The Residency Bond Programme has resulted in major interest savings for the state.
Between 2012 and 2016, the Government had to pay back the IMF loans taken on by the socialist Gyurcsány government. George Soros would also have been happy to finance this, but Hungary chose another path. We repaid the debt from the proceeds of foreign currency and residency bonds. This went against Soros’s interests. This is why organisations paid by Soros, including Transparency International, are slandering the Hungarian Residency Bond Programme. The truth can be read in the Hungarian State Debt Management Agency’s calculations, which were published today.
The Residency Bond Programme has resulted in major interest savings for the state. Following a period of crisis, the Residency Bond Programme facilitated Hungary’s financing. The programme contributed to the repayment of the high-interest IMF loan taken on prior to 2010, the interest rate of which exceeded 4% when the final payment was made in May 2013, in contrast to the 2.53% annual interest rate of the Hungarian Residency Bond at the time. The Hungarian State issued a total of 1.84 billion euros in Hungarian Residency Bonds between 2013 and 2017. Thanks to the favourable interest conditions determined when the programme was launched, the interest expenditure of sovereign debt was reduced.
In recent years, the financing situation of Hungary’s sovereign debt has improved significantly. In 2017, macroeconomic processes and the intensive improvement of state financing enabled the suspension of the issuing of Hungarian Residency Bonds.
The interest rate of the Premium Euro Hungarian Sovereign Bonds (previously Premium Euro Hungarian Government Bonds) that are still available to the public is currently 2.9%, and until the end of 2013 operated with a higher rate of interest that that of Residency Bonds. In comparison to the Premium Euro Hungarian Sovereign Bond, the Residency Bond Programme has led to significant saving for the Hungarian treasury.
From the perspective of the budget, the interest paid by the Hungarian Residency Bond was more favourable that the similarly marketed Premium Euro Hungarian Sovereign Bond during the whole period of availability. In 2013, 2014, 2015, 2016 and 2017 the Hungarian Residency Bond was a cheaper financing instrument for the debt manager that the similarly issued and maturity Premium Euro Hungarian Sovereign Bond by 1.63, 0.76, 0.1, and 0,4 (for both 2016 and 2017) percent respectively, and these lowered costs represent a saving for debt financing throughout every single year until its maturity. In addition, the state did not pay any commission with relation to the distribution of Hungarian Residency Bonds (in comparison to 1% commission in the case of Premium Euro Hungarian Sovereign Bonds), which also made the Hungarian Residency Bond more favourable as a debt financing instrument for the state.
Thanks to the more favourable conditions, the state saved over 9.6 million euros between 2013 and 2017 by issuing Hungarian Residency Bonds instead of Premium Euro Hungarian Sovereign Bonds.
Government Communication Centre
(Cabinet Office of the Prime Minister)