Forint loans are pushing forward

The number of problematic loan contracts is soaring by 30,000-40,000 every month, while the falling exchange rate of the forint put enterprises and households with a foreign exchange loan in a difficult situation. In the last year small and medium-sized enterprises hardly took out long-term loans, instead they chose short-term products. The number of investment loans was especially low: less than 8,000 from the 1,100,000 loan contracts signed with enterprises in 2009; the number of current asset loans surpassed 770,000. Forint loans were more popular than before because banks only granted foreign exchange loans to those enterprises which could certify that they had constant income in the foreign exchange considered. The Hungarian credit market became more stable, but risks still remained high: in the European Union it is Hungary, Romania, Bulgaria and the Baltic States where the proportion of foreign exchange loans is the highest. The limited supply of loans hinders economic upturn, therefore it would be vital to give new life to the credit market, incented by state guarantees and interest rate subsidies. EU sources need to be reallocated and red tape must be cut. Experts agree that SMEs can only come out of the deadlock with state-supported programmes. This year neither the sum of the average loan nor the number of loans granted increased. Forint loans are gaining momentum, especially in the short-term category.