“We will allow households to evaluate savings from one thousand crowns to three million crowns through the popular Bonds of the Republic with a premium coupon for holding for six years,” said Novinkám, candidate for finance minister Alena Schillerová (ANO), who already held the same post in the previous government of her party leader Andrej Babiš.
It is still too early to estimate how much the bonds will bring to the holders. The amount of interest and the possible inclusion of other types of bonds will be based on the current market situation, Schillerová declared.
The state debt currently amounts to 3.5 trillion crowns, households hold 3.3 percent of it. The majority are owned by banks, foreign investors, insurance companies or investment funds. If it were possible to raise the share of households to five percent, as the emerging government plans, it would correspond to 175 billion crowns.
“Such a level represents a healthy diversified share that strengthens the public’s relationship to state finances without increasing the cost of servicing the debt,” said Schillerová.
Borrowing money from citizens through government bonds is common in the world. Recently, for example, Slovakia, which is solving a rapidly growing hole in state finances, has started to do so. Bonds for citizens are also popular in Italy.
In the Czech Republic, Minister of Finance Miroslav Kalousek (TOP 09) came with them in 2011, followed seven years later by Schillerová. “We will set the conditions so that they are advantageous for the state,” she said now. She added that the bonds are supposed to strengthen the financial self-sufficiency of the state, the stability of financing and keep the interest on the debt at home.
“For the state, the main criterion should be financing costs. In general, I would not expect that the yields of savings bonds for citizens should be fundamentally different on average from those issued on the financial markets,” said analyst Jaromír Gec from Komerční banka. Currently, the yield on koruna state bonds is 3.6 percent for two-year maturity, four percent for five-year and 4.5 percent for ten-year.
Zbyněk Stanjura (ODS) stopped issuing Republika bonds, which were put into circulation, after he took over as head of the Ministry of Finance in January 2022. Due to rapidly rising consumer prices, the then most popular anti-inflation bonds became a significant burden on the budget. Between 2018 and 2022, the state borrowed a total of 80 billion from people.
“We want part of the debt costs to go directly to Czech households again,” said Schillerová. Analyst Gec believes that savings bonds can represent a welcome alternative for a more conservative part of the population. “Compared to other instruments, government bonds are also advantageous when their income is not subject to withholding tax,” he added.
