BUDAPEST: Hungary has sold over 1,000 billion forints ($3.51 billion) worth of a new high-yield retail savings bond to households in just four weeks, Finance Minister Mihaly Varga said on Monday.
Prime Minister Viktor Orban's government offered the five-year savings bond for the domestic retail market last month as his government pursues efforts to cut its reliance on foreign investors in debt financing.
"This (the new bond) gives stability for state finances," Varga said in a video on his official Facebook page.
The National Bank of Hungary (NBH) has said in its latest inflation report published last week that the new bond could help maintain a high savings ratio by households, and channel additional incomes stemming from years of double-digit wage rises into the government debt market.
"In addition to the effects on households' savings decisions, the new security may contribute to improving the country's external vulnerability," the NBH said. It added that households' retail bond purchases could help refinance Hungary's maturing FX debt.
In total, Budapest aims to increase the retail stock of government debt to 11 trillion forints by 2023 from around 8 trillion now.
The new retail bond carries an initial yield of 3.5 percent, gradually rising to 6 percent at maturity, offering a premium over all currently available retail bonds and over bank deposits. Interest will be exempt from capital gains tax.
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