New Borrowing Is Inevitable without Govt Surplus - Chair of Parliamentary Budget Committee

Menda Stoyanova, Chair of the parliamentary budget committee, has suggested that there is no cause for concern over the medium-term bond program by 2017 worth BGN 16 B, stressing that it is a financing program using external debt.

On February 10, Bulgaria's government informed that it had chosen four banks to manage its EUR 8 B bond program over the next three years - Citigroup Global Markets Ltd., HSBC Plc., Societe Generale, Unicredit Bank AG. Under a bill drafted by the government, the maximum maturity of the bonds was set at up to 30 years and the maximum interest rate was fixed at up to 10%.

In a Monday interview for the 24 Hours daily, Stoyanova explains that the scheme provides the government with the opportunity to state the amount of debt that it will take over the next three years, as well as the terms of the deals and the purposes for which the money will be used.

She condemns the manipulation of such sensitive topics for political gains, insisting that the topic requires discussion on an expert level.

Stoyanova argues that the deficit financing program is not compiled on the basis of expectations but expert forecasts that are used to make annual budgets.

She attributes the inexpert talk on the topic to the fact that the instrument is used in Bulgaria for the first time, despite the fact that it is commonly used in other European countries.

Stoyanova specifies that the ratification package includes three documents, among which a Dealer Agreement with the four banks (Citigroup Global Markets Limited, HSBC Bank Plc, Societe Generale and UniCredit Bank AG), an Agency Agreement with the four banks, and an act of commitment, stressing that the "act" is not a "contract" but a document telling future creditors, banks and...