The Bulgarian government approved Wednesday a mechanism of paying some BGN 500 M to private companies through the Bulgarian Development Bank.

The money is part of the some BGN 1.5 B owed by the government for executed public procurement orders, whose payment the Finance Ministry delayed at the end of 2009 in order to keep the budget deficit below 1%.

Under the new mechanism, the Bulgarian Development Bank, which is 100% state-owned, will be in charge of repaying part of the state debt to private firms. The arrangement applies to public procurement services provided before December 31, 2009, which were not paid for until March 31, 2010.

The Bulgarian Development Bank is going to use BGN 100 M from its own reserves in order to start the payment procedure, and the state is expected to transfer to it additional BGN 400 M.

The payment of government debt owned to private companies was presented last week as one of the 60 anti-crisis measures agreed upon by the Bulgarian state, the trade unions, and the major business organizations after weeks of meetings of the Council for Tripartite Cooperation.

Last week the government announced that the Bulgarian Development Bank was going to issue bonds worth about BGN 550-600 M in order to generate money that will be used to pay back state dues to private entities.

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