Márton Nagy, the minister of economic development, has announced that the Hungarian government is freezing interest rates on loans to small and medium-sized firms from Nov. 15 until July 2023.
During a government press conference, the minister said interest rates will be frozen retroactively at their June 28 levels, which was 7.77% as against the current 16.69%. Around 60% of SME loans are subsidised, with 40-45% being variable-rate loans, the minister said. The stock of variable-rate loans to SMEs amount to almost 2,000 billion forints (EUR 4.9bn) and is held by close to 60,000 businesses. Meanwhile, Nagy said the interest rate on Széchenyi card loans for businesses will rise to 5% from the current 3.5% from Jan. 1. Further, the government is mulling using the bank levy not just as a fiscal tool but also as an economic incentive, Nagy said. “So those that lend will pay a smaller bank levy and those that don’t lend will pay a larger one,” he said. The government will begin drafting such a scheme next week, he added.
Asked about the loan freeze, Nagy said the measure was an alternative to a moratorium. “We can either have an interest-rate cap or a moratorium,” he said. The aim, he added, was to avoid a cost shock in the SME sector. Nagy also said that the new Széchenyi card interest rates will be valid through the first half of next year. The minister said Hungary had every chance to remain on a growth path while Germany could slide into recession. Meanwhile, Nagy said inflation could be brought down to single digits by the end of 2023. He said that fundamentally price caps were “not good”, but “the current times aren’t normal” and shocks needed to be managed. Price caps need to remain in place as long as they are needed and as long as inflation demands it, he added. In response to a question, the minister said he expected Hungary’s economic growth to exceed that of the EU next year, though there will be a temporary slowdown. He said he expects the economy to expand by 4-5% in 2024-2025. Nagy said the central bank had been successful in stabilising inflation and had contributed to financial stability.