Hungary ‘quietly’ took a record $1bn loan from Chinese banks

In the spring of 2024, Budapest took out a €1 billion loan from three Chinese banks, the largest ever taken out by a state, Politico reports, citing data from Hungary's Debt Management Office.

Hungary's record loan came amid a record increase in its public debt to €140 billion, or 73.5% of GDP, and a budget deficit of 6.7% of GDP, while the country has lost access to EU funds due to disputes with Brussels.

The loan, provided by the China Development Bank, the Export-Import Bank of China and the Hungarian branch of the Bank of China, was fully drawn down on 19 April and is due to be repaid within three years, Politico reports.

The loan agreement allows financing investments in infrastructure and energy, among other sectors, while maintaining the public debt-to-GDP ratio at 28.9%, the media outlet added, citing a government agency.

Budapest did not announce the deal. It became known only after the data from the government debt agency was published this summer. The agency did not disclose other details of the loan, including the interest rate and repayment schedule.

Hungary has been actively deepening its ties with China, as evidenced by Xi Jinping's visit to Budapest in May, during which the parties signed a number of agreements on infrastructure projects. Hungarian Prime Minister Viktor Orban also visited Beijing on a so-called ‘peacekeeping mission’ in July.

Orbán's uncoordinated diplomatic efforts, namely his meetings with Russian and Chinese leaders Vladimir Putin and Xi Jinping, have sparked anger across the EU.

Brussels stressed that although Hungary holds the presidency of the EU Council, Orban does not represent the European bloc on these trips.

On 15 July, the European Commission announced that it would reduce its participation in informal meetings planned by Hungary during its EU presidency following Orban's ‘peace mission’.

Hungary, which is considered the EU member closest to the Kremlin, has repeatedly obstructed aid to Ukraine because it allegedly ‘prolongs’ and ‘exacerbates’ the war.

Background. As reported, the Polish Foreign Ministry suggested that Hungary should withdraw from the EU. The Deputy Foreign Minister called Orban's policy ‘anti-European, anti-Ukrainian and anti-Polish’.