The Hungarian budget is burdened by interest payments from government bonds. In the first three quarters of last year, the government in Budapest had to allocate 2.5 trillion forints (roughly CZK 160 billion) for them, which is twice as much as in the same period of the previous year, according to data from Hungarian statistics. Office.
Bloomberg writes that the country faces the highest debt service costs relative to the size of its economy in the entire European Union and has overtaken Italy.
Hungary's central bank estimated last month that the cost of servicing the public debt would be 4.3 percent of gross domestic product (GDP) by 2023. According to him, this year they will decrease to only 4.2 percent of GDP.
Italy spent 3.8 percent on public debt servicing last year, according to Bloomberg. The Czech Republic allocated 1.3 percent of its GDP.
Hungary on Wednesday became one of the first emerging market countries to sell dollar bonds to meet its growing financing needs. The country increased the level of debt last year as it had to make up for missing funds from the European Union, which suspended union due to concerns about bribery and the rule of law under Prime Minister Viktor Orbán's government.
With EU funds in sight, Hungary paid a higher premium to inflation-linked retail bonds last year. According to the central bank's estimates, it was nearly 18 percent last year.
High interest payments are a burden on the government. However, Hungarian citizens who bought government bonds will benefit from them, which will support the recovery of domestic consumption after the recession in 2023, Economy Minister Morton Nagy wrote in an article on the index news website on Wednesday.
