Hungary extends loan rate cap scheme to small

Hungary extends loan rate cap scheme to small

BUDAPEST (Reuters) - Hungary will expand its current cap on mortgage rates from mid-November to include variable rate loans to small and medium-sized businesses to avoid a recession, Economic Development Minister Maarten Nagy said on Saturday.Hungary extends loan rate cap scheme to small

Hungary extends loan rate cap scheme to small businesses as recession looms

With inflation above 20% in September and still rising, and the economy slowing, Prime Minister Viktor Orban's government faces the challenge of halting price increases while trying to avoid a recession in 2023. . This has already capped the prices of fuel and basic food items and the price of mortgages. Energy bills are also limited for homes with average use.

On Saturday it announced a $150 billion ($362 million) subsidy to help large companies invest in energy efficiency improvements, and its plan to limit interest rates on loans with cost-bearing commercial banks. be extended.

Negi said that after the emergency rate hike by the central bank on October 14, rates on trade loans will be capped at the 3-month interbank rate of June 28, which was 7.77% as against the current rate of 16.69%. The cap is in effect until July 1, 2023, similar to the current cap on home mortgage rates, Nagy said.

Negi said the stock of variable-rate loans held by about 60,000 small firms was close to 2 trillion forints, and the measure was aimed at avoiding these businesses paying 20% ​​or more rates on their loans.

"We want to avoid a slowdown in the economy next year and we have every chance of 1% growth," Negi said at a briefing.

"With this credit limit, we want to prevent yet another blow to the corporate sector arising out of a spurt in their repayment."

In May the government announced unexpected taxes worth 800 billion forints earned by banks, energy companies and other firms to bridge the budget gap plaguing Budapest stocks and investors.

($1 = 413.9900 forints)

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