Who do you owe to?

Due to the irresponsible, crazy political and economic policies of the Hungarian Socialist-Liberal (MSZP-SZDSZ) coalition, Hungary’s public debt ratio quickly rose from around 50% to around 80% between the disasterous time period of 2002-2010.  When the global economic-financial crisis hit, Hungary de fact defaulted in 2008 and only the huge IMF loan (25 bn Euros) saved the country. (The Orbán government paid it  all back last year, one year earlier before the last instalment was due.)

Government debt ratio compared to  the GDPEven though the 80 percent debt ratio is now not uncommon in Europe (in 2012, Belgium had 99.8%,  France had 90.2%, Germany had 81%, Spain had 86%, the UK had 88.7%)  this high debt ratio is still a problem for Hungary. And that’s because the debtors have been mainly foreign funds with little or no commitment to Hungary as a country.
On the other hand Japan has a 220 percent debt-to-GDP ratio and that’s manageable for them…  The reason is because Japan, and also the previously mentioned countries, owe their public debt mostly to their own people and companies.

So this graph, which shows the Hungarian Treasury bonds owned  by residents, is very promising indeed. Hungarians trust the country with their money at last.

Hungarian T-Bills owned by residents

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