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Varga: Forex loan fix to be longer-term, talks “constant”

History

Hungary’s government is working on legislation to help troubled forex-based loan borrowers over a longer time period, not with an instant move, Economy Minister Mihály Varga said on Thursday at a news conference, adding that the government was in constant talks with the central bank about potential solutions.

The government gave until November 1 to table a comprehensive proposal to help foreign currency borrowers or face a government solution.

Hungary’s mostly foreign-owned financial institutions fear that Prime Minister Victor Orbán, in the runup to the 2014 parliamentary elections, will impose fresh losses on banks under any new scheme after they suffered hefty taxes and huge losses under a 2011 plan to assist indebted borrowers.

Varga said feedback received so far did not suggest that the banks envisaged a decline in loan repayments and that his ministry would submit its own proposal to parliament after November 1.

Hungarians took out the loans, denominated chiefly in the Swiss franc, to take advantage of their low interest rates, but payments soared as the forint weakened after the 2008 financial crisis, causing widespread problems in the country.

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