Prime Minister Viktor Orban called on Hungarians to put their savings in government bonds rather than bank deposits, appealing to their patriotism while pledging to “crush” inflation.

Orban’s cabinet has tightened limits on fund managers’ ability to invest in assets other than government debt and it’s introducing a new 13% levy on interest gains from bank savings. In his weekly radio address aired on Friday, Orban referenced the proximity of Russia’s invasion in Ukraine in another appeal for Hungarians to lend their money to the Treasury.

“In times of war, you can support your country by keeping your savings in government bonds and bills,” Orban said.

The forint has been weakening this week after touching a 14-month high on Monday, dropping as much as 1.5% in a single session on Thursday. The yield on Hungary’s 10-year bonds has come down to 7.2% from peaks above 10% last year. With the central bank starting to cut key interest rates, Orban is stepping up calls on domestic savers to plug financing gaps.

Inflation Battle

The new levy on savings came as part of an array of tax hikes to bring Hungary’s budget deficit below 3% of gross domestic product in 2024. Hungary had a record shortfall in the first five months of 2023.

The nation’s economic outlook is marred by the highest inflation rate in the European Union, which Orban has blamed on the fallout from the war in Ukraine. The premier, Russia’s closest ally in the EU, reaffirmed his commitment to bring inflation below 10% by the end of the year and to introduce additional measures if needed.

“Inflation won’t come down by itself,” he said. “We must pull it down, crush it and pummel it.”

The pace of price increases slowed for a fourth month but remained above an annual 20% in May. Orban’s influential economy minister suggested earlier this week that the central bank should consider raising its 3% inflation target as it’s getting out of reach.