Minister of Foreign Affairs and Trade Péter Szijjártó signed the inter-governmental agreement on the refurbishment of the Budapest-Belgrade railway line with the President of the Chinese National Development and Reform Commission. 85 per cent of the project will be financed from credit provided by China. The Minister of Foreign Affairs and Trade described the agreement as the first tangible success of cooperation between China and Central-Eastern-Europe.
The document was ratified in Suzhou in South-China in conjunction with the China-16+1 summit in the presence of Hungarian Prime Minister Viktor Orbán, Chinese Prime Minister Li Keqiang and Serbian Prime Minister Aleksandar Vucic.
“We agreed that we shall implement 85 per cent of the project from credit offered by China; in other words, Hungary will cover 15 per cent from its own resources”, Mr Szijjártó told the correspondent of the Hungarian News Agency MTI after the signing ceremony.
“We also agreed that the Chinese party will offer us terms and conditions in connection with the credit facility which will permit the recovery of this project on the level of the national economy within the shortest possible time, so we shall seek to achieve the most favourable possible terms in respect of the Chinese facility. The negotiations are going well”, he said.
In answer to the question as to what guarantees there are to achieve this, the Minister said that it clearly follows from the text of the agreement that the Chinese partners will be required to offer interest conditions below the market level. “There is agreement that the loan will be provided for a term of twenty years, with a moratorium period of 5 years. The interest on the facility is the only open question we have yet to agree on”, Mr Szijjártó remarked. He added that while they have not set a specific deadline for reaching an agreement, this must be accomplished within a reasonable time as, according to plans, the implementation of this major project, which will take two years to complete, must begin by the end of next year.
In answer to the question regarding the expected involvement of Hungarian businesses in the project, the Minister said that this is also yet to be decided, but it is obvious that “the share of the involvement of Hungarian businesses and the credit interest are closely related”. “The higher the Hungarian involvement will be, the higher a credit interest rate we can cater for, and the reverse is also true: the lower this share will, the lower a credit interest rate the project can support”, he pointed out. The Minister further informed MTI that, according to the agreement, they designated a Hungarian-Chinese joint venture for the implementation of the project. The Hungarian railway company MÁV will proceed in this venture on behalf of the Hungarian party.
Mr Szijjártó confirmed in connection with the Tuesday signing of the agreement: “by virtue of this project, Hungary will make good use of the advantages arising from its geographical location, and upon its implementation, we shall play a key role in forwarding Chinese goods from the ports of Greece to Western-Europe through Hungary in the swiftest possible way”. He also confirmed that a section of 166 kilometres of the railway line will be fully refurbished, with the addition of a second pair of tracks. The project will cost some HUF 472 billion as expected. Passenger trains will be able to travel on the line at the speed of 160 kilometres per hour, and the refurbished railway line will be able to accommodate cargo trains of the length of 740 metres. Mr Szijjártó stressed that the project is unique also on account of the fact that it will be implemented with the joint participation of China, an EU Member State and a non-EU country.
(Ministry of Foreign Affairs and Trade)
