24.07.2014

At present, the country does not need the International Monetary Fund and the currency board arrangement is not in danger as long as we do not threaten it by idle talk. This is what the retired Minister of Finance Petar Chobanov says in an interview for bTV and adds that our country disposes of sufficient currency reserves slightly below BGN 30 billion. Minister Chobanov clarifies that in the next two months it is not obligatory to borrow new loans as the fiscal reserve is around BGN 9 billion. If new debt is yet to be issued, the budget has a current limit of BGN 800 million which may go beyond this year and in addition to that short-term government bonds maturing this year may be offered. "I do not know how feasible the idea of a caretaker government's borrowing from the IMF is as they do not normally like working with caretaker governments but with regular ones as the latter are supported by an operational parliament that may take care of the implementation of the programmes set for the relevant government", Mr. Chobanov further explains. He also says that there is a need for an effective parliament in order to ratify the contracts for assuming new debt.

According to the Minister, there is a risk of underperformance of BGN 500 million of budget revenue but "it is possible to be even larger depending on the strategy to be taken up from now on". If we refer to the practice we succeeded, such as VAT delay, overdue payments to businesses, some reservations for payments to businesses after some concessions, this means that revenue underperformance will be greater, which will slow down economic development", says Petar Chobanov. He adds that the political crisis and and the pre-term elections may even cost half of the possible economic growth.

The Minister of Finance also says that the budget may not be kept liable for absolutely everything and gives an example with BDZ debts and other state-owned enterprises. "They may not be paid all at once and it is a question of stage-wise negotiations and payments but these debts are not direct liability and they should not be added automatically to the fisc and to the budget deficit". According to Minister Chobanov, the Government continues being of the opinion that the national budget and the NHIF budget do not need a review. "But as in the next few months we are not going to have a government supported by an effectively working parliament and as we do not want to cause any uncertainty in the public, the Ministry of Finance and the Government have agreed that new debt could be issued to strengthen the fiscal buffers", he adds. According to Minister Chobanov, "once we cross the limit of 3% of budget deficit, returning would be very difficult. That is why we should not go beyond this limit".