North Macedonia’s government approved plans on September 3 for a €500mn loan from Hungary, which is expected to serve as a significant driver for the country's gross domestic product (GDP).

It was reported in July that North Macedonia’s Prime Minister Hristijan Mickoski had reached an agreement with Hungarian Prime Minister Viktor Orbán for a €500mn loan to be provided by Hungary to Skopje. This sum represents half of the €1bn that Mickoski pledged to secure following his electoral victory on May 8.

Mickoski, from the ruling right-wing VMRO-DPMNE, announced on September 4 that the loan would have a positive impact on economic performance in the fourth quarter of this year and the first quarter of 2025.

The loan package, comprising €250mn for business communities and another €250mn for capital investments in municipalities, is seen as a development component for the economy, Mickoski said.

The terms of the loan include a 3.25% interest rate, a three-year grace period, and a 12-year repayment period, which Mickoski described as highly favourable compared to current market conditions.

"This will soon be presented to parliament, and I expect the process to be completed by the end of the month," Mickoski stated.

He said that the loan would provide crucial support to both the private sector and local governments, helping to stimulate economic growth.

Mickoski also noted that industrial production in North Macedonia had increased by 3.8% in July after several months of decline, marking a positive shift for the economy. Mickoski said that the increase is an encouraging sign after a period of stagnation.

Hungarian media have reported in July that Hungary is extending a "friendly" loan of €500mn to North Macedonia, noting that the interest rate on the loan is more favourable than the rate at which Hungary itself finances its debt.