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BORYANA PENCHEVA: GREECE WILL NOT GO BANKRUPT

BORYANA PENCHEVA: GREECE WILL NOT GO BANKRUPT
Снимка: BORYANA PENCHEVA: GREECE WILL NOT GO BANKRUPT

31.10.2011

At the beginning of November Greece is expected to receive the sixth tranche of the program agreed with IMF and EU amounting to EUR 8 billion, so there is a temporary solution for the country. The long-term program for Greece will also be prepared by the end of the year so we believe that it will not declare bankruptcy. Deputy Minister of Finance Boryana Pencheva projected the above in an interview for the "Sabota 150" program on BNR. According to her there was already a model for overcoming the debt crisis which was not temporary, but a long-term and growth-oriented one.

She described as "unambiguously positive" the first reaction on international financial markets after the decisions of the European Council and the euroarea countries of 26 October, as a political agreement was reached on several key elements. Firstly, to seek a sustainable solution for Greece aimed at reducing the proportion of the debt-to-GDP ratio of Greece to 120% in 2020. For this purpose not only the states but the private sector, too, must get involved. 50% is the proposed nominal reduction of the Greek contingent debt possessed by private banks. That is why a new multi-annual program of IMF and EU will be introduced, which envisages financing of up to EUR 100 billion. "The program will be accompanied by great efforts on behalf of the Greek people and government to achieve financial and fiscal stability," pointed out Boryana Pencheva.

The resource of the temporary European Financial Stability Facility is expected to be increased to around EUR 1 trillion. Interaction will also be sought with other countries such as Brazil, Russia, India and China, in order the latter to be able to participate in the co-financing of financial support operations of the European support mechanisms. A major objective is also to improve banks' access to financing using a coordinated approach within the EU by means of increasing temporarily (by the middle of next year) banks' Tier 1 capital to 9%, clarified also the Deputy Finance Minister. Pencheva said that all those measures were accompanied by a firm commitment of the states for structural reforms and financial stability. The specific negotiations with private banks were forthcoming but in her opinion the current model provided grounds for optimism.

Deputy Minister Boryana Pencheva also assured that Bulgarian banks were stable. In Bulgaria, there are constant requirements for high capital adequacy of banks and now it is over 15%. This also applies to the branches of Greek banks in our country. Banks in Bulgaria have both capital and sufficient liquidity, as well as deposits' growth lately. Boryana Pencheva was categorical that while creating reserves banks had to also ensure their ability to extend loans to the real sector in order to avoid any prerequisites for crediting and growth delays.

The Deputy Finance Minister reiterated the firm position of the Bulgarian government against the idea of reducing the share of national co-financing under EU Funds for Member States that apply financial support mechanisms. Such a decision is discriminatory and will discourage the states that comply with the requirements of the Stability and Growth Pact like Bulgaria.  

 

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