Finance Minister Simeon Djankov: Transactions at the domestic and Eurobond markets will cover the state debt

The Bulgarian GERB (Citizens for European Development of Bulgaria) government will continue to privatise state-owned shares this year. It is also considering the drafting of a mixed strategy for issuing debt bonds at the domestic market and resorting to the Eurobond market, stated the Finance Minister Simeon Djankov in an interview for Reuters. According to him, the government's objective is to sell a share of 10 - 25% of the state Bulgarian Energy Holding (BEH) by the end of the year through auctioning at a foreign stock exchange, which could bring a profit of several million euros. The Eurobonds, in their turn, can have a seven-year maturity and a value of €500 mln - €1 bn, specified the Deputy Prime Minister. The domestic market became attractive this week after the sale of 7-year government securities yielding 3.9%, indicated the news agency, quoting the Finance Minister. According to him, the pension funds and local banks have excess liquidity and are willing to invest in government securities. The news agency reminded that our country had the lowest debt compared to the GDP ratio of a mere 16%, but it will purchase Eurobonds worth €816 mln, maturing in January next year.

It comes down to the replacement of part of the Brady bonds of the Bulgarian external debt for global bonds during the former government of the NMSP (National Movement for Stability and Prosperity). Some experts claim that the transaction was concluded in the period when the dollar exchange rate was too high compared to the euro, as a result of which Bulgaria suffered financial losses. The former Finance Minister Muravey Radev estimated that the incurred losses amounted to about $ 2 bn. Djankov himself pointed out that it came down to some BGN 1 bn. Besides, the transaction failed to have a positive impact on the credit rating of our country.

Other options for providing funds refer to the investment of 60% of the state budget reserves from the Silver Fund into Bulgarian or foreign government securities. Up to 20% of the budget reserves should be deposited with private banks, up to 20% should be invested in foreign government securities and up to 10% - in shares of public companies traded on the Stock Exchange. However, a few days ago the Chairman of the Financial Supervision Commission, Stoyan Mavrodiev opposed this idea. Ultimately, the strategy of the GERB government will include a combination of the different options.

GERB is expected to improve its budget deficit target of 1.3% of GDP this year, which is important for avoiding the pressure on the Monetary Council (Currency Board), was also explicit Djankov before Reuters. According to him, the forecast for economic growth of 2.8% seems feasible.

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