China: an alternative to EU money for Hungary?
The Hungarian government is looking for an alternative to EU money and the relationship with China is continuous. This will not save the country, as it is only a fraction of the amount needed, but the cabinet is in constant contact with the Chinese.
Negotiations with the European Commission on the conditions for Hungary to receive money from the economic recovery fund after the Covid-19 pandemic are dragging on. As it is unclear whether the EU aid will arrive at all in time, Viktor Orbán indicated in his speech to parliament on Monday that his cabinet is looking for other sources. One possibility is to issue another Green Panda bond in China, according to an article by 24.hu.
Energy prices, which have risen seven to nine times in two to three years, generate huge expenditure, which worsens the current account. Compared to 2019, energy prices have gone through the roof by 2022: the energy bill in the current account has risen from HUF 570 billion to HUF 5059 (EUR 1.35 billion to 12 billion) billion for natural gas, from HUF 1008 billion to HUF 1479 billion (EUR 2.4 billion to 3.5 billion) for oil, and from HUF 201 billion to HUF 1556 billion (EUR 477 million to 3.7 billion) for electricity, Népszava writes.
EU funds could improve the situation, but for a long time this has been slow, and although the process has recently accelerated – as the Hungarian government has started to incorporate rules in line with EU rule of law requirements into the domestic legal order – the threat of money being withdrawn is still hanging over the country.
Government sources tell 24.hu that there is no talk of IMF involvement, but the cabinet is in constant contact with China and is preparing to issue a green Panda bond. This is also part of the public financing plan.
Hungary has already issued a similar Panda bond in 2021, which was priced at around HUF 50 billion (EUR 118.7 million) and subscribed by investors. As for the 2022 plans, the Public Debt Management Centre has announced that the foreign currency bond issuance limit has been increased by EUR 2.5 billion to EUR 5.1 billion. “This framework may include green Panda bond issuance as well as private placements in case of investor demand,” the body said.
Source: 24.hu, Népszava