Norwegian Loan to Modernize the Hungarian Army

Hungary has concluded an agreement on favorable financing terms for the development of its military: EUR 348.5 million, i.e. about HUF 130 billion, will be provided by Export Credit Norway (ECN) and the Norwegian Export Credit Guarantee Agency (GIEK) to increase the country's combat defense capabilities.

According to an announcement on Wednesday, the Ministry of Finance, the financing will be low-cost, will make the remaining term of the public debt more favorable, and will help Hungary to stand on several legs in debt management, the state news agency MTI reports.

The export credit financing provided by ECN and GIEK enables combat-defense development within the framework of the Zrínyi Defense and Armed Forces Development Program. The source is related to the EUR 410 million NASAMS contract concluded by Hungary with the Norwegian supplier Kongsberg Defense & Aerospace AS in November 2020. 85% of the special procurement of the army is covered by the use of export credit, which is very favorable for the state budget, approximately the same as the conditions for issuing foreign currency bonds. The term is eight and a half years from the withdrawal of the full amount, the Ministry said in the statement.

The method of financing is in line with the strategy of the Public Debt Management Center (ÁKK). On the one hand, it contributes to the fact that Hungary has more legs in terms of borrowing, and on the other hand, the transaction also increases the average remaining maturity of public debt.
The government is committed to guaranteeing the security of Hungary and the Hungarian people, which is why it adopted the Zrínyi Defense and Armed Forces Development Program, which launched the largest and most comprehensive defense program of the past 25 years, the statement said.