The interest rate on the Agrár Széchenyi Card is decreasing

25/2023 of the Minister of Economic Development (IX. 28.) Based on the GFM decree, the interest rate on the Agrár Széchenyi Kártya Overdraft is reduced, Bankmonitor reports. Agricultural enterprises with a current account credit limit of no more than HUF 100 million are entitled to conclude a contract at a fixed annual interest rate of 5% within 9 months after the entry into force of the amendment decree. (The change will take effect on September 29 – the day after the announcement – and the 9-month deadline starts from here.) This decision did not come as a surprise, as the Minister of Agriculture had already announced this step.

The interest subsidy related to the Agrár Széchenyi Card is being increased

In the case of the Agrár Széchenyi Overdraft, the interest payable by businesses was equal to the one-month BUBOR. In practice, the normal interest rate of the scheme consists of two parts: the value of the one-month BUBOR is increased by 4 percentage points. This resulted in a 4% interest subsidy. In the future, the rate of interest subsidy will be increased to achieve a fixed annual interest rate of 5%. The decree states the following about this: The extra interest subsidy will cease if the value of the one-month BUBOR drops to 5%. This is understandable, since in this situation the extra discount would lose its meaning.

How much financial benefit can the change bring?

On September 28, the value of the one-month BUBOR was 12.96%, based on the previous rules, businesses had to pay the corresponding interest rate. If a HUF 50 million credit line is fully utilized, this interest rate would result in HUF 6.48 million in interest expenses in one year. Based on the new rules, the interest rate would be 5%, for the previously mentioned HUF 50 million credit line, this would result in an interest expense of HUF 2.5 million for one year, provided the credit line is continuously 100 percent utilized. In other words, the company’s interest costs would decrease by almost a third due to the change. In addition, according to the new rules, the interest rate risk of the loan is also eliminated, since the rate of the interest subsidy was also tied to the development of the BUBOR. (It is worth noting here that according to the decree, the maximum rate of interest subsidy can be 14%.)

Bank monitor