The government debt-to-GDP ratio may decline this year and next, Minister for National Economy Mihály Varga said at a press conference held jointly with Government Debt Management Agency (ÁKK) CEO György Barcza.

Speaking of the central government budget and the financing of state debt in 2017, the Minister said current GDP data signal that the government debt-to-GDP ratio may fall below 74 percent by year-end.

Retail government securities have played a key role in the financing of debt, which account for 20 percent of total stock. This indicator was as low as 2 percent in December 2010.

The share forex debt within the total debt volume has been declining partly due to lower net issuance of forex government securities. This indicator is expected to be slightly above 25 percent at the end of 2016, and this factor is significantly reducing the country’s exposure to exchange rate fluctuations. Six years ago, the share of foreign exchange denominated state debt within the total volume was well above 60 percent, the Minister noted.

The Government’s main objective continues to be a secure and cost-effective financing policy, based primarily on capital market instruments.

ÁKK has identified three strategic goals: the steady lowering of the debt rate (a task prescribed by the Basic Law), the promotion of retail government securities and the further lowering of the share of forex debt, the Minister pointed out.

The financing plan envisages the issuance of securities valued altogether at EUR 1bn, but this amount may vary depending on actual market demand and potential redemptions, Mihály Varga added.

(Ministry for National Economy)