Varga calls for fx solutions, Kúria considers legality

Issues

Further remedies for Hungarian borrowers with foreign currency-denominated loans will be worked out in the coming months, National Economy Minister Mihály Varga stated on Kossuth Rádió yesterday: “We have to use the next six months to formulate further solutions.”

Parliament approved on Tuesday legislation that eliminates a number of restrictions for participation in an exchange rate cap scheme. Lawmakers also extended a moratorium on evictions until next April.

Varga noted earlier measures the government had taken to assist forex-based loan borrowers but said a solution that was good for all of them did not exist. Rather an effort must be made to help as broad a range of clients as possible, he said. He said the government was waiting for the Kúria, Hungary’s supreme court, to take a decision on the matter of forex loans that would give Parliament a foundation on which to take legislative measures.

“We can take economic decisions very quickly, but without legal merit, we could err in a very dangerous area,” he said.

Kúria considering implementing uniform procedure for loan settlement
The Kúria, Hungary’s supreme court, said on Wednesday it could take a decision on whether to launch a legal uniformity procedure on the matter of foreign currency-denominated loans after a survey of rulings involving such contracts.

The Kúria said its civil department “wants in the near future to gauge how many court cases are underway in the country related to foreign currency-denominated lending contracts, and furthermore, to determine based on legally binding rulings whether disparate legal practice can be established.”

Several top government officials have recently said they expect the Kúria to produce a ruling on the matter of FX borrowers that allows lawmakers to take legislative measures. Hungary’s Parliament recently passed legislation that opens an exchange rate cap scheme to more borrowers, the latest in a series of measures to provide them with assistance.

Inexpensive, Swiss franc-based loans were once the most popular retail lending product in Hungary, until the weaker forint caused repayments to grow, pushing many households close to default.

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