Hungary's Increasing Dependence on Chinese Cash
- Hungary borrows €1B from Chinese banks to address record high public debt.
- Budapest looks to Beijing for financial assistance amidst economic challenges.
- Growing financial ties between Hungary and Chinese banks raise concerns about dependency.
Budapest is seeking financial assistance from Beijing as its public debt reaches an unprecedented €140 billion, equivalent to 73.5% of its GDP. The Hungarian government has secured a loan from the China Development Bank, the Export-Import Bank of China, and the Hungarian branch of the Bank of China, which was fully drawn on April 19 and is due for repayment within three years. The agreement was initially reported by the Hungarian business publication Portfolio before being confirmed by government officials. Foreign Minister Péter Szijjártó highlighted that Chinese investments in Hungary, totaling approximately €16 billion, have come from major companies like BYD and Huawei. The recent loan is intended to finance various infrastructure and energy projects, including a high-speed railway to Budapest airport and oil pipelines connecting Hungary and Serbia. Szijjártó emphasized the strong political trust developed between Hungary and China, which has facilitated these financial agreements. Prime Minister Viktor Orbán's recent visit to Beijing coincided with Hungary's presidency of the rotating Council of the EU, underscoring the growing ties between the two nations. As Budapest grapples with a budget deficit of 6.7% of GDP and awaits billions in EU funds, the new Chinese loan represents a significant addition to the state’s debt portfolio. While the government has not disclosed specific details regarding the loan's interest rate or repayment schedule, it marks a critical step for Hungary in addressing its financial challenges and advancing key infrastructure projects.