On Tuesday Hungary’s foreign minister, Peter Szijjarto signed an agreement with China’s National Development and Reform Commission to upgrade the Budapest-Belgrade rail link. 

The deal was signed on the sidelines of the CEE summit in Suzhou and will mean that 85% of the project will be financed from China. The remaining 15% will be put up by Hungary.

Hungary’s Prime Minister, Viktor Orban was in attendance at the signing in China.

The rail link between the two capitals is 166 km long and will cost €1.5 billion to upgrade. The revamp will mean high speed trains and longer freight trains will be able to use the line.

The terms of the Chinese deal include a 20 year loan with a 5 year grace period. Szijjarto stated that the Chinese will offer a good rate of interest with construction on the project due to begin towards the end next year.

The project is due for completion in 2018.