site.btaNational Assembly Hears Finance Minister on Government Debt

As a result of action taken by the Finance Ministry to procure the financing necessary to ensure state budget liquidity, the nominal amount of the government debt reached BGN 35.3 billion by October 19, 2022, which represented 21.8% of GDP and was below the maximum admissible amount of BGN 38.5 billion, Bulgarian caretaker Finance Minister Rossitza Velkova said during a hearing on budget deficit financing, initiated by two MPs of the GERB-UDF Parliamentary Group.

The Finance Minister reported that after the government debt issued so far, the fiscal reserve added up to BGN 12.1 billion and the budget surplus stood at BGN 1 billion. As a result of savings, the end-of-the year deficit is expected at BGN 5.8 billion, she pointed out. The Finance Minister noted that BGN 900 million are expected to be received under the EU temporary instrument Support to mitigate Unemployment Risks in an Emergency (SURE) but, at the same time, BGN 900 million direct payments to agricultural producers have to be made until the end of the year.

"Based on all these commitments, if we do not issue more debt until the end of the year, the fiscal reserve should be some BGN 5.6 billion by December 31, 2022, which is extremely low, considering that its minimum amount is BGN 4.5 billion and we will have to effect the payments on pensions in early January while tax revenues will not yet be sufficient," Velkova said, answering a question from Vazrazhdane.

New debt needs to be issued because of the amount of the budget deficit and in order to refinance the debt, the Finance Minister explained. She specified that under the revised 2022 State Budget Act, the deficit amounts to BGB 6.2 billion.

Repayments on the government debt amount to BGN 3 billion, or BGN 9.2 billion in total, Velkova specified.

The new government debt approved by Parliament for 2022 is BGN 10.3 billion, and the BGN 1.1 billion remainder at the end of the year provides resources mainly for pension payments in early January 2023. Until the caretaker Cabinet took office on August 2, BGN 1.8 billion debt had been issued on the domestic market. The government debt incurred so far amounts to BGN 7 billion, Velkova went on to say.

Last week the Finance Ministry offered investors BGN 200 million worth of government securities, of which BGN 180.55 million were sold at a weighted average annual yield of 5.65%. By the time Velkova addressed the National Assembly, the central bank and the Finance Ministry had not released information on the results achieved at another auction for government securities, held on Monday.

The Finance Minister pointed out that Bulgaria has one of the lowest debts of the general government sector in the EU.