New Hungarian law details statutory payment moratorium

Hungary

In a further aid measure issued in response to the COVID-19 crisis, Hungary just passed a new law detailing the statutory payment moratorium for existing loan agreements that has been in place in Hungary since 18 March 2020.

Passed as a follow-up action to the March 18 law, the new law issued on March 24 contains specifics of the payment moratorium and includes these main points:

  • If a debtor initially decides to continue payment, the original decree on the payment moratorium still applies. (If they later stop paying, the payment moratorium also still applies).

  • The payment moratorium applies to guarantees as well.

  • The moratorium also applies where the debtor itself is a financial enterprise or an investment fund.

  • The interest accrued during the payment moratorium cannot be capitalised.

  • The interest accrued during the moratorium must be paid after the end of the moratorium (31 December 2020) in equal annual instalments.

  • At the end of the moratorium on 31 December 2020, the tenor of the loan is extended by law in such a way that the sum total of each principal payment plus the sum payable as accrued interest cannot exceed the original payment instalments.

  • The rules for interest also apply to fees.

  • The contract, automatically amended by inclusion of the payment moratorium, does not need to be issued in a separate notarial deed. It is deemed included in the original notarial deed (i.e. its enforceability is the same as the original contract).

Information on the previous measures regarding the payment moratorium can be found here.

For more information on the moratorium and Hungary's response to the COVID-19 crisis, contact your regular CMS advisor or local CMS experts: