(Bloomberg) -- Hungary plans to cut its issuance of foreign-currency bonds next year based on plans to reduce spending and as the outlook brightens for the resumption of funding from the European Union.

The government plans to raise up to $2 billion in foreign-currency bonds as early as the first quarter, in addition to at most €1 billion ($1.1 billion) in green euro bonds, Debt Management Agency Chief Executive Officer Zoltan Kurali told reporters in Budapest on Friday. Yen-denominated samurai and yuan-denominated panda bond sales may also be issued in the latter half of 2024, but overall foreign-currency issuance next year will be less than half of the 2023 amount, Kurali said.

Hungary raised its foreign-currency issuance this year amid a major fiscal slippage and after the EU suspended more than $30 billion of funding earmarked for Budapest due rule of law and graft concerns under Prime Minister Viktor Orban. The government has said it expects money flows to resume as soon as this year. It plans to slash the budget deficit to 2.9% of gross domestic product next year from a target that was revised upward recently to 5.2% for 2023. 

“The 2024 budget calculates with EU inflows, since we are entitled to these and payments cannot be held up,” Finance Minister Mihaly Varga said at the briefing. “The information we have so far is promising.” 

The European Commission will decide by Dec. 15 on whether to unfreeze as much as €10 billion to Hungary, contingent on the the EU executive’s assessment of Orban’s steps to bolster judicial independence, according to EU officials. Hungary’s EU Affairs Minister Janos Boka met EU Justice Commissioner Didier Reynders on Friday in Brussels to address remaining concerns.

The forint was little changed at 379.94 per euro at 12:16 p.m. in Budapest. It has appreciated 5.2% so far this year, underperforming a 7.9% gain by its main peer, Poland’s zloty. Hungary’s euro-denominated bonds maturing in 2033 traded on Friday at the highest since they were issued in September, with the yield falling below 5.33%.

In addition to the main foreign-currency bond sales, the government may also issue debt via private placement, similar to the way it raised $500 million in November by retapping its existing dollar bond due in 2028 on investor request, Kurali said. He said the arrival of EU loans from an already-approved tranche related to green energy investments could further cut issuance needs.

--With assistance from Stephanie Bodoni.

(Updates with bond performance in chart, penultimate graph)

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