Orban Delays $5 Billion Budapest Airport Deal on Budget Risk
(Bloomberg) -- Hungary will delay the purchase of Budapest Airport because of a ballooning budget deficit, Prime Minister Viktor Orban said.
The surprise announcement, delivered at a briefing on Monday, followed a warning by central bank Governor Gyorgy Matolcsy, who said last week that the size of the purchase threatened the country’s financial stability amid record spending before elections expected in April.
“Buying back the airport before elections, I don’t see that as realistic,” Orban said at a joint news conference with French President Emmanuel Macron and leaders from central Europe.
The fiscal space has narrowed after the European Union’s executive decided to delay billions of euros in the bloc’s pandemic aid to Hungary due to graft concerns. Macron said a disbursement of the funding was unlikely before April’s vote.
Orban’s announcement came a month after Hungary’s government started due diligence of Budapest Airport. Bloomberg has reported that the government is seeking to buy the hub as part of a consortium that includes refiner Mol Nyrt. and real estate company Indotek Group, whose owner Daniel Jellinek has had business deals with Orban’s family.
“The shareholders of Budapest Airport have agreed to stop the due diligence process and to remain in dialog with the Hungarian government,” AviAlliance, a Germany-based airport management company and the hub’s biggest shareholder, said in a statement.
Orban had championed the airport deal as part of a drive to reduce foreign ownership in an increasing number of industries he considers strategic, and he has said the location is key for tourism and broader economic development.
Until now, the premier had rejected criticism of the deal and had pursued an aggressive timetable that included signing a contract this year and closing before elections, which are the most closely contested since Orban’s return to power in 2010.
The hub’s owners had been reluctant to sell from the beginning. They agreed to enter formal talks on the sale following multiple increases on the offered price. The latest offer was for 4.44 billion euros ($5 billion), Vilaggazdasag newspaper reported on Oct. 19, citing a personal familiar with the talks.
The decision is another pivot toward budget consolidation after the government over the weekend said it would add $1.1 billion to budget reserves to “strengthen financial stability and further improve investor sentiment.”
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