New BGN 16 B Debt 'to Give Bulgaria Stability in Next Three Years' - FinMin

Business » FINANCE | February 15, 2015, Sunday // 16:03
Bulgaria: New BGN 16 B Debt 'to Give Bulgaria Stability in Next Three Years' - FinMin Photo by BGNES

Bulgaria's move to take on new external borrowings will provide for its financial stability in the next three years, Finance Minister Vladislav Goranov has said.

In a Sunday interview for the Bulgarian National Radio, he has opined that, under the conditions of "super liquid markets" the act of piling up new debt could actually be carried out in favourable circumstances.

Earlier this week the government announced it was considering the option of issuing 30-year securities bearing a maximum interest rate of 10 percent, an idea that prompted mixed reaction from both the opposition and some coalition partners.

Goranov, who was appointed from the quota of the main ruling party, conservative GERB, sought on Sunday to disperse fears that Bulgaria was taking on an excessive debt burden.

He added it was "the short-term issuance made over the past years allowed for a huge accumulation of payment within just a few years between 2015 and 2017. Bulgaria has already taken a total BGN 6 B in debt and has to pay it."

The minister believes a serious debate is needed about whether the government should allow itself budget deficits, since "until there is a deficit, we will always have to talk about the debt... This is why I propose that discussions concentrate on whether the budget should have a deficit and spend more than we generate. Debt is a consequence, and not a reason for anything in our economy."

Parliament is yet to ratify Goranov's demand in the coming days. Socialist lawmakers have already warned they will reject the move, which in their words gives the government a freer hand to boost its own expenditure, jeopardizing public finance.

In Goranov's view, there will be no "disastrous" consequences if lawmakers block the motion, but warned such a step might prevent Bulgaria from implementing this year's budget.

He reminded the date of payment for a bridge loan worth nearly BGN 1.5 B used to cover insured deposits of customers at Corporate Commercial Bank (KTB) was upcoming. In his words, the fiscal reserve could afford to pay it off, but this could be followed by a lack of liquidity to finance the ongoing budget deficit, which would force the state into reducing spending.

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Tags: Vladislav Goranov, parliament, Bulgaria, budget, deficit, debt
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