Hungary imposes blanket moratorium on loan repayments to year-end

Hungarian Prime Minister Viktor Orban on Wednesday announced a blanket moratorium on loan repayments for all companies and private borrowers until the end of the year to limit the economic fallout from the spread of the coronavirus.

The virus has presented the 56-year-old Orban with the biggest challenge of his decade-long rule, raising the specter of mass unemployment and temporary factory closures that pose the risk of Hungary's economy grinding to a halt. Orban, whose unorthodox fiscal stabilization campaign after his 2010 rise to power had roiled foreign investors, said the main objective of Wednesday's measures was to protect jobs after a steady fall in unemployment over recent years.

"Private individuals and companies, all private individuals and all companies, will be exempt from principal and interest payments through the end of this year on loans taken as of today," Orban said in a video on his Facebook page. The announcement follows calls by the central bank, led by Gyorgy Matolcsy, Orban's former economy minister, for banks to suspend loan repayments voluntarily for companies and private borrowers.

As Orban announced the decision, the Hungarian forint, which has lost more than 6% of its value against the euro this year, sank to record lows near the 355 marks. Shares in OTP Bank, central Europe's largest independent lender fell 7% late on Wednesday to their lowest levels since July 2017, having scaled record highs at the end of last year.

Orban also announced further measures to defend jobs, including payroll tax cuts for the most heavily affected sectors, such as tourism and entertainment among others. The prime minister said these were the most pressing measures but more steps to resuscitate the economy would follow almost daily.