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investment hit.  The republic's anti-inflationary bonds are already achieving more than 6 percent

investment hit. The republic’s anti-inflationary bonds are already achieving more than 6 percent

In the past three years, citizens have bought more than 38 billion kroner of state bonds. At the same time, most of them are anti-inflationary, that is, their return depends on the growth of consumer prices, which is monitored by the Statistical Office.

The effects of high inflation, and therefore above-average returns, will be seen by people who bought bonds at the turn of the year. According to the latest data from the Ministry of Finance, a solid return of 6.3 percent will be added to their account by the end of the year. At the end of October, it was “only” 3.9 percent.

However, in principle, it covers only the devaluation of money, for which people buy less goods than they did a year ago due to higher prices. The increase was mainly in food and energy and will continue in the coming months.

The Ministry of Finance expects inflation by about 5 percent by the end of next year.

Jacob Seidler, chief economist at CBA

“Currently, we expect inflation to peak in the first quarter of 2022 and then to slow year-on-year. However, for example, the latest Ministry of Finance forecasts expect inflation to reach around 5 percent at the end of next year, despite From the fact that the year-over-year comparison will be affected by a higher baseline effect due to rapid pricing.Growth at the end of this year’s Jacob Seidler Association.

The Finance Ministry has not yet wanted to comment on the preliminary results, however, data from the previous release – also due to higher inflation this year – was record. According to the ministry, in the last round from June to September this year, people bought state bonds for 5.5 billion kroner. This is the best result since Bond of the Republic launched in December 2018.

Debt over $2 trillion

“The record interest of thousands of Czechs on government bonds confirms that republic bonds provide not only a safe protection for savings against inflation, but also a relatively attractive return thanks to the exemption of the proceeds from the 15 percent tax. As in previous periods, the bond that was very popular with citizens was the anti-inflation bond Which today provides a smart way to protect its savings at a time of temporary high inflation, said Finance Minister Alina Shelerova in October.

Citizens have subscribed to the Republic’s bond issues of more than 38.5 billion kroner in the past twelve subscription periods. However, it still represents a very small part of the public debt – only 1.7 percent.

Due to the high interest, this share will increase slightly. “The Ministry of Finance expects that the share of expenditures related to government bonds allocated to citizens in the total expenditures of the government debt section will be 2.1 percent this year, and it can be expected to increase in 2022,” ministry spokesman Zdenek Vojs said.

The Czech state’s debt is currently 2.3 trillion crowns, which is 39.1 percent of GDP.