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EBRD increases support to Hungarian agricultural industry
Demand from private companies in Hungary’s agriculture and food industry for term financing has been so high that the European Bank for Reconstruction and Development (EBRD) is extending an existing credit line to Budapest Bank Rt, providing a further US$ 15 million.
At the signing ceremony, Peter Reiniger, co-director of the EBRD’s Hungarian team, said: “Implementing the existing EBRD US$ 8 million credit line progressed far faster than we had expected and the funds are totally disbursed. By extending the line, we are reaffirming our commitment to this important sector and our confidence in Budapest Bank to build on this success.”
The initial Agricultural Restructuring Project (ARP), signed in 1993, amounted to US$ 103 million. The loans were granted to four large Hungarian banks: Kereskedelmi Bank, Budapest Bank, OTP Bank and Magyar Hitel Bank. The project was designed to provide medium- to long-term loans to private small and medium-sized Hungarian enterprises in the agribusiness sector.
The loan from the EBRD to Budapest Bank is sovereign guaranteed by the Republic of Hungary. The funds are on-lent at Budapest Bank's risk. One other of the banks originally participating in the ARP has also almost entirely disbursed the EBRD credit and is expected to request an extension.
The agriculture and food industry continues to be one of the strongest sectors of the Hungarian economy. In 1994, the industry contributed 13 per cent of GDP, one quarter of export earnings, and accounted for 7 per cent of employment.
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