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Economy Minister: Car Owners Should Renegotiate Forex Loans On Their Own


Car owners who took out loans in foreign currency and are struggling to service their debt in wake of forint weakness should negotiate with their lenders, Economy Minister Mihály Varga told public radio. Varga said that rescheduling repayment could ease the problem of increasing instalments. Varga noted that the government had helped out forex mortgage holders, but he suggested that although losing a car could cause difficulties, these could not be compared to losing a home. PM Viktor Orbán also said at the weekend that issues around forex consumer loans should be settled between lenders and borrowers. He said that the government had intervened on behalf of forex mortgage holders, but added that “consumer loans are a different matter”.

On another subject, Varga said there are ongoing talks with the banking association, noting that the current economic growth has been reached at a low level of lending. The special bank levy will be maintained but could be lowered, Economy Minister Mihály Varga said in an interview published by business daily Napi Gazdaság. If there is a way to boost lending, the economy could be moved to a higher growth path than expected, he said, adding that he believed that an agreement could be reached soon. The minister also told the paper that if the ratings agencies assessed Hungary’s performance objectively then the country would now deserve an upgrade.

The state debt to GDP at end-2014 could be either unchanged or even drop minimally, partly thanks to higher economic growth, now seen to exceed 3.1%, Varga said. The ratio of foreign currency denominated debt within the national debt had been reduced from 50% to 35%. He added that the government was committed to further reducing that ratio in order to minimise the country’s vulnerability. The 2014 public finance deficit is expected between 2.5% and 2.6% of output. The bulk of retail FX debtors are no longer exposed to exchange rate changes thanks to the government measures to convert FX retail mortgages into forints, Varga said. The minister said businesses are less affected by the Swiss franc’s firming as the bulk of corporate loans are in other currencies. Beside, most businesses hedge exchange rate risks anyway, he added.

via and MTI photo: Zoltán Tuba –