Hungary Proceeds with Multi-Billion Dollar Rail Infrastructure Project with China
On April 24, Hungary signed a $1.9 billion loan agreement with Export-Import Bank of China for the government’s planned development of the Budapest-Belgrade railway project. The loan is expected to cover approximately 85% of the project’s costs.
Scheduled to be completed by 2025, the project is part of Beijing’s Belt and Road Initiative (BRI) and is intended to integrate with a broader railway network connecting Central and Southeastern Europe to the Chinese-run Greek port of Piraeus, which is expected to become a major hub for the export of Chinese goods to Europe.
Prior to the announcement of the loan agreement, there were reports that the Hungarian government drafted legislation intended to keep all aspects of the $2.1 billion (taxpayer-funded) railway project confidential for a period of 10 years. According to some reports, this legislative effort was necessary to help Budapest procure the Chinese loan. Hungarian Minister of Finance, Mihaly Varga, reassured that the loan is “advantageous and secure for Hungary.” Hungarian supporters of the deal view the project as a way to elevate Hungary’s role as a regional logistics hub for trade.
The Budapest-Belgrade railway will be the second largest government-funded Hungarian initiative following Russia’s ongoing development of the country’s Paks II nuclear power plant project. The 150 km railway line will be built by a 50/50 consortium comprised of China Tiejiuju Engineering & Construction and China Railway Electrification Engineering Group, while the other half will be constructed by the Hungarian company Opus Global – an entity controlled by Lorinc Meszaros, an associate of Hungarian Prime Minister, Viktor Orban.
Chinese contractors are also participating in the development of the Serbian section of the project. Two sections connecting Stara Pazova to Belgrade and Novi Sad to the Hungarian border are under development by China Railway International Group and China Communications Construction Corporation. Work on the Serbian section of the project was launched in 2017 with an initial $300 million borrowed from China. Earlier this year, Serbia continued discussions with the Export-Import Bank regarding the latter’s investment in Belgrade’s infrastructure investment plan between 2020–2025.