Page 35 - Central & Southeast Outlook 2020

2013 and 2018 some 40,000 SMEs received HUF2.8 trillion in financing at 2.5%. The central bank has raised the limit of corporate bond purchase programme from HUF300bn to HUF450bn from January 1, 2020 to revive Hungary's lacklustre bond market.
The ratio of non-performing loans (NPLs) has fallen to 4.5%. The NPL ratio is under 5% at 23 of the 35 financial institutions under the oversight of the MNB.
Hungarian banks have laid out hundreds of billions of forints in interest-free general purpose loans since a credit scheme was launched in July as part of a package of family support measures rolled out by the government in the summer to halt depopulation. Banks expect healthy demand in retail lending supported by low interest rates and the increase in real wages, in addition to the government-financed programmes.
5.4 ​Finance - Latvia
Tellingly, the opening lines of the Latvian central bank, Latvijas Banka, most recent financial stability report, published in August, cover the issues of money laundering and terrorism financing. Latvia has long been one of the EU’s worst member states when it comes to lax supervision of money flows from outside of the EU to the Latvian boutique banks that specialised in servicing non-resident customers.
A number of scandals beset Latvia’s financial sector in 2018 and 2019. With the former head of Latvijas Banka Edgard Rimsevics being tried for bribery and the closure of the third largest bank ABLV topping the list, Riga pledged to step up efforts to fix its financial sector in 2020.
One of the early and important challenges is coming as early as in February, when the G7’s Financial Action Task Force (FATF) - an intergovernmental body set up to combat money laundering and terrosim financing - might put Latvia on the so-called “gray list” of countries strategically lacking measures to fight financial crime.
“Latvia is doing the right thing right now, focusing on avoiding being put on this gray list. Latvia is doing its best to remove the negative scenario from the agenda. This means not only making changes, but also communicating what we have done to partners in a very clear way. This is very important," Martins Kazaks, the new governor of the Bank of Latvia told ​The Baltic Times​ in early January.
Kazaks also said that if Latvia was effectively included in the list, it wold make the financial sector “not sufficiently capable of strengthening the Latvian economy."
Other than fixing its tarnished reputation of being too easy on illicit money flows, the Latvian financial sector is also wary of deterioration of the external
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