22.12.2009

"We wish to be as transparent a possible regarding the financial mechanisms to be used, which is the reason for holding this discussion on the possible forms of financing in 2010", said Deputy Minister of Finance Ana Mihaylova, who opened the round table wherein leading Bulgarian macroeconomists and bankers took part. The discussion was held based on an analysis of the possible financial instruments. Georgi Angelov, Emil Harsev, Kalin Hristov, Momchil Aleksandrov, Petar Andronov and Vladimir Karolev took part in the discussion.

The participants united around the opinion that the peak of the financial and economic crisis was passing away globally, but that the economies of individual countries were rather inert and part of the negative effects manifested with delay. Bulgaria's economy would not be an exception and therefore the necessary preventive measures should be taken. "Now the time is very favourable for us because of certain preconditions that we have created due to our efforts in the last months" Deputy Minister Mihaylova stated. She specified that Bulgaria was among the European economies with the best indicators in respect of fiscal framework and public debt. The international financial community highly appreciates the results achieved by the Government. And this circumstance is determining the price of the financial resources that our country could use, being highly conservative and prudent, in support of the balance of payments, to ensure flexibility in an eventual unfavourable environment, Ms Ana Mihaylova added.

From the options, subject of the discussion, the participants definitely rejected the possibility of using IMF resources. The financial experts considered also the possibility of support for the reforms from IFIs such as the World Bank, IBRD, EIB, etc. The privatisation on the stock exchange of state owned companies, mainly from the energy sector, was also a well accepted idea. The eventual positive and negative effects of a Eurobond issue were also discussed at the meeting. One of the positive effects that united the participants in the discussion was that in that way a more fair and realistic benchmark of Bulgarian sovereign debt on the international markets would be created which would influence the price of financing for other economic operators in the country. That would bring back to the country the pension funds' resources. The financiers united also around the possibility to focus the issuance policy at meeting domestic demand of government securities by issues in Euro.

Government debt situation

As of the end of October the government debt amounted to EUR 4756,6 million of which EUR 1485,5 million domestic government debt and EUR 3271,2 million external government debt, i.e. the share of external government debt is greater - 68.8%.

In the government debt structure by creditor the greatest is the share of debt under bonds issued on international capital markets- 32.6%, followed by government securities issued on domestic market - 31.2%, debt to the World Bank - 16.8% and government investment loans - 15.9%.

The currency and interest profile of the government debt is dominated by debt in Euro and BGN - 79.4% and fixed interest coupons - 75.0%.

As of the moment Bulgaria has in circulation two issues of Global Bonds  - one denominated in Euro with 7.5% coupon and maturity January 2013 and another denominated in US$ with 8.25% coupon and maturity January 2015.