Budapest: Hungary’s Prime Minister Viktor Orban has launched a fresh wave of subsidised loans for businesses, a move widely seen as a bid to energise the economy and strengthen political support as national elections approach.
The new programme, unveiled on Saturday, will allow small and medium enterprises (SMEs) to access credit at a fixed interest rate of just 3 percent. The scheme, which comes into effect on Monday, places a cap of 150 million forints (around US $454,000) per loan, significantly below current market borrowing costs. For struggling businesses facing tight liquidity and high financing expenses, the announcement offers immediate relief.
Orban stressed that the initiative is not only about boosting investment but also about protecting jobs. He suggested that additional tax benefits linked to employment would follow in the coming weeks, though details remain under wraps. Analysts believe these measures are designed to reassure Hungary’s entrepreneurial class a vital voter bloc that the government is firmly behind them during a period of economic turbulence.
The cheap business loan scheme is the latest in a string of welfare and fiscal incentives rolled out in recent months. In September, the government launched a subsidised housing loan programme for first-time buyers at below-market rates. Wage hikes for state employees and housing subsidies for public servants have also been announced, forming a multi-layered strategy to lift disposable incomes and consumer confidence ahead of the polls.
According to projections from Hungary’s central bank, these combined measures could increase net household income by about 1.5 percent of GDP in 2026, suggesting a short-term consumption boom.
Despite these ambitious efforts, Hungary’s economy faces persistent hurdles. Inflation, though cooling from its peak, has constrained the central bank’s room for monetary easing. Growth remains sluggish, with OTP Bank forecasting GDP expansion of just 0.6 percent in 2025, before rebounding to around 3 percent in 2026, largely driven by higher domestic spending.
However, the spending spree comes at a cost. Economists warn that the fiscal deficit could widen to 5 percent of GDP or more in 2026, potentially forcing the government into tough spending cuts once the election season is over. Critics argue that Orban’s reliance on subsidies and cheap credit may boost short-term popularity but risks undermining long-term stability.
Orban, who has ruled Hungary since 2010, is preparing for what analysts say could be his most competitive election in years. His conservative Fidesz party faces a reinvigorated opposition that is campaigning on promises of fiscal prudence and closer ties with the European Union. Against this backdrop, the latest loan programme appears designed to lock in support from businesses, workers, and households alike.
As Hungary edges closer to election day, the coming months will reveal whether these measures are sufficient to secure another mandate for Orban, or whether voters will view them as pre-election giveaways that leave the economy exposed to future risks.