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Summary of proposed guarantee

Summaries of proposed guarantees are provided prior to Board consideration and before final contract signing, and they are therefore subject to change. Project briefs are disclosed after Board consideration and contract signing and reflect the terms of the project at the time of contract signature. Environmental and Social Review Summaries are provided for projects assigned an Environmental Assessment Category of A or B.


Project name
Hungary Exim Funding Coverage
Project ID
Fiscal year
Guarantee holder
Magyar Eximbank Secured Funding Limited
Investor country
Host country
Environmental category
Financial Services
Date SPG disclosed
May 24, 2013
Project Board date
June 18, 2013
Gross exposure
 $715.0 million
Project type

Project description

The proposed project involves a €400 million financing with a maturity of up to ten years from a special purpose entity, backed by notes issued by Magyar Export-Import Bank (Exim) of Hungary. The primary objective is to increase Exim’s long-term lending capacity and promote the export activity of mostly small and medium size Hungarian companies. The special purpose entity, Magyar Eximbank Secured Funding Limited (MESF) of Ireland, has requested MIGA's coverage against the risk of a non-honoring of the sovereign financial obligation for 95% of the principal (€400 million) and interest (estimated at up to €179 million) on the notes issued by Exim.

As Hungary’s official export credit agency—wholly-owned by the Hungarian state through the Ministry for National Economy—Exim’s liabilities will be secured by a government guarantee based on Hungarian law.

MIGA's proposed guarantee will enhance the credit quality of the issue, lowering the longer-dated borrowing costs of Exim, thereby enabling these savings to be passed on to the Hungarian export sector. This will strengthen the sector’s competitive position in foreign markets.

Environmental Categorization

The project is a category FI under MIGA’s Policy on Social and Environmental Sustainability

Development Impact

Since the global economic crisis started in 2008, lending to Hungarian businesses has declined sharply, mainly as a result of deleveraging and strict credit allocation decisions of foreign banks present in the country. Funding reductions by foreign banks have accelerated in Hungary beyond the pace seen in peer countries.

At the same time credit demand has remained robust, especially in the export sector, which has remained buoyant despite the weak overall outlook in the Hungarian economy.

In this context, Exim plays a strategic role within the government’s economic plan, as it focuses on Hungary’s export trade—following the sharp drop in domestic consumption and investment— while compensating for the severe decline in credit supply.

In addition, Exim gives support to Hungarian commercial banks in order to reach MSMEs through their distribution networks. This additional funding increases the stability of the Hungarian banking sector and strengthens its liquidity position.

This project will stimulate continued growth in Hungary’s export sector, generating associated employment and economic activity.  As the country’s exporters are looking increasingly eastward to non-OECD countries, this will support South-South trade and linkages as well.

The proposed project is consistent with the World Bank's Europe and Central Asia Strategy that is focused on developing a new growth model for the region, particularly through increasing competitiveness to achieve faster growth.

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