Government securities are guaranteed by the State of Hungary, therefore they are perfectly secured, Minister for National Economy Mihály Varga said at a press conference held jointly with Government Debt Management Agency CEO György Barcza.
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As the Minister pointed out, the yields of government securities are competitive, Bonus Hungarian Government Bonds, for example, yield 3.5-4.5 percent, depending on maturity. The new, five-year Premium Hungarian Government Bond (PMÁK) pays an interest rate premium of 4 percent above the average inflation rate of the previous year, he explained. These government securities are safe long-term savings instruments for retail investors.
Mihály Varga added that investors can open a savings account at the Hungarian State Treasury, for which no account keeping fee is charged, and thus the opening of an account at a brokerage can be avoided.
The Minister said that domestic retail investors are the most reliable investor group, as they tend to re-invest domestically and spend the interest they earn within the country. These factors are crucial from the stability of Hungary, he added.
Government Debt Management Agency CEO György Barcza emphasised that 70-80 percent of retail government securities are re-invested. At the end of February 2015, the stock of retail government securities totalled HUF 2500bn, within which the largest amount (HUF 1105bn) was invested in Interest Bearing Treasury Bills with a maturity of less than one year, followed by PMÁK (HUF 589bn) and Treasury Savings Bills (HUF 360bn), Mihály Varga said, adding that 75 percent of Bonus Hungarian Government Bonds, worth HUF 391bn, was held by private persons.
György Barcza said that returns are even tax-exempt in case the securities are held on a Long-Term Savings Account for more than five years. Thanks to declining yields and the lowering of the share of forex liabilities within the entire amount of government debt, the debt servicing costs of the Government fell from HUF 1300bn to HUF 1150bn per year and this has concurrently increased fiscal manoeuvring room.
(Ministry for National Economy)
