The MNB is launching the Funding for Growth Scheme (FGS)
In Hungary, outstanding corporate loans have been declining steadily since end 2008. This is an especially unfavourable phenomenon for small and medium sized enterprises, as they are more prone to credit supply constraints, and it is more difficult for them to find alternative financing. In the current macroeconomic environment in line the legal provisions the MNB, in cooperation with credit institutions, is able to implement targeted lending scheme to support sustainable economic growth without jeopardising price stability.
The primary objective of the Funding for Growth Scheme is to improve the financing conditions for small and medium sized enterprises through preferential central bank financing, as their situation is of primary importance in terms of preserving and expanding production capacity and employment. The preferential interest rate reduces debt service costs of borrowing companies which has a positive effect both in terms of profitability and liquidity. Lower debt service burden also results in a decrease in the deterioration of the loan portfolios, and therefore may ultimately have a positive impact on banks’ portfolio quality as well. In addition, the program me may also improve lending capacity through the balance sheet positions of banks.
For more information please visit the MNB website.