Hungary’s new government is intensifying its scrutiny of a major financial deal struck by the previous administration, shining a spotlight on a €1 billion loan extended to North Macedonia under unusually generous terms.
Prime Minister Péter Magyar announced a sweeping investigation into the transaction, which was facilitated through the state-owned Hungarian Export-Import Bank (Eximbank). The move forms part of a broader effort to examine potential mismanagement of public funds during Viktor Orbán’s long tenure.
The loan, granted at a fixed interest rate of just 3.25 percent with a full 100 percent Hungarian state guarantee, has raised eyebrows due to its favorable conditions compared to domestic borrowing rates. Magyar highlighted that Hungarian companies, citizens, and even the state itself typically face significantly higher interest rates on loans, including for major infrastructure projects like the Paks nuclear power plant expansion. This discrepancy has fueled suspicions that funds intended to bolster Hungarian exporters were instead redirected to support foreign political allies and associated business interests.
According to the Prime Minister, the arrangement may represent a misuse of public resources. “There are suspicions that the previous government used public funds intended for Hungarian business to support foreign policy allies and friendly trade structures,” Magyar stated. The investigation, referred to police by the Ministry of Economy and Energy, examines possible abuse of office, mismanagement, and financial crimes. This case is one of four major Eximbank transactions now under review, collectively involving financing worth over €2.7 billion.
Eximbank under the microscope: multiple high-risk deals qestioned
The North Macedonia loan is not an isolated incident. Hungarian authorities have filed criminal complaints regarding several other substantial Eximbank operations that share common red flags: high financial exposure, elevated risk classifications, and what officials describe as insufficient safeguards or collateral.
One case involves a €162 million loan approved in June 2025 for redeveloping Budapest’s former Sofitel Chain Bridge hotel and adjacent buildings. The project reportedly received a high-risk rating, yet the bank’s board had only two days to review a lengthy proposal before granting approval, with several internal requirements waived. Media reports have linked the investment to business circles close to Orbán’s family.
Another transaction concerns €346 million in bond financing for a major infrastructure project in Africa, led by Hungarian firm Duna Aszfalt. The funds supported the construction of a 184-kilometer motorway, a border bridge, and related facilities connecting Zambia and the Democratic Republic of the Congo. Despite both African nations carrying Eximbank’s highest risk rating, the Hungarian state backed 80 percent of the financing. Authorities are now assessing whether such generous support was justified given the evident country, legal, and project risks.
A third case centers on a massive €1.58 billion loan to Egyptian National Railways for the purchase of Hungarian-manufactured railway carriages. The deal, originally involving Russian partners, faced major disruptions following sanctions related to the war in Ukraine. Delays mounted, with hundreds of carriages undelivered by the contractual deadline, and the associated Hungarian companies entered liquidation. The state now bears the risk of non-performance, prompting questions about oversight and potential irregularities, including large dividend payouts prior to bankruptcy.
These investigations underscore deeper concerns about Eximbank’s operations. Originally established to support Hungarian exporters, the bank’s asset base had grown substantially to around €10.9 billion by the end of 2024. Critics argue it increasingly functioned more like a private financing vehicle for politically connected interests than a tool for genuine economic diplomacy.
The loan controversy emerges against a backdrop of ambitious reforms by Magyar’s Tisza government, which assumed power following elections in 2026. Magyar has positioned the investigations as part of a commitment to transparency and accountability, emphasizing that the government seeks facts rather than premature judgments. “We will provide every necessary assistance to determine whether crimes were committed and where the taxpayers’ money is,” he affirmed.
In parallel with the financial probes, the government is advancing institutional changes. A bill to establish an independent anti-corruption office has been submitted, and Hungary is taking steps toward joining the European Public Prosecutor’s Office. Broader fiscal tightening measures include slashing parliamentary expenses, reducing the size and remuneration of boards at state-owned companies, and capping salaries for top executives. Magyar, who earns significantly less than his predecessor, highlighted these moves as essential to curbing what he described as “payment outlets” for political loyalists under the prior regime.
The North Macedonia loan itself traces back to diplomatic overtures in 2024. The initial agreement was signed in Washington during the NATO Summit shortly after Hristijan Mickoski’s government took office in Skopje. Subsequent parliamentary approvals followed, with the first €500 million tranche disbursed in October 2024. Investigative reporting has suggested the funds originated from a larger €1 billion borrowing by Hungary from China earlier that year, raising questions about indirect Chinese geopolitical influence in the Balkans via Hungarian intermediaries.
Magyar’s government inherited what it calls a “catastrophic” budgetary situation. By pursuing these cases vigorously while implementing spending cuts, the new leadership aims to signal a decisive break from past practices. The Prime Minister has stressed the importance of European cooperation, including on extradition matters, and criticized previous decisions granting asylum to certain foreign politicians facing legal troubles.
For many Hungarians, the probe into the North Macedonia deal represents more than a financial review – it symbolizes a broader reckoning with opaque decision-making that allegedly prioritized political alliances over national economic interests.
Sources: Budapest Times, Daily News Hungary, BGNES, Vijesti
Caption: A handout photo made available by the Hungarian Prime Minister’s Office General Department of Communication shows Hungarian Prime Minister Viktor Orban (R) shaking hands with North Macedonia’s Prime Minister Hristijan Mickoski at his office in Budapest, Hungary, 30 May 2025. EPA/ZOLTAN FISCHER