The European Bank for Reconstruction and Development's new five-year plan for Hungary, due next week, will target stakes in banks and expanding the country's gas pipeline network, the country's EBRD board member said on Tuesday.
Hungary's relations with the EBRD have been on the mend along with its economy after a difficult six years. That shift will be reflected in a new investment strategy plan, said Antal Nikoletti, Hungary's member on the bank's board.
EBRD deals in Hungary slowed to a trickle after its economy slumped almost as much as Greece's in 2009 and more recently as Budapest drew criticism for a number of banking taxes.
But its economy is now growing faster than the European Union average, exports are strong and its stock market .BUX is at an eight-year high and was one of the best performers in the world last year.
"The mood is turning," Nikoletti said in an interview. "It started with the memorandum of understanding (on EBRD support of Hungary's banking system) last year and I think with the new strategy we have every chance to revitalise activity."
He said it would focus first on the country's banking system. The EBRD and Hungarian government are still trying to complete a deal to buy up to 15 percent each in Erste Bank Hungary nL8N14Z0Q8, but the new plan has its sights on other banks, too.
"There is Budapest Bank (for sale) and based on the country strategy that might be interesting for the EBRD," Nikoletti said of the bank, which the government brought from GE Capital.nL5N0VN5A0
"And it might be that because the National Bank of Hungary would want to do a bad-asset resolution vehicle, the EBRD might participate in that as well."
It could provide guarantees to make commercial banks "more comfortable" about lending and inject money into separately run equity funds, he added. "Creating or participating in regional equity funds is something that is very realistic."
Although Hungary attracted criticism for erecting fences to keep out the millions of refugees heading into Europe, many other countries have since followed Budapest's example and all but closed their borders.
Nikoletti made his comments as protesters staged a major demonstration against another policy of Prime Minister Viktor Orban, his centralised control of the country's schools, and his rule in general, which critics call authoritarian and heavy-handed nL5N16N459.
But under Orban, the economy is expected to grow 2.5 percent this year, well about the EU average. In addition, the country's gas storage capabilities and network are crucial as Europe tries to reduce its reliance on Russian energy supplies.
Improving gas connectors - the pipelines and other infrastructure that link different countries - is another area the EBRD's revamped strategy will focus on, Nikoletti said.
It could also benefit indirectly as Poland's new government begins to back away from reform plans.
"I think where we were six years ago, the Poles are there today," Nikoletti said. "Of course, some people might be afraid the Hungarian example to build its own stance will be followed."
(Reuters)