According to the announcement, the deal is favorable to Hungary from several points of view:
- improving the average remaining maturity of public debt,
- It helps to pay off debts due in the future as well
- Contributes to the financing of public debt based on several legs.
With the issuance of bonds, the foreign currency debt ratio remains below the reference range of 30 percent of total debt – much more favorable than the 50 percent level in 2010 – the ministry’s announcement notes. They add that the last time ÁKK issued bonds in foreign currency was in January this year, at a value of $4.25 billion, with three times the interest of investors.
“National debt reduction must continue”
The debt management objectives of the Hungarian government remain unchanged, and public debt should continue to be reduced, while debt financing should focus on domestic sources. “Thanks to debt management in recent years, we have increased the share of households in debt financing from 3 percent to more than 20 percent, and nearly 80 percent of public debt interest expenses are paid by the state to local residential and institutional investors,” they say in the announcement.
Highlights:
Domestic savings defuse inflation and create a solid foundation for future economic growth.
According to the Finance Ministry, the success of the current deal indicates the continued confidence of investors in the Hungarian economy. This confidence is also confirmed by credit rating agencies: Moody’s last week confirmed Hungary’s public debt rating and outlook
. The international credit rating agency continues to recommend Hungary for investment, expecting that the Hungarian economy will return to the path of high-speed growth next year, while the government will significantly reduce the budget deficit and public debt.
