To modernise the nation's rail infrastructure, the Hungarian government has submitted a request to the European Investment Bank (EIB) for a €1bn loan, it was announced on September 27.

The money, topped up with an additional €1bn funding from the budget, will be used for the construction and overhaul of 500km of new railway track and security systems over four years starting in 2025, Construction and Transportation Minister Janos Lazar said.

Lazar said that Hungary would not wait for EU funds suspended because the country has failed to implement super milestones required by the European Commission.

The EIB loan is part of the five-point action plan outlined by Lazar in August, just days before traffic at three of the four major Budapest railway stations came to a standstill following the derailment of a wagon. The investigation found the poor condition of a railroad switch caused the accident.

The government's railway action plan includes supporting production of carriages by local manufacturers and the purchase of 20-30 year old trains from abroad. The scheme is part of a ten-year HUF1.2 trillion investment project carried out by the state railway company.

Service put on by the Hungarian state railway has caused frustration for commuters due to frequent train delays, cancellations, and mechanical failures

Trains are often overcrowded, particularly during peak travel times. That has been worsened since the introduction of new, preferential tariffs and new passes in the spring, touted by the ministry as a big hit.

One of the most persistent problems is the ageing rail infrastructure, which has led to reduced speeds, even on the most frequently used lines, like the one connecting Budapest with Vienna.

Many sections of the railway network require urgent modernization, but progress has been slow, despite massive inflows of EU funds. Analysts note that the government has prioritised the construction of new motorways over railway development.

Duna Aszfalt, owned by one of Hungary's richest men, Laszlo Szijj, is a prime example of this. The company’s revenue skyrocketed from HUF32bn (€81mn) in 2016 to HUF261bn last year, thanks to a string of state orders. The construction firm's profit swelled from HUF13.6bn in 2022 to HUF42bn a year later, which translates to an impressive 17% profit margin, significantly exceeding its European peers.