The credit contract signed between China and Hungary for upgrading the Budapest-Belgrade railway line is advantageous and secure for Hungary, Finance Minister Mihály Varga said on Friday.
The signing of the document makes it possible for the development project to be started and for Hungary to become a logistic hub for the region, he said.
Under the agreement signed with China’s Exim Bank, Hungary will finance 85 percent of the investment costs from credit and the remaining 15 percent from its own funds, Varga said. The loan has a fixed interest rate and the agreement allows for prepayment, he added.
Accordingly, the Hungarian government will initiate early repayment if justified by market conditions.
Varga noted that the agreement for the upgrade was signed in spring 2019 with the Hungarian-Chinese contractor consortium. Work has already started on the Serbian section, which is expected to be completed by the end of 2022. The full project is scheduled to be completed by 2025, the minister said.
China has said it will finance 85 percent of the cost of upgrading the line which will become part of a corridor for the delivery of Chinese goods to Europe from the Port of Piraeus in Greece.