The legal issues concerning foreign exchange loans must be clarified first and an economic solution can follow, Minister for National Economy Mihály Varga said.

The Minister added that the Government discussed the issue at its Wednesday meeting and noted that a legal uncertainty had evolved as a result of recent contradicting court decisions in lawsuits between borrowers and banks.

He declined to specify a date for making a decision on foreign exchange loans and reiterated that the uncertainty in the legal situation must be cleared first. The Government alone cannot resolve the legal uncertainty and further professional consultations are needed, Mihály Varga said.

He added that he would head the talks with representatives of financial institutions and all those affected by the unfavourable consequences of loans taken out in a foreign currency in the past. As a result of the uncertainty caused by foreign currency loans, it is in everyone's interest to find a solution that can offer certainty to clients, banks and the state, Mihály Varga said.

Proposals prepared thus far by the Hungarian Banking Association have been insufficient to serve as a basis for changes needed in legal regulations. Banks must continue to work on their position. The government would have liked to see the re-negotiation of contracts between banks and clients but this has not happened, Mihály Varga said.

He reiterated that the Government expects foreign currency loans to be withdrawn from the market and at the same time, those who took out loans in forints should not end up in a worse position than forint debtors.

The Government, in line with the central bank's position, does not expect forex reserves to drop and the central bank will offer foreign currency only at the market rate if this becomes necessary, the Minister said.

(Ministry for National Economy)