Hungarian government bond failed as an investment
The government’s initiative to attract additional funds into government bonds faced resistance as a significant portion of Hungarians turned to alternative tax-free investment avenues. While there’s a growing trend towards saving for 3 to 5 years, there’s a noticeable decline in retirement savings.
Unpopular government bond
Last year witnessed a surge in long-term investment accounts, potentially leading to zero tax obligations on returns. By the end of 2023, approximately 2.1 million customers held securities accounts with various investment service providers, while the number of customers with the Hungarian State Treasury had reached 800,000. This trend, as reported by economx.hu, indicates that despite efforts by the Orbán Government to promote investment in government bonds through measures such as the introduction of the social contribution tax and compelling banks to direct investors to the Treasury, many individuals opted for alternative tax-free investments, reflecting hesitancy towards government bonds.
Hungarians’ investment preferences
In 2023, the number of long-term investment accounts surged by over 40,000, contrasting with an 860 decrease in pension savings accounts. Data from the National Bank of Hungary suggests a preference among Hungarians for medium-term investments over long-term planning. These investment avenues offer tax advantages and have gained traction since the social contribution tax’s introduction in July 2022, which now includes a 13% liability on interest and other investment income due to a 15% interest tax. This tax increase has raised the tax payable from HUF 15,000 (EUR 38,5) to HUF 28,000 (EUR 72) for an earned income of HUF 100,000 (EUR 256). Nevertheless, both permanent investment accounts and retirement savings accounts remain exempt. The data reveals a significant increase in the number of permanent investment accounts particularly notable in the last quarter of the year.
Latest figures
While the first quarter saw only 4,598 new accounts, subsequent quarters witnessed increases exceeding 10,000 and 14,657, respectively. The final quarter set a record not only in terms of account numbers but also in the volume of securities holdings, which surged by HUF 358.4 billion (EUR 9,212,309,733) compared to the previous quarter’s end. Despite an initial decline at the beginning of the year, the unique construction of these accounts mitigates exceptions. Currently, there are a total of 299,598 permanent investment accounts, collectively valued at HUF 4,351 billion (EUR 11,183,805,705), alongside 90,620 pension savings accounts, amounting to HUF 486.5 billion (EUR 12,504,990,751). The average value of permanent investment accounts stands at approximately HUF 14.5 million (EUR 37,000), while Hungarians hold special pension accounts with an average value of about HUF 5.4 million (EUR 13,800).
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Is this NOT another example, that in the Financial & Economic – decisions, the DIRECTION we have been sent, designed and “Signed Off” on by the Prime Minister – Victor Mihaly Orban and his Finance Minister – Mihaly Varga – have again got it WRONG ?
When is the Orban Government going to give the money it stole from thousands of pension savings accounts of Hungarians years ago? Why would you put your money in any savings account in Orbanistan when you have no idea whether the government will take it? Smart Hungarians have been taking their money out of the country where Orban can’t touch it.
Looking at the outside in, the English paper articles published, this one in particular, the name Orban and the his Government, the country Hungary he is the Prime Minister, it ALL reads that Orban is under under pressure, that support for him in Hungary is in decline.
Appears Hungary’s economy is wavering, and nothing to suggest it’s going to recovery in the foreseeable future.
Big questions appears the Hungarians need to ask themselves what’s there future under Victor Orban who appears to be politically doing away with democracy and running Hungary like a dictator.
Hungary looks not a fun country to be in.
Could they become a Communist country again ?
For lack of a credible, united political alternative, Mr. Orbán and Fidesz´ position is secure.
Our Politicians may be underperforming, however due to limited domestic media attention in a tilted media landscape as well as a world that appears disinterested in data and facts, they are not being held to account. Do not expect anything to change, anytime soon!
https://commission.europa.eu/document/download/d69f242b-bd69-4e15-976f-870470b72b55_en?filename=40_1_52623_coun_chap_hungary_en.pdf
Media overview in pages 27-30 if you are interested
It is idiotic to call Hungary a dictatorship when the quality of life is incomparably better in Hungary than in the US and many EU countries. Your favourite food must be boogers if you think that the US and other EU countries are any less corrupt and cleptomaniac.