EIB, MNB Agreement Unlocks More Options for Financing Long-term Green Projects
EIB vice president Teresa Czerwinska (left), who is responsible for operations in Hungary and MNB deputy governor Barnabás Virág.
The European Investment Bank and the Magyar Nemzeti Bank (the National Bank of Hungary or MNB) have signed an agreement under which the EIB will be able to offer more long-term forint loans.
The deal creates a new source of more affordable financing for Hungarian clients in forints, which will, in turn, accelerate sustainable economic growth, the post-pandemic recovery and climate action in Hungary, the two sides say.
The agreement allows the EIB to offer fixed-rates forint loans to its clients in Hungary for up to 20 years and, in return, provides the MNB with access to euros for its operations.
“This cooperation will mitigate the exchange rate risk currently affecting Hungarian borrowers of loans in euros and allows more long-term investments in infrastructure, climate action, sustainable cities and regions, and environmental sustainability,” EIB vice president Teresa Czerwinska, who is responsible for operations in Hungary, said of the deal.
“It expands the range of long-term financing options available in Hungary, a crucial precondition for sustainable growth and a competitive economy. I would like to thank the MNB for its support to the EIB in its role as a reliable booster of Hungarian economic and social development,” she said.
Expanded Mandatex
MNB deputy governor Barnabás Virág noted that last year the MNB’s mandate had been supplemented with the support of the government’s policy linked to environmental sustainability.
“In line with its green mandate, the MNB approved its Green Monetary Policy Toolkit Strategy and decided to launch two new programs, the Green Mortgage Bond Purchase Program and the Green Home Program, to boost green mortgage lending and improve the energy efficiency of the domestic housing stock,” he explained.
“The agreement with the EIB is another important step towards supporting the financing of domestic green projects. He added that environmental sustainability considerations do not affect the general orientation of monetary policy,” he added.
The operation is the EIB’s response to growing market demand for local currency-indexed loans. For the EIB, the Hungarian forint is currently the fourth-ranked currency in terms of disbursed amounts after the euro, U.S. dollar and Polish zloty.
About the EIB
The European Investment Bank (EIB) is the long-term lending institution of the European Union and is owned by its member states. It makes long-term finance available for sound investments that contribute to EU policy goals.
This article was first published in the Budapest Business Journal print issue of May 20, 2022.
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