Bulgaria Central Bank: 'Secret' Fiscal Reserve Deal Was Precaution

Finance | October 30, 2009, Friday

According to the BNB, its Governor Iskrov (left) and former Finance Minister Oresharski (right) made an agreement as a bailout precaution. Photo by BGNES

The "secret" deal for the depositing of part of Bulgaria's fiscal reserve made in 2008 between the Bulgarian National Bank and the Finance Ministry was a precaution to secure stability of the banking system.

This was announced Friday evening in a statement of the Bulgarian National Bank regarding the claims of Finance Minister Simeon Djankov of a secret deal about the use of the fiscal reserve made by his predecessor Plamen Oresharski and the BNB Governor Ivan Iskrov.

“The agreement between the government and the BNB from 2008 mentioned by the Finance Minister aims at specifying the conditions under which funds from the fiscal reserve could be used to provide for the stability of the financial system. This agreement is a precaution, and it has not had to be used because of the normal functioning of the banking system, and no funds have been provided under it,” the Central Bank statement reads.

“The 17 commercial banks mentioned by Minister Djankov are servicing state budget funds based on agreements with the Ministry of Finance since the Central Bank performs no commercial activities in order to service financial transactions,” the BNB declared.

According to the Central Bank, the contractual relations with the commercial banks have been 100% guaranteed with state bonds and cash deposits.