Hungary

The National Bank of Hungary (NBH) left its base rate unchanged at 13% on Tuesday and pledged to maintain tight monetary conditions for a "prolonged period", with inflation only set to decrease more significantly from mid-2023, Reuters reported. The central bank said annual inflation, which was running at 21.1% in October, was now primarily driven by a surge in food prices, where further "unpleasant surprises" could be on the cards in coming months.

Hungary will include variable-rate loans to small- and medium-sized businesses in a scheme designed to cap loan rates and avoid a recession, Minister for Economic Development Marton Nagy said, adding banks could "easily" bear the cost of the measure, Reuters reported. With inflation above 20% and still rising, and the economy slowing, Prime Minister Viktor Orban's government faces the challenge of curbing price growth while trying to stave off a recession. It has already capped the price of fuel and basic foodstuffs as well as mortgage rates. Energy bills are also capped for most households.

Hungary's central bank accepted 2.093 trillion forints ($4.90 billion) worth of bids from banks at its first floating-rate two-month deposit tender on Wednesday as part of its efforts to drain forint liquidity and tighten monetary conditions further, Reuters reported. The National Bank of Hungary (NBH), which ended its cycle of rate hikes last month taking the base rate to 13%, has said it would deploy an array of tools to tighten liquidity conditions from this month, including the new deposit instrument.

The Hungarian government will submit the first of several anti-corruption bills to parliament on Monday, its spokesman said, as Budapest scrambles to avoid losing billions of euros in European Union funding, Reuters reported. The European Union executive recommended on Sunday suspending funds worth 7.5 billion euros ($7.48 billion) due to what it sees as Hungary's failure to combat corruption and uphold the rule of law. The European Commission also set out requirements for Hungary to keep access to the funding, including new legislation, which Hungary immediately said it would meet.

August 31 China Evergrande Bondholders Push Own Plan for Debt Restructuring Global funds that invested in China Evergrande Group's bonds have come up with their own debt restructuring plan for the property developer and demanded that its chair repay liabilities with his own fortune, the Financial Times reported on Tuesday, according to Reuters. With more than $300 billion in liabilities, Evergrande, once China's top-selling developer, has been at the centre of the crisis and its debt restructuring plan is seen as a possible template for others.

Hungary raised objections over the implementation of a global minimum tax in the European Union on Tuesday, saying it can only support a proposal that does not disadvantage firms operating in Hungary, and citing additional risks due to the Ukraine war, Reuters reported. Nearly 140 countries reached a two-track deal in October brokered by the Organisation for Economic Cooperation and Development (OECD) on a minimum tax rate of 15% on multinationals.

Hungary plans to offer bonds in euros and dollars as Prime Minister Viktor Orban seeks alternatives to billions of euros in blocked European Union funding, Bloomberg News reported. Hungary is seeking to sell seven-year and 12-year benchmark-sized bonds in dollars and nine-year bonds in euros in the near future, according to a person familiar with the matter, who asked not to be identified because they’re not authorized to speak about it. BNP Paribas SA, Deutsche Bank AG, Goldman Sachs Group Inc., ING Groep NV and JPMorgan Chase & Co. are to arrange the sale, the person said.

Hungary told its European Union counterparts that it will cost at least 770 million euros ($810 million) to revamp its oil industry as they wrangle over potential sanctions that would target Russian supplies, Bloomberg News reported. Prime Minister Viktor Orban’s government said 550 million euros were needed to overhaul its refineries to comply with the ban, and another 220 million euros for a pipeline from Croatia, according to people familiar with discussions that have taken place this week between EU ministers and documents seen by Bloomberg.

Tungsram released a statement that the company has filed for bankruptcy protection, Hungary Today reported. The company on Wednesday informed employees, trade unions, works councils and banks of this compulsory measure, as required by law. It was reported that 1,600 employees of the company were laid off at the end of April, 400 of them in Budapest’s Újpest district alone. “Tungsram Operations’ lending partner, Eximbank, exercised its legal right to file for bankruptcy on Wednesday,” the Index article says.

Hungary's OTP Bank, Central Europe's largest independent lender, is under pressure from the government of Ukraine, where the bank is also present, to sell its Russian unit, Chief Executive Sandor Csanyi said on Wednesday, Reuters reported. Earlier this month Csanyi said the bank would sell its Russian operation if there was a buyer, adding market presence there could become a moral issue. The Russian and Ukrainian units accounted for 15.8% of OTP's profit last year.