Saturday, 8 August 2026
Hungary has launched a review of its state-backed loan guarantee system as part of a broader effort to reduce fiscal risks and bring the country’s guarantee exposure closer to European Union levels.
Under a government decree published on 3 August 2026, the Ministry of Finance and the Ministry of Economic Affairs and Energy have been instructed to assess state guarantees supporting private-sector lending, with particular attention to programmes linked to the Hungarian Development Bank (MFB).
The first measure requires the ceiling for state counter-guarantees to be reduced from HUF 12.8 trillion to HUF 11.2 trillion by the end of August. Further reductions are planned in the coming years, with the government aiming to gradually lower state-backed guarantees as a share of Hungary’s economy. The policy is intended to strengthen public finances and support an improvement in the country’s long-term credit profile.
State counter-guarantees have played an important role in supporting business lending by reducing the financial risk carried by commercial banks. This has enabled lenders to offer more favourable financing conditions and extend credit to a wider range of borrowers, particularly through programmes backed by the Hungarian Development Bank.
The reduction in available guarantee capacity is expected to limit the volume of new state-supported financing that banks can provide. Companies that have relied on government-backed guarantees may face tighter lending conditions, while financial institutions are likely to become more selective when approving new transactions.
The government’s strategy also envisages a gradual withdrawal of guarantees considered no longer necessary. Existing guarantees issued under individual government decisions could potentially be reviewed where contractual provisions allow for their withdrawal or where legal conditions permit termination after a specified period.
If any existing guarantees are withdrawn, affected borrowers and lenders may need to renegotiate financing arrangements where the loss of state support would trigger contractual provisions under existing loan or bond agreements.
The reforms mark a shift in Hungary’s approach to state-backed financing, reflecting a move towards reducing public-sector risk-sharing while encouraging a greater reliance on market-based lending as the country’s financial system matures.
Source: CMS
