State debt manager (AKK) wants to double the stock of retail government securities in 5 years, AKK CEO Gyorgy Barcza said in an interview with state television channel M1 and state radio Kossuth. This will mean raising the stock by more than HUF5,000bn in five years or by about HUF1,000bn per year, the CEO explained. This amount is roughly equal to the government’s foreign exchange debt so if the above target is achieved, forex debt could be completely phased out by 2025, Barcza added. Thus, all government debt could be denominated in HUF after 2025, reducing foreign exchange and other financing risks and making government debt financing more stable, Barcza explained.
The stock of retail government securities rose by HUF713bn last year to HUF7,544bn at the end of 2018 (20% of central government debt) and AKK plans to raise it further by HUF800bn in 2019. We note here that the finance ministry submitted a plan to exempt retail investors from tax on interest income earned on government securities as of Jun 1. Forex debt accounted for 20% of total central government debt. It fell by HUF58bn to HUF5,725bn at the end of 2018. AKK plans no forex issues this year while net forex payments amount at EUR2bn.