Hungary signs China-backed Budapest-Belgrade rail project

Hungary signed Friday a China-financed loan agreement for a high-speed railway linking Budapest and Belgrade, billed as Hungary's biggest ever infrastructure investment and one whose contract details could be kept secret for a decade.

"An important agreement was reached today: the construction work can begin with the signing of the loan agreement for the Budapest-Belgrade railway line," said Finance Minister Mihaly Varga in a Facebook video.

The 350-kilometre-long (220 mile) high-speed rail line would form part of a planned railway connection linking central Europe with the Chinese-run Piraeus port in Greece.

The project is part of China's ambitious "Belt and Road" initiative, Chinese President Xi Jinping's signature global infrastructure project to deliver Chinese goods from east to west.

Italy, Portugal and Greece, as well as several eastern European countries, have joined the trillion-dollar initiative, seen in the West as a global trade plan to boost Chinese influence.

"The terms of the (Budapest-Belgrade rail track) agreement are favourable and secure for Hungary, the loan has a fixed interest rate and can be repaid in advance," said Varga, without providing details.

Under the agreement signed with China's Exim Bank, Varga said Hungary will finance 85 percent of the investment costs from credit and the remaining 15 percent from its own funds.

The initial agreement for the upgrade was signed in spring 2019 with the Hungarian-Chinese contractor consortium, while work has already started on the Serbian section and is expected to be finished by the end of 2022, with the rest complete by 2025, he said.

"With the development of the railway line, Hungary can become one of the logistics centres of Europe," Varga said.

The project has drawn criticism in Hungary over its huge cost to the taxpayer and corruption risks.

Cost estimates of at least two billion euros ($2.2 billion) indicate the project is likely to be the most expensive infrastructure project in Hungarian history.

The consortium contracted to build the 160 kilometre Hungarian stretch of track also includes a company controlled by business circles close to Prime Minister Viktor Orban.

Earlier this month, the government proposed legislation to classify the project's contract details for 10 years.

It said making the details was necessary to protecting Hungary's foreign policy and economic interests, and to secure the necessary credit from Exim Bank.

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