State guarantees back billions in loans to Hungarian firms, raising taxpayer risk
Hungary's state-owned Start Garancia has provided guarantees for large loans to numerous companies, and the exposure could burden taxpayers if those firms default.
The state-owned firm Start Garancia Pénzügyi Szolgáltató Zrt. supplies guarantees for high-value corporate financing, typically covering up to 80% of loans and up to 100% of bond issues. Its guarantee portfolio has risen sharply, reaching 311 billion forint at the end of 2023, 426 billion in 2024, and approaching 500 billion by the close of 2025, while facilitating roughly 730 billion in total credit and bond financing.
The agency’s clientele includes many firms favored during the previous government era, such as the Lounge group and Bayer Construct, which have recently encountered financial trouble. Because the guarantees are backed by the state, any default could force the Treasury to absorb losses, exposing taxpayers to substantial liability. The Ministry of Economy and Energy has ordered a comprehensive audit of Start Garancia’s operations, and the legal ceiling for guarantees is set at 3 trillion forint by the end of 2025.
Why it matters
Taxpayers could face large losses if state-backed loan guarantees to risky firms default.
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