Hungary, looking for alternatives to EU funding, is developing a framework deal with Washington that could include cooperation on swaps, a loan facility, development bank credit or infrastructure financing, its economy minister said on Monday.
Prime Minister Viktor Orban, who faces an election next year, met his longtime ally U.S. President Donald Trump at the White House on Friday, securing a waiver from U.S. sanctions for using Russian energy, a deal that has bolstered the forint.
Orban also said Hungary, whose economy has stagnated for the past three years amid high inflation following Russia's 2022 invasion of Ukraine, had brokered an agreement from Washington to protect its economy and public finances from external attack.
The White House has yet to comment on the arrangement. Hungarian officials say it has shown the country can find alternatives to European Union funding, with billions of euros currently suspended in a dispute over Orban's rule-of-law reforms that critics see as eroding democracy.
MINISTER CALLS ARRANGEMENT A 'PROTECTIVE SHIELD'
"This is a protective shield, which cannot be called a rescue package," Economy Minister Marton Nagy was quoted as saying by news website index.hu. He said any comparisons to the lifeline Trump provided to Argentina were misguided.
Nagy did not go into further detail on the specifics of the swaps or the loans Hungary could tap, but said financial assistance from the EU was not politically realistic.
Hungary borrowed 1 billion euros from Chinese banks last year to finance infrastructure and energy projects, looking to raise alternative financing amid the EU funding freeze.
OPPOSITION LEADER CALLS FOR SPECIFICS
Opposition leader Peter Magyar, who is ahead of Orban in most opinion polls and who is campaigning on a pledge to have the frozen EU funding released should he win power, called on central bank Governor Mihaly Varga to unveil details about the agreement Magyar called a "rescue package".
The bank's press office did not reply to emailed questions seeking comment.
Orban's Construction and Transport Minister Janos Lazar said the U.S. financial shield meant Hungary could no longer be "blackmailed" by the EU.
"The posture of the U.S. government, its message is perfectly clear: if there is no money from Brussels, there will be money from the U.S.," Lazar said in an interview on YouTube.
A spokesman for the European Commission declined comment.
FORINT RALLIES TO 1-1/2-YEAR HIGH
Economists at MBH Bank in Hungary said both the sanctions waiver and the financial shield would support the forint, which scaled new 1-1/2-year highs against the euro on Monday.
"It is clear that, if necessary, the U.S. government is prepared to offer stronger support to countries whose political leadership it has good relations with," MBH economists said.
The agreement with Washington also involves Hungary supporting the construction of up to 10 small modular nuclear reactors worth up to $20 billion, buying $600 million worth of U.S. liquefied natural gas and $700 million of military equipment, based on State Department figures.
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