 according to which Hungary may draw funds from a stand-by loan facility of EUR 1bn for the pre-financing of own funds required for EU-funded projects up to the year 2020, Mihály Varga pointed out. In line with the terms of the agreement, the projects expected to be financed through the instrument include one for the upgrading of drinking water services in Budapest, another for the creation of a railway link suitable for personal transport between downtown Budapest and the Ferenc Liszt International Airport, and one for the extension of several existing highways and motorways (e.g. M4, M6, M8 and M30) to reach the country’s borders, Mihály Varga said. The amount made available by the current agreement is accessible within the next three years for the co-financing of EU-funded projects, he added.

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Out of international development-focused institutions, in terms of project-financing the EIB is the most active in Hungary. The bank uses the advantages stemming from its “AAA” rating and offers highly favourable loan conditions for Hungary, the Minister pointed out. As the EIB is a not-for-profit institution, its main priority is to provide long-term loan facilities with favourable conditions and low interest rates for member states.

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Speaking of the contract Vazil Hudak commented: “The loans signed today demonstrate the EIB’s commitment to cohesion projects in Hungary. We are co-financing projects expected to have a positive impact on the society and the economy”.

(Ministry of Finance)