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The government is freezing interest rates on loans to small and medium-sized firms from Nov. 15 until July 2023, Márton Nagy, the minister of economic development, announced at a government press conference. Interest rates will be frozen retroactively at their June 28 levels, which was 7.77% as against the current 16.69%, he said. Around 60% of SME loans are subsidised, with 40-45% being variable-rate loans, the minister said. The stock of variable-rate loans to SMEs amount to almost 2,000 billion forints (EUR 4.9bn) and are held by close to 60,000 businesses.
Meanwhile, Nagy said the interest rate on Széchenyi card loans for businesses will rise to 5% from the current 3.5% from Jan. 1. Further, the government is mulling using the bank levy not just as a fiscal tool but also as an economic incentive, Nagy said. “So those that lend will pay a smaller bank levy and those that don’t lend will pay a larger one,” he said. The government will begin drafting such a scheme next week, he added.
Asked about the loan freeze, Nagy said the measure was an alternative to a moratorium. “We can either have an interest-rate cap or a moratorium,” he said. The aim, he added, was to avoid a cost shock in the SME sector. Nagy also said that the new Széchenyi card interest rates will be valid through the first half of next year. The minister said Hungary had every chance to remain on a growth path while Germany could slide into recession.
Meanwhile, Nagy said inflation could be brought down to single digits by the end of 2023. He said that fundamentally price caps were “not good”, but “the current times aren’t normal” and shocks needed to be managed. Price caps need to remain in place as long as they are needed and as long as inflation demands it, he added.
In response to a question, the minister said he expected Hungary’s economic growth to exceed that of the EU next year, though there will be a temporary slowdown. He said he expects the economy to expand by 4-5% in 2024-2025. Nagy said the central bank had been successful in stabilising inflation and had contributed to financial stability.
Hungary’s government is allocating 150 billion forints (EUR 365.6m) towards supporting investments aimed at improving the energy efficiency of large companies as part of the first phase of a new “factory-saving” scheme, the minister of foreign affairs and trade said in a statement. The scheme to be launched on Nov. 2 will be open to companies that invest at least 200 million forints in the expansion of their energy supply capacities with the aim of improving their energy efficiency and reducing energy costs, the foreign ministry cited Péter Szijjártó as saying. The government will cover 30% of the energy-efficiency investments of Budapest-based companies whose applications are approved, while companies based outside the capital will have 45% of their investments covered. Companies will be able to apply for a maximum of six billion forints in funding, Szijjártó said.