site.btaParliament Ratifies Agreements with Intermediaries on New Foreign Debt

Parliament Ratifies Agreements
with Intermediaries on New
Foreign Debt


Sofia, February 25 (BTA) - Bulgaria's Parliament Wednesday
conclusively ratified three agreements with four intermediary
banks for an up to 8,000 million euro sovereign loan. The
first-reading vote was 161 in favour (GERB, the Reformist Bloc
(RB), ABV, the Movement for Rights and Freedoms (MRF) and the
Bulgarian Democratic Centre (BDC), 50 against (BSP-Left Bulgaria
and Ataka) and 12 abstentions (Patriotic Front (PF)). On second
reading, the bill was supported by 159 MPs, 48 opposed it, and
11 abstained.

Contrary to their earlier statements, ABV, the MRF and the BDC
supported the ratification. They explained that their conditions
were met by the Finance Minister, who made a commitment that at
least 2,000 million leva of the new debt will not be issued.

Under the ratified agreements, signed on February 6, 2015,
Citigroup Global Markets Limited, HSBC Bank Plc, Societe
Generale and UniCredit Bank AG will intermediate in the
implementation of Bulgaria's global medium-term note (GMTN)
programme, under which the maximum nominal amount of the debt
that can be assumed is 8,000 million euro, the maximum maturity
is 30 years, and a maximum interest rate of 10 per cent. The
programme covers a three-year period: 2015, 2016 and 2017. The
purpose is to service debt payments that fall due during that
period and to finance the budget deficit.

FIVE-HOUR DEBATE

Yordan Tsonev MP of the MRF explained that his party was
satisfied that there was a commitment to reforms and 2,000
million less. "Under these conditions - with the debt being
reduced by 2,000 million and the commitment to reforms - we will
support, I will support this ratification," he said.

Earlier in the day, MRF leader Lyutvi Mestan said, addressing
the legislature, that the debate has to be adjourned so that
serious consultations could be held with the opposition parties'
leaders in the presence of experts. "The talks must take place
so as to avoid the dispute on the existing debts that this
country has to service over the next three years," he argued.
Parliament rejected Mestan's motion to adjourn the debate.

BSP-Left Bulgaria objected to proceeding with a second reading
of the bill within Wednesday's plenary sitting, arguing that
they want to enter motions between the two readings. National
Assembly Chair Tsetska Tsacheva dismissed their objection,
explaining that when a treaty is moved for ratification,
Parliament may either approve it or not but may not amend it.

Explaining why she voted against, Maya Manolova MP of BSP-Left
Bulgaria called on President Rosen Plevneliev to veto the
ratification bill. Otherwise, her parliamentary group is
planning to approach the Constitutional Court because of
procedural breaches, Manolova said.

At the start of the plenary sitting, PF Floor Leader Valeri
Simeonov said his parliamentary group had decided not to back
the ratification bill. He called on the ruling coalition to pay
serious attention to enlisting public support and reaching
political consensus on all significant issues for the Bulgarian
people. It emerged from his words that the Patriotic Front does
not oppose the loan itself but what they see as a rushed passage
of the bill ratifying the agreements with the intermediaries.
"It is indisputably necessary to contract a loan for the
repayment of existing debts for the 2008-2014 period and future
payments until 2017," he argued. "The Government's hurry and the
lack of a debate left the impression of something murky that
had to be pushed through in the commotion," Simeonov said,
recalling that this is the reason why his parliamentary group
asked for an adjournment of the vote last year.

The RB confirmed its decision to support the bill. The Bloc's
Co-floor Leader Nayden Zelenogorski said they insist that the
deficits for 2016 and 2017 be reduced substantially and that all
systems be reformed.

Another RB Co-floor Leader, Radan Kanev, said he had voted
against the ratification on first reading because he had serious
doubts that the parliamentary majority was being supplanted.
"Quite a few statements from the GERB quarters made no secret of
the intention to oust from the majority the PF and, probably,
ABV, too, through this vote," Kanev noted. In his words,
financial stability is one aspect of the country's stability,
and the other aspect is a solid majority needed to carry out
essential reforms "so that we won't have to incur such debts any
longer." Kanev pointed out that the vote was a clear political
sign that the majority of four parties remains what it is for
four years. He added that the RB's support for the Government is
adamant.

