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Bulgaria Finance Ministry refutes reported fiscal reserve plan

Mon, Nov 16 2009 15:42 CET

byAlex Bivol

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Bulgaria Finance Ministry refutes reported fiscal reserve plan

Finance Minister Simeon Dyankov

Photo: Капитал

Bulgaria's Finance Ministry said on November 16 that a Financial Times report about the Cabinet's intention to deposit fiscal reserve funds in commercial banks was erroneous.

The government planned to deposit about one billion leva, or 12 per cent of the fiscal reserve, with Bulgarian subsidiaries of foreign-owned banks in an attempt to lift the economy out of recession, FT quoted Dyankov as saying.

"Minister Dyankov's quote is an old one and no longer up-to-date," the ministry's press service said in a statement. "The focus of the Finance Ministry is now on balancing the 2009 Budget and passing the 2010 Budget bill," the ministry said.

FT quoted Dyankov as saying that up to 20 per cent of the fiscal reserve, now deposited at the central bank, could be transfered to commercial banks "where it would earn a useful interest income.

In October, Dyankov argued that the fiscal reserve earned little or no revenue for the Government and said that Cabinet was considering deposits with commercial banks. The public outcry against the proposal, led by the opposition socialist party, prompted Prime Minister Boiko Borissov to axe the idea.

However, it was later made public that the socialist-led cabinet, ousted in the July parliamentary elections, had already signed a secret deal with the central bank to make funds available to commercial banks. Dyankov's predecessor, Plamen Oresharski, said that it was a preventive measure and was never used, with "one minor exception", but did not offer further details.

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