Hungary expands loan rate cap scheme to small businesses as recession looms

BUDAPEST, Oct 22 (Reuters) – Hungary will expand its existing mortgage rate cap from mid-November to include variable-rate loans to small and medium-sized businesses to avoid the risk of falling, the country’s Economic Development Minister Marton Nagy said. economic recession. Saturday.

With inflation above 20% in September and still rising and the economy slowing, Prime Minister Viktor Orbán’s government faces the challenge of curbing price growth while trying to avoid a recession in 2023. It has capped the price of fuel and basic food and mortgage rates. There is also a cap on the average-using household’s energy bill.

On Saturday, it announced subsidies worth 150 billion forints ($362 million) for big companies to help invest in energy efficiency, and expanded a scheme to cap lending rates at the cost of commercial banks.

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Following the central bank’s emergency rate hike on October 14, commercial lending rates will be capped at the three-month interbank offered rate on June 28, or 7.77%, compared with the current rate of 16.69%, Nagy said. The cap, which is valid until July 1, 2023, is similar to the existing cap on household mortgage rates, Najib said.

Najib said some 60,000 small businesses hold a stock of variable-rate loans of nearly 2 trillion forints, and the measure was designed to avoid them paying 20 percent or more on their loans.

“We want to avoid a recession next year and we have a chance of 1 percent growth,” Najib told a briefing.

“With this lending cap, we want to prevent the corporate sector from being hit again by a surge in repayments.”

Investors were rattled in May by the government’s announcement of a windfall profits tax of 800 billion forints on so-called “extra profits” earned by banks, energy companies and other companies to plug a budget gap, hitting the Budapest stock market.

(1 USD = 413.9900 Forints)

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Reporting by Krisztina Than; Editing by Kirsten Donovan

Our Standard: The Thomson Reuters Trust Principles.

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