Portfolio was the first to report on Monday evening that, following the government’s recent decision, from February 13, a maximum of HUF 1.2 million can be paid into each Start account in a calendar year.
Briefly given in this regard information the Minister of Finance, emphasizing that the exceptionally high yield of the baby bond attracted the attention of abusers in the recent period, who invested exceptionally large sums in baby bonds in a short period of time.
“The government’s position is clear: with the high yield of the baby bond and the accompanying state support, families who save for their children should be supported, not those who abuse the rules. Therefore, the government closes the loophole and maximizes the amount that can be paid into Start accounts at HUF 1.2 million annually “.
The change affects 1% of account holders
– pointed out Mihály Varga, who also reminded that the interest rate on baby bonds is at a record high of 20.6% as of February.
He highlighted: 350,000 children already have baby bond accounts, the amount of which reaches HUF 310 billion. From this it can be easily calculated that
In the course of 1.5 months, the stock of baby bonds increased by HUF 30 billion.
It is not clear who the finance minister meant by abusers in his Facebook post (not in the video) and what fraud techniques they used to purchase the baby bond that can only and exclusively be opened for children. The fact is that more baby bonds were sold this year than usual: at the end of last year, the stock stood at HUF 280 billion, while now it has increased to HUF 310 billion. In other words, the growth rate was HUF 30 billion in 1.5 months. If this pace of purchases had been maintained, the stock of newly purchased baby bonds would have reached HUF 60 billion in the first quarter of this year.
We do not know exactly what kind of fraud was behind the jump and to what extent, but it is also important to draw attention to the fact that the record high interest rate alone (from February to next February, the new series of baby bonds is ticking at 20.6% interest) may have made this form of investment more and more attractive, and this high interest rate may have contributed greatly to the surge in interest in baby bonds. The sudden increase in the stock and the record-high interest rate are unfavorable developments from the point of view of the state coffers, as unexpected additional interest expenses will be incurred in 2025 as a result. It is possible that the real intention of the government was to keep the surge in interest expenses under control.
From the graph below, it is easy to see that the upswing in the purchase of baby bonds started already in the last quarter of last year. After an increase of HUF 10-16 billion in the previous quarters, the stock expansion in the last 3 months of 2023 was HUF 39 billion. This rate of growth has continued to accelerate in recent weeks, as indicated by:
Cover image source: MTI Photo/István Filep