The governments of several Central European countries have requested Hungary’s Ministry for National Economy (NGM) to provide more information on the Hungarian model for phasing out forex loans.

Representatives of the Finance Ministries of Croatia and Poland have turned to NGM to learn more about Hungarian Government measures aimed at phasing out forex household loans. In addition to these two countries, the European Central Bank has also been following the Hungarian scheme with attention.

The decision of the Swiss National Bank (SNB) last week triggered large exchange rate fluctuations on forex markets. As a result of the SNB’s step, the currencies of Central and Eastern European countries – among them the Hungarian Forint -- depreciated sharply vis-á-vis the Swiss Franc. This has proven that setting the exchange rate for the repayment of forex mortgages has been right.  In case of loans denominated in Swiss Franc and Euro, exchange rates were set at CHF/HUF 256.5 and EUR/HUF 309.5, respectively, which has spared forex borrowers from incurring extra debts totalling more than HUF 500bn.

The massive stock of Swiss Franc denominated household loans in Croatia and Poland is posing a serious threat. The NGM is honoured to share Hungarian experiences and solutions with the ministries of countries that show interest and help remedy the forex loan issue.

The Government measures aimed at eliminating forex debt have over the past years greatly reduced Hungary’s vulnerability both on a social and individual scale. The Government is determined to continue with cutting debt, including liabilities denominated in foreign currencies.

(Ministry for National Economy)