Hungary adds 2.5 billion euros to 2022 foreign currency debt issuance target

  • Creates room to raise up to EUR 4.5 bln this year
  • Battles with EU over access to recovery funds
  • Aims to keep share of FX debt below 25% of total

BUDAPEST, June 7 (Reuters) - Hungary has lifted its 2022 foreign currency borrowing target by the equivalent of 2.5 billion euros ($2.7 billion), the AKK debt agency said on Tuesday, as a stand-off with the European Union over democratic standards hampers access to recovery funding.

The EU's executive Commission froze access to the funds for Hungary and Poland over their nationalist governments' track record of undercutting liberal democratic rules by restricting the rights of migrants, the LGBTQ community, as well as increasing state control over media and the courts.

Poland, however, scored a political win last week as the Commission granted it access to nearly 36 billion euros ($39 billion) that had been blocked over Warsaw's judicial overhaul that the top EU court struck down for not protecting courts from political meddling. read more

"AKK raised the gross foreign currency bond issuance target by up to EUR 2.5 billion equivalent, making the total gross FX bond issuance target up to EUR 5.1 billion equivalent in 2022, with up to EUR 4.5 billion remaining after the February Samurai bond transaction," it said in a statement.

The AKK said the revision was needed to "further diversify the funding structure amid increasing costs of financing". The debt agency said the move would not jeopardise its strategy to keep the share of foreign currency debt below 25% of the total debt stock.

Hungary's Tibor Navracsics, the minister in charge of the use of EU funding, said last Thursday that Budapest would do everything it could to be able to sign an agreement on Hungary's recovery plan "in the second half of the year or toward the end of the year".

Navracsics however added that the process leading to the signature of the agreement was "complicated", striking a less optimistic note than on Tuesday, when Hungary had indicated that negotiations were in their final phase.

($1 = 0.9353 euros)

Reporting by Gergely Szakacs; Editing by Emelia Sithole-Matarise

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