Debrecen's self-control has not only signed a loan agreement with Erste Bank for the BMW factory, but also a future currency agreement. In this way they want to eliminate the risks and speculation of the euro-exchange exchange rate risk.

In September 2006, the Modern Modem and Contemporary Arts Center opened in Debrecen. The city gave 3 billion for the three storey gallery, and became the largest domestic exhibitions venue and where it was not bothering the summer of 2009 that Lajos Kósa, mayor of Debrecen, be exhibited in the "Hungarian Pornography" exhibition. The work of public funds was done, so it was not a question whether the statue representing the mayor of the city was being submitted. Finally, they decided to be free. Indeed, he was stuck on the statue and was not ordered by Lajos Kósa, and the Modem did not ask the artist, Gábor Gerhes, to make the old man's portrayal.

A Modem is now on the agenda again at the General Assembly in Debrecen: this building was proposed as a city cover for the $ 44 billion loan needed to build the BMW factory. The motion was submitted by Mayor László Papp and the assembly had already voted. We were looking for local government to find out why government securities are needed for credit protection. They state that state securities do not count – prohibit EU rules – such as banned subsidies if the government holds 80 percent of the loan and the 20 percent are & # 39; the rest is subdivided by local government. So there was a choice in the building where the Kölcsey Center and Modem was up until the lending contract ended.

The real estate is owned by two nonprofit ltd ltd. local government decided to sell the shares of both companies for nominal value from HUF 3 million to Kft Nonprofit Debrecen Youth Service Provider. This was necessary for the building to be "marketed" in Hungary that the mortgage could be recorded.

The decision adopted also stated that the shares would be sold on 1 December 2018 and resale at the end of 2024.

Is a Modem Out Here?

We were curious about what this cover was: if the loan could not be repaid, would the bank take a Modem? We were told that "there is no need to explain the concept of a mortgage, this is a guarantee of the loan agreement and the other is the state guarantee". They also said that "Debrecen management is stable, its revenues increase steadily, so it can fulfill its obligations under its credit agreement". On the other hand, MEPs also "raised their mouth" at the meeting, before the vote, the Mayor was also asked that if the bank were able to take a Modem, if so, they were told " that is the essence of the cover. "'s previous series revealed on the Debrecen investment that the deputies voted for a loan content of HUF 44 billion, as the BMW bid was not mentioned. Knowing such a loan

  • short term,
  • By 2023 he would have to repay the city in installments.

The first installment, 28 billion forints, was repaid in 2021, and in 2022 and 2023, the city would transfer the city to the bank between 8-8. billion for forint.

Since then Erste is clearly giving credit that Debrecen would call in several stages:

  • this year, 8.5 billion,
  • next year 35.5 billion.

Funds are provided by the bank for land acquisition and infrastructure development. For example, this

  • they will add 33 to the four lanes,
  • they will build a highway exit for the new factory,
  • electrify the line 108.

We know from landowners who have already received the money for their land. We talked to a farmer with 10 hectares and lets another 150 hectare into the city where a BMW factory will be built. According to them, "buyers who had already wanted to get rid of the ground came". He reminded others that "the point, the mayor has expired his grandmother if any ear misuse comes, he will be the one who will make it first public".

Agricultural land near Debrecen, along the highway no. 33, on July 31, 2018. In this area and its surroundings build a factory in the BMW Group.


German business policy

The contract supporting BMW investment in Debrecen on 12 October was signed by Foreign Minister Péter Szijjártó, László Palkovics, Minister of Innovation and Technology and Local Government Heads of Debrecen at the University of Debrecen. According to the document, German car factory

  • with a billion euro investment in its new plant,
  • employing thousands of people,
  • generates 150,000 cars per year.

On the same day, Debreceni Ingatlanfejlesztő Ltd also created a new local government company. Here is the company responsible for the project.

We did not know it was revealed only then

A city representative who called for silence said. "BMW has contracted with a business association, not with the state and not with local government." The car factory will take over the construction site of this company. The pre-sale contract has already been signed. We do not know how much BMW is coming to the area. Local government and editorial office said "exact purchase of land is defined in the final sales contract, given that ownership of the land is being purchased".


Only then Members were more surprised when they had to decide whether to come to an end or exchange of options with Erste. This is necessary because – as the mayor progresses – "BMW will direct the purchase price to the company in an euro, but local government has borrowed & # 39 ; the loan needed to realize the investment by Erste Bank Hungary Zrt. " This is a currency risk. We know that László Papp requires being a "defense mechanism". "We had to decide how to reduce the risk."

The fact that the business is at risk and weighs up, even the mayor does not hide it. Members have written that,

the transaction will be unprofitable for local government if the forge exchange rate increases compared to the current level on the day of purchase price. The future exchange rate is not known at the moment and therefore it's a risk.

"We were told that this risk should be taken for the investment," said a representative. They decided to support the future exchange of foreign exchange exchange, "we could not even say if the accident came, anyway," he added.

The Mayor's proposal was outlined for a future solution because he was

  • independent of moving foreign exchange market rates,
  • there is no transaction cost,
  • the borough has no other matter.

However, he did not hide the fact that the transaction binds both parties. "There is no 100% guarantee that the local government will accept the purchase price of BMW in time and full, so we will collect a sales transaction for a future for a non-realized amount," he said.

He believes that the risk can not be completely eliminated, is only reduced. He stressed that this transaction should end because in 2019 the ford could start to strengthen, "and for this reason, the local government would receive less HUF when adjusting the price Buying received from the BMW of EUR is EUR than now. " If the process is contrary to the opposite, local government is also better off: it hurts the mark for the same amount of euro.

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