Domestic Financing of Hungarian Government Debt

The financing of Hungarian government debt comes from two main sources: domestic and foreign. In domestic financing, the state issues Hungarian forint-denominated securities to domestic investors.

The most important instruments of domestic financing are the following:

• Government Debt Notes (ÁKK): Short-term (less than 1 year) securities issued in the form of discount treasury bills (DKJ) and interest-bearing treasury bills (KKJ).
• Hungarian Government Securities (MÁP): Medium- and long-term (1-10 years) securities with fixed interest rates.
• Investment Funds: Investment funds investing in government securities issued for private investors.

2020:

• The central bank base rate was 0.9% at the beginning of 2020.
• The yield on the 10-year Hungarian government bond was around 1.5% at the beginning of 2020.
• Due to the coronavirus pandemic, the central bank base rate was reduced to 0.1% in March 2020.
• The yield on the 10-year Hungarian government bond fell below 0.5% by autumn 2020.

2021:

• The central bank base rate remained at 0.1% at the beginning of 2021.
• The yield on the 10-year Hungarian government bond hovered around 0.5% at the beginning of 2021.
• Rising inflation led to an interest rate hike cycle in the second half of 2021.
• The central bank base rate rose to 1.5% by the end of 2021.
• The yield on the 10-year Hungarian government bond rose above 2.5% by the end of 2021.

2022:

• The central bank base rate continued to rise in 2022, reaching 13% by the end of the year.
• The yield on the 10-year Hungarian government bond rose above 7% by the end of 2022.

2023:

• The central bank base rate remained at 13% at the beginning of 2023.
• The yield on the 10-year Hungarian government bond hovered around 7% at the beginning of 2023.
• Stabilizing inflation and slowing economic growth could lead to an interest rate cut cycle in the second half of 2023.

2024:

• The central bank base rate is expected to be around 10% in 2024.
• The yield on the 10-year Hungarian government bond is expected to be around 5-6% in 2024.

Annual Yields of Discount Treasury Bills in Hungary

Discount Treasury Bills (DKJ) are short-term (less than 1 year) government securities issued in Hungarian forints. DKJs are issued at par value and investors receive the interest at the end of the maturity period. DKJs are considered risk-free investments as the government guarantees the repayment of principal and interest.

2020:

• Due to the COVID-19 pandemic, the central bank base rate decreased significantly, which also dragged down the yields of DKJs.
• The yield on the 3-month DKJ fell below 0.1%.
• The 6-month yield hovered around 0.2%.
• The 9-month yield was around 0.3%.
• The 12-month yield was around 0.4%.

2021:

• The economy gradually recovered, and the central bank base rate started to rise. Consequently, the yields of DKJs also started to rise.
• The yield on the 3-month DKJ rose above 0.5%.
• The 6-month yield hovered around 0.7%.
• The 9-month yield was around 0.8%.
• The 12-month yield was around 0.9%.

2022:

• The outbreak of the war in Ukraine shook the global economy again, and the central bank base rate started to rise. The yields of DKJs also continued to rise.
• The yield on the 3-month DKJ rose above 1.5%.
• The 6-month yield hovered around 2%.
• The 9-month yield was around 2.5%.
• The 12-month yield was around 3%.

2023:

• The central bank base rate continued to rise, and the yields of DKJs also reached their peak.
• The yield on the 3-month DKJ rose above 3%.
• The 6-month yield hovered around 4%.
• The 9-month yield was around 5%.
• The 12-month yield was around 6%.

2024: