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Hungary repays first Paks loan installment

February 10th, 2018

A left-wing columnist lambasts the government after it was announced that the first Paks loan drawdown has been repaid. A liberal pundit, on the other hand, claims that the government’s decision is reasonable, and that the Russian loan may at some point become a favorable option for Hungary again.

On Monday, the Minister of the National Economy announced that Hungary is repaying 78.2 million Euro, the total of the loan installment it has so far drawn since November 2017 from the €10 billion Russian credit line agreed on as part of the Paks nuclear plant project (see BudaPost 2014. January 16th).

Népszava’s Miklós Hargitai interprets the repayment of the loan as proof that the whole Paks deal is disadvantageous for Hungary. The left-wing columnist thinks that the loan agreement is a burden for Hungary, and taxpayers will need to cover the cost of converting the unfavorable Russian credit into a lower interest loan.

On Index, Dénes Csurgó agrees with Cabinet Minister Mihály Varga’s remarks that the loan agreement was reasonable in 2014, and that its early repayment is a prudent act. The liberal commentator suggests that the interest rate agreed in 2014 was indeed favorable for Hungary. But since then, the performance of the Hungarian economy improved, interest rates have sunk, hence Hungary can now borrow at lower rates than a few years ago. Csurgó adds that if international interest rates rise again, the Russian loan may again become favorable to Hungary.

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