Hungary borrowed €1 billion from Chinese banks in April to finance infrastructure and energy projects, government debt agency AKK said on Thursday.
The three-year floating-rate loan came from China Development Bank, the Export-Import Bank of China and the Hungarian branch of Bank of China Limited, it said, confirming a deal first reported by financial news website portfolio.hu.
Under Prime Minister Viktor Orbán, Hungary has become an important trade and investment partner for China, in contrast with some other European Union nations that are exploring becoming less dependent on the world’s second-largest economy.
Chinese President Xi Jinping met Orbán during his first European tour in five years in May and said China and Hungary would embark on a “golden voyage” in bilateral relations.
The AKK did not reveal the cost of borrowing or the repayment terms of the Chinese loan. However, it said the new borrowing pushed the share of foreign currency debt within Hungary’s overall debt stock to near a recently increased 30 per cent threshold.
It declined to comment further.
In April, Hungary announced it would postpone investments worth nearly $2 billion as part of a drive to cut the budget deficit to a recently-increased 4.5 per cent of GDP target amid a tepid economic recovery.
While Hungary has made some progress towards unlocking EU money to modernise its economy, billions of euros worth of funding remain suspended over rule-of-law concerns.
Orbán, in power since 2010, has also roiled EU allies with a self-styled Ukraine “peace mission” that included talks with Donald Trump and the leaders of Russia and China without EU backing.
