Economy1 hour ago (Oct 22, 2022 08AM EST)
© Reuters. FILE PHOTO: Marton Nagy, deputy governor of the National Bank of Hungary, gives an interview to Reuters in Budapest, Hungary, May 23, 2017. REUTERS/Krisztina Than
by Krisztina Than
BUDAPEST (Reuters) – Hungarian Economic Development Minister Marton Nagy said, Hungary will include variable-rate loans to SMEs in a plan to limit lending rates and avoid recession, adding that banks
inflation is over 20% and still On the rise, the economy is slowing and Prime Minister Viktor Orban’s government faces the challenge of curbing price growth while trying to avoid a recession. It already capped the price of fuel and basic food, as well as mortgage rates. Most households also have caps on their energy bills.
On Saturday, the government announced subsidies worth 150 billion forints ($362 million) for big companies investing in energy efficiency and an expansion of its lending rate cap scheme.
Najib said the commercial lending rate will be capped at 7.77% on June 28 on the 3-month interbank offered rate, compared to the current rate of 16.69%. The central bank raised interest rates in an emergency on October 14. The cap, which is valid until July 1, 2023, is similar to the existing cap on home mortgage rates.
Banks will pay Nagy that the scheme will total about 80 billion forints as of July 1, adding that this is an amount they “can easily afford”.
“Rising interest rates have brought additional bank profits,” Najib added.
When asked if the government had held talks with banks before introducing the new cap, he said it had “notified” the banking association of the move.
Nagy said about 60,000 small companies held a stock of variable rate loans of nearly HUF 2 trillion, a measure designed to avoid these companies paying 20% or more on their loans high interest rates.
“We want to avoid a recession next year and we have a chance of 1% growth,” Najib told a briefing.
“With this lending cap, we hope to prevent the corporate sector from being hit again by a surge in repayments.”
May, The government announced a windfall worth 800 billion forints for what banks, energy companies and other companies call “extra profits”. The taxes, aimed at covering the budget deficit, have hit Budapest stocks and rattled investors.