site.btaDeficit in Updated Budget Will Not Be Below 4%

Deficit in Updated
Budget Will Not
Be Below 4%


Sofia, October 30 (BTA) - The deficit in the updated budget
cannot be slashed below four per cent because in such case
certain ministries will not be able to make payments within
their systems in the past two months of the year, Menda
Stoyanova, GERB MP and Chair of the Parliament's ad hoc
committee for budget and finance, said. She summed up the
results of a meeting of the parliamentary forces with the
Finance Minister.

The meeting was expected to discuss the steps that are to be
undertaken regarding the troubled Corporate Commercial Bank
(Corpbank), which has been under conservatorship since June
2014.

On Wednesday, the ad-hoc committee decided that, by November 6,
Parliament should prepare revisions to the Lending Institutions
Act to require of the Bulgarian National Bank (BNB) to take
action for strengthening banks when their own capital becomes
negative. The decision was supported by the representatives of
GERB, the Movement for Rights and Freedoms, ABV, the Patriotic
Front and the Bulgarian Democratic Centre, while the Bulgarian
Socialist Party and the Reformist Bloc were against.

Stoyanova said that the Finance Minister familiarized the MPs
with the proposed Bill Updating the 2014 National Budget Act.
Then the participants in the talks discussed versions for
capitalization of the Bulgarian Deposit Insurance Fund (BDIF)
to make possible the payment of the guaranteed deposits at
Corpbank. Stoyanova pointed out that the budget revenues will be
around 1,000 million leva short of target, which requires to
increase the deficit by 1,500 million leva through an additional
debt due to the already incurred expenditures.

The difference up to 4,000 million leva, which is the amount set
for the additional public debt in the Bill, is designed for
support of the banking system. Stoyanova said that the Bill
envisages two possibilities for raising of funds for BDIF:
through an issue of government securities that will be placed
either by the state or by the Fund using a state guarantee. In
her opinion, placement by the state is the more economic and the
better scenario because the interest will be lower.

BNB's early estimates put the guaranteed amount of deposits in
Corpbank at 3.7 billion leva, which means that BDIF will need an
additional 1.7 billion leva, Stoyanova said.

According to her, issuing a new bond will not increase the
government deficit, which will reach 4 per cent of GDP anyway.

Speaking before the meeting, Stoyanova told journalists in the
Parliament lobby that the public money to be used for Corpbank's
recovery will not exceed the amount that would be necessary to
pay off the guaranteed deposits of the bank's clients.

She explained that it is necessary to amend the Credit
Institutions Act, because BNB has refused to apply a provision
in it which says that the central bank should draw up a plan for
controlled restructuring of any bank which faces financial
problems. Since BNB has for five months refused to apply this
provision, the law must be amended in a way that will clearly
require the central bank to do so, Stoyanova argued.

"There is an investor in Bulgaria right now who has repeatedly
visited BNB, the Finance Ministry and other institutions and has
expressed an intention of investing one billion euro in
Corpbank. But the investor has no time. So we want to give the
investor time and offer a chance to rescue the bank, rescue its
depositors, the companies, the workers in these companies, the
municipalities, the hospitals. We want to give BNB some more
leeway to do its job," Stoyanova said.

BNB will be given three days to submit to the Budget Committee
in Parliament estimates about the macroeconomic effect of the
planned measures and their impact on the national budget. After
that, the politicians will be able to make a decision, Stoyanova
said. /PK/TK, VE/