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Hungary offers loans to companies as part of efforts to avoid recession

BUDAPEST (Reuters) - Hungary will offer large and medium-sized companies 200 billion forints ($494.7 million) of loan guarantees and reduced rate loans in an effort to avoid recession, Minister for Economic Development Marton Nagy said on Thursday.

With inflation above 20% and rising, and the economy slowing, Prime Minister Viktor Orban's government faces the twin challenge of curbing inflation while trying to stave off a recession.

It has already capped the price of fuel and basic foodstuffs as well as mortgage rates. Energy bills are also capped for most households.

The government also decided last month to include variable-rate loans to small and medium-sized businesses in a scheme designed to cap loan rates.

Nagy said on Thursday that the new programme comes on top of a scheme announced last month, in which the government gives subsidies worth 150 billion forints ($371 million) to large companies that invest to improve energy efficiency.

As part of the new programme, state-owned Hungarian Development Bank (MFB) will guarantee working capital loans, overdraft facilities and loans for operating costs worth a total of 100 billion forints, Nagy said in a statement.

Separately, Hungary's Eximbank will offer a total of 100 billion forints of fixed-rate loans to large and medium-sized companies to finance investments that save or produce energy.

Interest rates on Hungarian forint-denominated loans will be capped at 5% while loans in euros will have a maximum 3.5% interest rate. The scheme is due to be launched on Jan. 1.

($1 = 404.2800 forints)

(Reporting by Anita Komuves; Editing by David Goodman)