The interest rate of the new one-year state bonds has been announced at 3.30% – significantly higher than returns offered on savings accounts by banks in Belgium.
The new one-year state bonds will be issued on 4 September, though Belgian citizens can apply for them between 24 August and 31 August. Making the announcement on Tuesday, Federal Finance Minister Vincent Van Peteghem explained that savers will receive an effective interest of 2.81% after paying tax on the returns.
Earlier this summer, Van Peteghem said he intended this type of bond to compete with savings accounts as a means of pressuring banks to raise their interest rates: "Families and individuals deserve a market-based return on their savings. That is why I continue to call on banks to do the right thing and increase savings rates within what is possible in the current financial and economic context."
He reiterated the criticism that banks currently offer savers too low an interest rate compared to what banks themselves collect. He explained: "That is why we decided to issue a state note very similar to the classic savings account with a unique one-year maturity."
Many banks have also been accused of not properly informing their customers about the existence of superior rates on other savings accounts they offer.
The favourable net interest rate of 2.81% that state bondholders will enjoy is thanks in part to the fact that the government has reduced the withholding tax rate on these particular bonds from 30 to 15%. This results in a higher net return compared to the best-performing savings accounts currently available.
Increased interest
The latest issue of state bonds is the third released this year but has the shortest maturity. After a three-year hiatus during the pandemic, Belgium once again issued state bonds last year with an interest rate of 2.4% for the 10-year bonds; this raised €108 million. This March, the Belgian treasury hiked the interest rate up to 2.6% for 3-year notes and 3% for 10-year notes.
Private savers' interest in this investment also increased every time. According to Van Peteghem: €108.7 million was raised in 2022 while €389.8 million has already been invested in state bonds this year.
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Subscribing to the government voucher is possible from €100 and can be done through the Federal Debt Agency website from Thursday 24 August to 31 August or through a participating banking institution from Thursday 24 August to 1 September. At the end of the term, investors receive their initial deposit plus the set interest rate.
Those who subscribe through the government enjoy free management, but several banks will also not charge management fees, according to Van Peteghem. The participating banks are ABN AMRO, Belfius, Beobank, BNP Paribas Fortis, bpost bank, Crelan, Degroof Petercam, Deutsche Bank, ING, KBC, Keytrade Bank, Leleux and vdk bank.
