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PM to announce new action plan, details on fixed-rate fx loan repayment on Monday

History

Prime Minister Viktor Orbán will announce a new action plan in Parliament on Monday containing measures to deal with the impact of the euro crisis in Hungary and to help the neediest families in the country, Prime minister's Spokesman Péter Szijjártó said at a press conference after a cabinet meeting in Sunday.

Parliament holds its initial general meeting of the autumn session beginning at 1:00 p.m. on Monday.

The PM's Monday speech will already contain details "to some extent" of a measure proposed by the parliamentary group of the governing alliance Fidesz-KDNP on allowing Hungarians to pay off foreign-currency-denominated loans in a single installment at a fixed exchange rate and leave banks to cover the full cost of the transaction.

The parliamentary groups made a decision, and the government has to prepare a corresponding proposal, Szijjártó said.

"The government will make a proposal which is morally right, sustainable for everyone and is in line with legislation", he said without elaborating further.

The group proposed the fixed exchange rates be set at HUF 180 for Swiss franc-based loans and at HUF 250 for euro-based ones, well under recent market rates of HUF 232.5 to the franc and HUF 281.70 to the euro late Friday afternoon.

The National Bank of Hungary (MNB) and the Hungarian Banking Association issued statements after the proposal was announced on Friday. The MNB warned that Assistance for borrowers should not put the stability of Hungary's financial system at risk, and the banking association stated that the proposal "significantly endangers the stability of the financial system and may result severely serious macroeconomic effects".

Stock prices fell, with bank stocks especially hit and the BUX index falling 6.19%, while the forint weakened after the proposal was announced on Friday.

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