Economy 25 October 2022, 9:05am

Hungary gov't to spend a pretty penny on Széchenyi Card Programme

Portfolio

The Hungarian government has announced in the Official Gazette late on Monday its decision on the continuation of the Széchenyi Card Programme, indicating the amount of the state budget to support it.

The decree stipulates that the government will ensure the financing for the programme to be announced for the first half of 2023 in order to ensure that domestic micro, small and medium-sized enterprises severely affected by the Russian-Ukrainian conflict and energy price increases have access to preferential sources of financing.

Therefore, in the 2023 budget, HUF 58.95 billion will be allocated to the Cabinet Office of the Prime Minister to achieve this goal.

To help Hungarian SMEs stay on their feet and remain competitive, the government has decided to make the loan products of the Széchenyi Card Programme available in the first half of 2023 at an extremely favourable annual interest rate of 5%, without any handling costs, the Ministry of Economic Development said in a statement on Monday. This year, the scheme will run at 3.5% interest, as originally planned.

The range of products in the Széchenyi Card Programme will be "streamlined" by the government, with six types of card: investment, working capital, tourism, microcredit, agricultural credit and overdraft. The interest subsidy will be assumed by the government, which wants to encourage banks to continue the programme.

Anyone who takes out a Száchenyi Card loan can do so at a fixed rate of 5%, and the interest rate will be the same throughout the whole period, said Márton Nagy, Minister of Economic Development, at a press conference on Saturday. Market loans carry an interest of 15-20%, he reminded.

The interest rate option is automatic, there is no need to specifically apply for it, he explained. We are talking about 60,000 SMEs, 100,000 loans, which amounts to 2,000 billion forints, he added.

"We do not want SMEs to raise prices and throw in the towel," he stressed. That is why we are introducing these measures and to avoid a recession.

The decree also calls on the Minister of Finance to ensure that the necessary budgetary resources are available to finance the Széchenyi Card Programme schemes for the period 2024-2033.

THIS INDICATES THAT THE GOVERNMENT IS planning ON THIS PREFERENTIAL LENDING PROGRAMME IN THE LONG TERM, AND WILL INCLUDE IT IN ITS BUDGET FOR THE NEXT 10 YEARS.

Cover photo: Government meeting in progress. Source: MTI/Prime Minister's Press Office/Zoltán Fischer