Hungary extends loan moratorium as economy struggles to recover from pandemic

imageEconomy38 minutes ago (Sep 19, 2020 07:05AM ET)

(C) Reuters. FILE PHOTO: Hungarian Finance Minister Mihaly Varga speaks during a business conference in Budapest

By Krisztina Than

BUDAPEST (Reuters) – Hungary will extend a moratorium on loan repayments for some households and companies until the middle of 2021, as its finance minister warned the economy could struggle to grow next year unless a coronavirus vaccine is found.

Prime Minister Viktor Orban introduced the moratorium for all companies and private borrowers in March as one of his government’s key measures to help reduce the economic fallout from the pandemic. It was due to expire at the end of the year.

In a video posted on his official Facebook (NASDAQ:FB) page on Saturday, Orban said the moratorium would be extended by six months for families with children, the retired, unemployed and those in public works programmes.

The extension until the middle of 2021 will also apply to companies that have seen revenues drop by at least 25%.

Orban also said loan contracts for all households and companies agreed before the pandemic could not be terminated for six months.

The moves come as the government prepares to announce more steps to try to revive growth, after the economy plunged more than expected in the second quarter and prospects for a recovery next year have worsened.

The weak economic outlook could represent the biggest threat to nationalist Orban’s decade-long rule as he prepares to face parliamentary elections in the first half of 2022.

Finance minister Mihaly Varga said in an interview published earlier on Saturday that if a coronavirus vaccine was not available by the middle of 2021 the economy might struggle to grow next year, based on a pessimistic scenario.

Under an optimistic scenario, the economy could grow by 4-5% if a vaccine was available in the second quarter, he told newspaper Magyar Nemzet.

A third scenario was for a protracted recovery with 3%-4% growth, also conditional on a vaccine being available, he added.

Hungary’s economy is expected to shrink by 5%-6% this year.

Varga said the government was working on new stimulus measures that could include targeted tax cuts for crisis-hit sectors.

After a spike in new cases in recent weeks, Hungary reported 809 new coronavirus infections on Saturday, bringing the total to 16,920, with 675 deaths.

Hungary extends loan moratorium as economy struggles to recover from pandemic

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