MNB announces measures to boost lending

The National Bank of Hungary on Thursday unveiled a package of measures, dubbed “Funding for Growth Scheme,” that aim to boost lending to microbusinesses and SMEs and reduce vulnerability through lowering the country's external debt. Speaking at a press conference late in the morning, György Matolcsy, the MNB's recently appointed governor, likened the elements of the program to the Bank of England's “Funding for Lending” scheme launched last summer. He added that the risks of the measures presented were within the boundaries of tolerance.
    The three-part package includes HUF 250 billion of refinancing for commercial bank loans to microbusinesses and SMEs, another HUF 250 billion for the conversion of foreign currency-denominated SME loans into forints and a HUF 1,000 billion (about €3 billion) reduction of the country's short-term external debt which would make room for a similar reduction of international reserves and drop of the stock of the central bank's two-week bills. The latter third element of the program aims at reducing the economy's vulnerability.
    The program does not endanger price stability as inflation dropped below and is projected to remain below the bank's 3% mid-term target, external Council members Andrea Bartfai-Mager added. The MNB is initiating negotiations with lenders on these matters as well as on the third element, and Matolcsy said he will meet with the heads of Hungary's eight biggest banks on Monday, April 8, in a first round of planned consultations.