21.12.2013

The Government's strategy not to restrict economic growth through the treasury has already registered positive results - for the third quarter seasonally not adjusted data show that growth y.o.y is 1.5%, Minister of Finance Petar Chobanov stated in an interview for Banker newspaper. He added that the positive effect was not unexpected because easing the loop around the businesses ensured their liquidity and had favourable consequences. The Minister believes that the most important achievement is restoring the usual practices for VAT refund. Chobanov specified: "We do not expect the economy to jump highly next year, but that simply with the normalization of the business environment investments and consumption will grow". Chobanov particularized also the legislative changes made with the aim to improve revenue collection such as the improvements to the single account for payments to the budget, the reverse VAT charge mechanism and the Fiscal Control Directorate with the National Revenue Agency.

According to the Finance Minister not only demand would be a driver for GDP growth. "The Government plans to implement also an active policy in respect of supply and for this particular reason it has adopted a public investment programme focused mainly on stimulating the businesses and the regions". It is among the most important policies, specified by him, to be financed by the 2014 budget. The Minister puts a limit of BGN 80 million for projects of ministries, while the remaining funds under the programme will be for municipalities. "According to me we will begin to approve project proposals as of the end of February 2014", Petar Chobanov firmly stated. According to him the increased subsidies for municipalities and the tax reliefs introduced in the legislation were a good basis for better dialogue with the municipalities.

"Payments on EU projects have never been stopped although we have been aware that the EC will not be able to reimburse the payments made by the end of the year. Such policy of maintaining the solvency of the businesses requires additional expenditure. We will meet the deficit target set in the revised budget", Minister Chobanov was adamant. He emphasizes that the companies have completed the projects, they have incurred expenses and it is only natural for them to receive their money.

The Minister of Finance also commented on the reason for the lower amount of the loan taken through the Schuldschein credit instrument: "Orders with technical characteristics that did not completely comply with the mandate given to us by the National Assembly were made. Their acceptance would have complicated a lot the procedure for taking the loan". The other reason is that some investors have proposed floating interest rates that are not favourable for us because international interest rate levels at the moment are historically low, he added. In Chobanov's opinion the loan agreement is very favourable in terms of debt maturity and interest rates and in addition we have entered successfully an unknown to us market segment of external borrowing.

As to the loan structure in 2014 the Minister said that a wide range of instruments were considered both in terms of maturity and types, and with external loans an assessment was also made of the currency types. "In general, our policy is to optimize government debt towards a situation where the budget would always have available the money required for the payments in order to avoid the situation at the beginning of the year", Minister of Finance Petar Chobanov stated.