After Hungary’s Premier Viktor Orban took 3 trillion forint from private retirement funds to fill the massive deficit, many citizens are seeking investment funds abroad. There is a general feeling of discontent amongst Hungarians that the government won’t secure their investment fund savings.
Hungary was one of the first nations in the former soviet block that opened up its financial industry to investments from foreigners. As trust of the government’s treatment of investment fund savings erodes, so does the confidence of investors – and at a time when Hungary needs most to bolster this confidence.
The criticism of Premier Orban doesn’t just stop with the way he dealt with retirement investment fund savings. The European Union also criticized a law he passed which restricts the media and many have questioned his high taxes on banks which is the current highest in Europe. Andras Jenei, who analyzes politics with the Center for Fair Political Analysis in Budapest, said “Concern over the security of savings is justifiable for higher income earners.”
These irregular methods for lessening the budget have compromised the nation’s budgetary stability and the independence of the banking system. However, the yields on the Hungarian benchmark 2016 investment fund bond rose to 8.36% after the controversial retirement fund decision. It has dropped since then to 7.21%.
While politicians are citing the need to send private investment fund moneys to the state, increasingly more money is headed out of the country. The Raiffeisen Bank in the small border village of Andau in Austria said that they have had a wave of many new clients. Many Austrian banks are now even accepting forint and it seems like this trend in investment fund savings outside of Hungary is going to increase with the discontent for the nation’s economical strategy.