In the month of June 2016, the share of forex debt within the total volume of state debt was down by 5 percent year-on-year. Positive fiscal processes have also been recognized in the latest analysis by Moody’s Investors Service. The rating agency is expecting Hungary’s government debt-to-GDP ratio to decline further in coming years.         Moody’s states that the decline of this indicator will be attributable in the next two years to the Government’s fiscal policy, and the economic upturn, which is set to follow a transitory slow-down. The Ministry for National Economy welcomes the fact that the share of forex debt within the total debt volume has gradually declined from 52 percent at the end of 2011, as it shows that the Government’s relevant measures have taken effect. One of these efforts has been the Government-initiated campaign for promoting government securities for retail investors which has achieved that 14 percent of the volume of government securities is now owned by households. And, as a result of a self-financing program, 29 percent of state bonds are now being held by banks. This has reduced holdings of foreign investors, and non-residents now possess only 39 percent of government securities and 44 percent of the total volume of government debt. As a consequence, not only the country’s exposure to exchange rate fluctuations but its external vulnerability has also been reduced. The Hungarian Residency Program also plays an important role in reducing the vulnerability of the Hungarian economy. Recent years have proven that lower financial exposure is of significant value. Better risk indicators have led to lower yields on government securities, to lower interest payments and accordingly to cheaper debt financing. The amount thus saved can be allocated for other objectives, such as investment or development projects and higher wages. Minister for National Economy Mihály Varga with UAE Foreign Minister Abdullah Bin Zayid Al Nahyan. (Photo: Géza Dede)

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