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Jan 12, 2018

Hungary's FM: China's loan for Budapest-Belgrade railway upgrade is the "most favorable" in the absence of similar European funding

Péter Szijjártó, minister of Foreign Affairs and Trade, said there was no competitive financing alternative available in Europe for infrastructural investment - the 18-year US dollar loan from China with annual interest rate of 2.5 percent was the best option

Hungary's foreign minister has said that the financing provided by China for the upgrade of the Budapest-Belgrade railway line is the "most favorable" in the absence of similar European funding.

Péter Szijjártó, minister of Foreign Affairs and Trade, said there was no competitive financing alternative available in Europe for infrastructural investment - the 18-year, US dollar loan from China with annual interest rate of 2.5 percent was the best option.

The minister said that the loan is likely to become a 20-year loan with a five-year grace period, and the exact cost of the financing will become clear after the completion of the public procurement.

Minister Szijjártó dismissed criticism questioning Hungary’s interest in the investment, arguing that an electrified rail connection to the capital of a neighboring country suitable for trains running at 160km per hour would be beneficial for Hungary.

According to MTI, the minister added that the government wants Hungary to become the transit country for as much Chinese merchandise as possible on their way to Europe.

A tender for the upgrade of the Budapest-Belgrade line with a submission deadline of January 19, 2018 was called in November 2017.

The cost of upgrading the line in Hungary is expected to be around 550 billion HUF (1.8bn EUR), 85 percent of which will be financed from the Chinese loan.