Economic crisis – Budapest Airport, Paks II and more projects to be postponed?
Viktor Orbán may have to let go of Budapest Airport, the super-hospital, the circular railway, Paks II and the Diákváros (Student City) as part of the forthcoming austerity measures.
Budapest Airport
There is no doubt that there will be some austerity measures in the coming period. The questions are where and how they will be implemented. László Molnár, CEO of GKI Gazdaságkutató Zrt., told mfor.hu:
“It seems obvious that Viktor Orbán does not want to purchase back Budapest Airport Zrt in the foreseeable future – at least a year and a half. Officially, this would not be public investment, but the loan part would affect the state budget.”
Molnár added that the government simply does not have the resources, because now, among other things, it has to raise pensions and deal with the compensation for the cuts in public utility bills.
In October last year, the government made a HUF 1 500 billion (EUR 3.95 billion) bid for the company operating the airport. Since then, however, tourism has started to pick up and the traffic at Budapest Airport is improving.
Thus, the later negotiations start, the higher the price will be, which is already higher than last October.
Super-hospital
The South Buda super-hospital is also a large project. Last summer, the head of the company that invested in the project told mfor.hu that the contstruction would cost about HUF 300 billion (EUR ~791 million). According to László Molnár, however, there is a strong consensus among health economists that it would be better to develop the existing hospital infrastructure rather than build a large hospital in a new location.
Paks II
When asked by mfor.hu about his opinion on the future of the Paks II project, László Molnár said he saw two possible scenarios.
- The NER companies, already involved in the project, will complete the preparatory work. This may take another year or two. In the meantime, it will become clear how strict the Western economic sanctions turn out to be. However, Rosatom will start construction, and the government will somehow manage to pay back the Russian investor in a roundabout way while also preferably negotiating the linked loan to be more favourable.
- Western companies, such as French ones, could be involved in the construction of the new block. It could be also beneficial if the EU classified nuclear energy as green-rated and thus green financing could be obtained. This would be a great gesture towards the EU which could also promote how environmentally friendly and sustainable the Orbán government is.
Finally, he said,
As a consequence of all this, the construction industry may also face fewer orders from the public sector. Earlier this week, the National Federation of Hungarian Building Contractors (ÉVOSZ) indicated that there could be approximately HUF 500 billion (EUR 1.3 billion) loss in state orders this year. A further HUF 100-200 billion (EUR 264-528 million) in orders cannot come in either because local governments will be in an even worse position than earlier. The best decision they can make is to postpone planned investments if they do not want to take out loans.
Ongoing projects
Even though a number of projects have been put on hold, there are still some that are in progress. One is the Budapest-Belgrade railway line, the other is the athletics stadium project.
According to mfor.hu, on the Soroksár-Kunszentmiklós-Tass section of the railway line, the number of P+R parking spaces will increase by at least 240 and the number of B+R bicycle parking spaces by at least 300.
The Finance Minister should allocate around HUF 3.3 billion (EUR 8.7 million) for various noise protection and other technical preparation work over the next three years.
The construction of the leisure park and sports fields next to the new athletics stadium is planned to be completed by next year’s World Athletics Championships. The government has given HUF 24.5 billion (EUR 64.7 million) to speed up the process.
Source: mfor.hu, Facebook/Budapest Airport, dbcprojekt.hu