Ataka leader Volen Siderov said that "this is a historic day on
which it became clear that Bulgaria is governed by a coalition
of GERB, Reformists, Patriotic Front, MRF, ABV and BDC."

"The Ataka Parliamentary Group opposes this backbreaking war
debt that the ruling coalition of Borissov, Kostov, Kuneva,
Ismailov, Simeonov, Karakachanov, Purvanov imposes on the
Bulgarian people," Siderov said during the debate. "This is a
war loan as is imposed from abroad," he stated.

FINANCE MINISTER'S ARGUMENTS

In a 40-minute speech in Parliament before the vote, Finance
Minister Vladislav Goranov called on the MPs to enable the
Government to pay its bills. He assumed a commitment that at
least 2,000 million leva of the estimated 16,000 million leva
new debt will not have to be used. "By this act we ratify an
international intermediation agreement and we do not assume even
a lev of new debt. Whether we will assume more debt, we will
decide together in the coming years when we vote the State
Budget Act," he said.

The Finance Minister recalled that Bulgaria has to repay 12,000
million leva by 2017, which nobody can deny.

He said that since 2009 Bulgaria has been living on credit, and
that the 2015 budget already set a 2,500 million leva excess of
expenditures over revenues. "The least amount for which we must
be ready is 14,500 million leva, we have proposed a phased
reduction of this excess, but the budget will still be in
deficit," he noted. Fiscal planning for 2014 was flawed, leading
to a deficit of nearly 3,000 million leva at the end of last
year, Goranov said.

He recalled that the new coalition Cabinet had to borrow 3,500
million leva to repay the guaranteed deposits at the failed
Corpbank. The Finance Minister admitted that in the middle of
last year his predecessor had no other option but to contract a
six-month 1,200 million leva loan, maturing at the end of 2014,
in order to bail out First Investment Bank after a run of
depositors."When we subtract the dedicated resources from the
8,117 million leva available, it will turn out that there were
3,422 million leva disposable on accounts on January 1, 2015,
whereas debts built up by our father fall due on May 1," Goranov
said.

PRIME MINISTER: 'PUBLIC EXPECTS STABILITY, REFORMS'

"The public expects from us stability and reforms; therefore,
let's do our job," Prime Minister Boyko Borissov wrote on
Facebook about Wednesday's debate in Parliament which he did not
attend.

Borissov thanked the MPs of all parliamentary groups who backed
the ratification and called on all National Representatives "to
overcome narrow partisan populism and behave responsibly when
national priorities are at issue."

"Let everybody be aware that the Government is making tremendous
efforts to collect more money, and the results are already in
evidence. Nevertheless, the deficit [for 2015] is 2,500 million
leva," the PM wrote.

He accepts the criticism that the subject was miscommunicated at
the beginning. "I am glad that the information gap was bridged
today," Borissov pointed out.

PRESIDENT: 'RAISING NEW DEBT MAKES SENSE'

Speaking to journalists on Wednesday morning, President Rosen
Plevneliev called for "a clash of ideas" in Parliament and for
"clarification of numbers."

The head of State said: "When it comes downs to billions, there
can't be disparate explanations." He said that raising new debt
made sense considering the record-low ECB interest rates and the
favourable terms for Bulgaria.

Journalists recalled that last year Plevneliev vetoed a budget
update, arguing that billions should be spent transparently, and
now it is unclear on what 5,000 million leva will be spent.
Asked whether he would veto the new debt, the President said the
idea about the debt was good.

In connection with the parliamentary debate and vote on the
ratification bill, the Council of Ministers rescheduled its
regular weekly meeting for Friday. For the same reason,
President Plevneliev's consultations with the RB and MRF
parliamentary groups were also postponed, the head of State's
Press Secretariat said. LI, LN, PK/LG, MY, PP
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