site.btaParliament Debates New External Debt of EUR 8 Bln

Parliament Debates
New External Debt of
EUR 8 Bln


Sofia, February 18 (BTA) - Parliament is debating Wednesday the
ratification of a Dealer Agreement, an Agency Agreement and a
Deed of Covenant under which Bulgaria incurs new external debt
of a maximum nominal amount of 8 billion euro in the next three
years. The Dealer Agreement has been signed between Bulgaria on
the one hand, and Citigroup Global Markets Limited, HSBC Bank
Plc, Societe Generale and UniCredit Bank AG on the other hand.

Prime Minister Boyko Borissov implied that he might tender the
government's resignation unless Parliament approved the new
government debt of 16 billion leva on Wednesday. Speaking before
the regular cabinet meeting, he said he would allow other
parties to try to find 6 billion leva by the year's end.

Finance Ministry data show that of the 16 billion leva, a new
external debt of 6.9 billion leva has been planned for 2015, and
Parliament has already approved it by adopting the National
Budget Act.

The agreements signed on February 6 create a global medium-term
note (GMTN) programme for bond issues in the international
markets worth 8 billion euro at the most. The total volume for
each year will be limited by the amount of government debt
specified in the National Budget Act.

The maximum maturity of the bonds is up to 30 years, and the
maximum interest rate is up to 10 per cent. This considerably
exceeds the current interest on Bulgarian bonds so as not to
send signals to the market about the interest rates on the new
bonds.

The funds received in the implementation of the GMTN programme
will be of considerable importance for ensuring the required
financial resources in the period 2015-2017 for refinancing of
government debt, for covering the expected budget deficits and
for ensuring the fiscal reserve, said the Council of Ministers,
which drafted the Bill of Ratification.

The Budget Committee was divided over the Bill last week, with
nine members voting in favour and four against, with five
abstentions. The MPs of the BSP-Left Bulgaria voted against, and
the Patriotic Front and the Movement for Rights and Freedoms
abstained.

The BSP-Left Bulgaria asked that the debate should not start
without Prime Minister Boyko Borissov. Parliament Chairperson
Tsetska Tsacheva said Borissov had been informed. A motion to
hold off the debate until his arrival was rejected.

Dimiter Bairaktarov (Patriotic Front) said Finance Minister
Vladislav Goranov had admitted that communication between his
Ministry and the parties making up the majority in Parliament
with GERB had been disrupted. The MP was speaking to journalists
after a meeting of the Patriotic Front, the Reformist Bloc and
Goranov. Slavcho Atanassov (Patriotic Front) said that this debt
"could not be smuggled in quietly", and that persuading his
parliamentary group about it would take more than 15 minutes.

After a meeting between the MPs of the ABV party and Goranov,
ABV leader Georgi Purvanov said his party still opposed the
ratification of the agreements. He indicated that he was not
concerned about the Prime Minister's possible resignation. He
opposed decision making under pressure, and insisted on a debate
and persuasion.

Reformist Bloc Co-floor Leader Radan Kanev said communication
between the Finance Ministry and the majority in Parliament was
delayed, which caused tension.

The Bulgarian Socialist Party (BSP) and the nationalist Ataka
staged a protest rally against the planned external debt in the
park near the Parliament building. The protest was backed by
NGOs.

Ataka leader Volen Siderov said: "They want to impose a debt
which the future generations will have to repay. Mark my words,
because the power-holders will deny this, the debt will be spent
for military purposes." Siderov also said Washington made
Bulgaria's "colonial rulers take out a loan to buy its old
weapons". He argued that GERB was against plans of Plamen
Oresharski's cabinet to take a loan of one billion leva, while
now GERB's government was planning a loan of 16 billion leva.

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