The European Commission has approved a €2 billion (HUF 760 billion) capital injection by Hungary into its development bank, Magyar Fejlesztési Bank (MFB), under EU State aid rules.
The funding will come from the EU’s Recovery and Resilience Facility (RRF) — a post-pandemic programme that provides grants and loans to support reforms and investment, the Commission said in a statement on Monday.
Hungary told the Commission the capital injection is intended to give MFB more capacity to finance areas where private markets do not provide enough funding, including infrastructure, agriculture, environmental protection, education, tourism, sports, and urban and rural development.
The measure is included in Hungary’s amended Recovery and Resilience Plan, which is awaiting approval by EU member states in the Council.
What the money is expected to support
The amended plan lists four uses for the capital injection: support for MFB’s programme for the competitiveness of small and medium-sized enterprises (SMEs); support for early-stage growth and innovative companies and SMEs involved in the green and digital transition; support for rental housing and student dormitory development; and co-financing projects with the European Investment Bank linked to implementing Hungary’s recovery plan.
The Commission assessed the measure under Article 107(3)(c) of the EU treaty, which allows Member States to support the development of certain economic activities under specific conditions.
Hungary committed to limit MFB’s financial activities to areas with relevant “market failures” and to put measures in place to prevent crowding out private-sector operators.
A non-confidential version of the decision will be published in the Commission’s State aid register under case number SA.123592 once confidentiality issues have been resolved.
