June 15th, 2012

Moral hazard abounds as EIB to flood Hungary with “red sludge” money


Haven’t heard much recently about the 2010 environmental disaster that around the world became known as Hungary’s “red sludge” crisis. But yesterday we did get a press release from the European Investment Bank about a EUR 63 million loan it is extending to the Hungarian state, which will be used for some belated cleanup and… other things.

Hungary, represented by the Ministry for National Economy, is the EIB loan borrower and project promoter, while local governments and eligible public and private entities, including SMEs, and individuals affected by the damage caused, are the final beneficiaries of the loan.

Needless to say, this paragraph might be shortened to “Private entities are the final beneficiaries of the loan that will be paid back by the government.”


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