Hungary's Debt Management Agency (ÁKK) believes it would be risky to raise the proportion of short-term government securities, the size of debt which has to be renewed annually should rather be reduced, ÁKK deputy CEO László András Borbély said in response to a reporter's question on Tuesday.
Borbély was asked to comment with regard to a recent State Audit Office suggestion that funds should be diverted from National Bank of Hungary (MNB) two-week bonds – the central bank's main sterilizing instrument – into short-term government papers. Borbély said that reducing the average maturity of government debt would involve significant risk as it would result in a sudden rise in renewal demand.
One criticism against Hungarian management is that the average maturity of debt is short and a large part of the debt is to be refinanced within one year. This maturity structure is reflected in the pricing of both forint and foreign-currency bonds, he noted.