Chamber Proposal to Cope with COVID-19 Crisis

A six-point financial package designed to offset the negative financial and economic impact of the coronavirus epidemic was drawn up at the Budapest Chamber of Commerce and Industry (BKIK) on the basis of direct feedback from small and medium-sized enterprises.

The President of the Budapest Chamber of Commerce and Industry (BKIK), Elek Nagy, proposes to the government the establishment of a 100% state-owned National Crisis Management Holding Co. Ltd. based on a material prepared by the Chamber's working group of experts.

A statement by the Budapest Chamber of Commerce and Industry, which comprises over 40% of Hungarian corporate enterprises on a basis of mandatory membership, says the Chamber focuses its current activities on supporting the businesses as effectively as possible in the crisis caused by the coronavirus and assisting the government and municipalities in crisis management. As a first step, a quick online survey of businesses in Budapest was conducted to identify areas where small and medium-sized businesses need the most help.

The issues that emerged from the answers were examined by the BKIK working group of internal and external experts with a view to addressing the main challenges, based on past successful domestic and international crisis management practices. As financial issues are a priority for businesses, the working group has developed the following six-point proposal:

1. It would be advisable for the Hungarian Government to establish a 100% state-owned National Crisis Management Holding Company Ltd. as soon as possible.

2. Following its creation, the National Crisis Management Holding Co. Ltd. will issue a HUF 1,000 billion bond with a state guarantee at 0% interest rate to be purchased by the National Bank of Hungary.

3. The National Crisis Management Holding Co. Ltd. establishes specialized crisis management subsidiaries (or divisions), including through the reorganization of existing state-owned companies, which are recapitalized from the proceeds of the bond issue. Each of the specialized crisis management subsidiaries (or divisions) will focus on the problem groups identified by the research results.

4. The Chamber has elaborated a number of proposals for the function of the companies (or divisions) to be established: among others, the proposal includes crisis management venture capital, asset management and debt management companies.

5. The National Crisis Management Holding Co. would also provide capital to existing state-owned companies and programs from the proceeds of the bond issue, such as the Hungarian Export-Import Bank Co. Ltd. and the SZÉP (fringe benefits) Card Program (the latter to encourage post-crisis consumption).

6. If HUF 1,000 billion of the first round of bond issues is exhausted, then another round of round bonds is recommended as long as state intervention is required and the European Central Bank's policy on buying bonds announced last Wednesday remains unchanged.

In order to elaborate further the above six-point proposal and to ensure effective cooperation, the BKIK President offered the Government the professional work of the chamber task force.