EIB-MNB Agreement for Financing Green Projects

The European Investment Bank (EIB), the bank of the European Union, and the National Bank of Hungary (Magyar Nemzeti Bank - MNB), the Hungarian central bank, have signed an agreement to enable the EIB to support the Hungarian economy with more long-term green loans.

The operation creates a new source of more affordable financing for Hungarian clients in local currency, the forint (HUF), and will in turn accelerate sustainable economic growth, the post-pandemic recovery and climate action in Hungary, according to an EIB statement.

This cooperation allows the EIB to offer fixed-rates forint loans to its clients in Hungary for periods of up to 20 years, and in return provides the MNB with access to euro for their operations.

EIB Vice-President Teresa Czerwinska, who is responsible for operations in Hungary, said: “This cooperation will mitigate the exchange rate risk currently affecting Hungarian borrowers of loans in euro and allows more long-term investments in infrastructure, climate action, sustainable cities and regions, and environmental sustainability. It expands the range of long-term financing options available in Hungary, a crucial precondition for sustainable growth and a competitive economy. I would like to thank the MNB for the support to EIB in its role as a reliable booster of Hungarian economic and social development”

MNB Deputy-Governor Barnabás Virág said: “As a milestone, in 2021, the MNB’s mandates has been supplemented with the support of the Government’s policy linked to environmental sustainability. In line with its green mandate, the MNB approved the Bank's Green Monetary Policy Toolkit Strategy and decided to launch two new programmes - the Green Mortgage Bond Purchase Programme and the Green Home Programme - to boost green mortgage lending and improve the energy efficiency of the domestic housing stock. The agreement with the EIB is another important step towards supporting the financing of domestic green projects. Environmental sustainability considerations do not affect the general orientation of monetary policy.”

The operation is the EIB’s response to growing market demand for local currency-indexed loans. For the EIB, the Hungarian forint is currently the fourth-ranking currency in terms of disbursed amounts after the euro, US dollar and Polish zloty.