In the absence of similar European funding, the financing provided by China is the most favourable for the upgrade of the Budapest-Belgrade railway line, Hungarian foreign minister Péter Szijjártó said on Thursday.
The minister said there was no competitive financing alternative available for infrastructural investment to the 18-year Chinese US dollar loan with annual interest of 2.5 percent. Earlier, the minister talked about a 20-year loan with 5 year grace period.
The exact cost of the financing will become clear after the completion of the public procurement, he added.
Szijjártó dismissed criticism questioning Hungary’s interest in the investment, arguing that an electrified rail connection to the capital of a neighbouring country suitable for trains running at 160km per hour would be beneficial for Hungary.
He also said the government wants Hungary to become the transit country for as much Chinese merchandise as possible on their way to Europe, adding that it was the state-owned rail company MÁV that had decided to classify the feasibility study for the project.
The contracting entity is Chinese-Hungarian Railway Nonprofit Ltd in which state-owned China Railway International Corporation and China Railway International Group hold a combined 85 percent stake and MAV a 15 percent stake. The cost of upgrading the line in Hungary is expected to be around 550 billion forints (EUR 1.8bn), 85 percent of which will be financed from the Chinese loan.