Bulgaria Finance Minister Denies FT Drive to Revive Lending Report

Bulgaria's Finance Minister Simeon Djankov has scolded the Financial Times for delaying the publication of his comments. Photo by BGNES

Bulgaria's finance minister has described a Financial Times report about plans to place funds from the government’s fiscal reserve with local subsidiaries of foreign-owned banks as "out of date".

“The cited comment by Minister Simeon Djankov is out of date and is not current. The work of the Finance Ministry is currently focused on achieving a balanced budget for 2009 and the completion of the procedure for adopting the state budget bill for next year,” reads a statement from the ministry, circulated to the media.

The comment came in response to an article in the prestigious Financial Times, which cites Simeon Djankov as saying that about BGN 1 B – about 12 % of the reserve – would be allocated for short-term deposits at commercial banks through an auction process.

“This measure would stimulate the economy by helping bring down interest rates for borrowers and, if required, more liquidity could be made available,” Djankov said in a telephone interview.

“Banks have been competing for deposits and driving up rates because they are no longer being funded by parent groups abroad,“ the minister added, as cited by the Financial Times.

The debate about the management of the fiscal reserve and allocating part of it for short-term deposits at commercial banks through an auction process flared up at the end of October, when a secret deal between the central bank and the finance ministry about BGN 1 B from the fiscal reserve leaked.

 Prime Minister Boyko Borisov put an end to the debate by saying that no funds from the government’s fiscal reserve will be placed with commercial banks.

FULL text of the Financial Times article READ HERE

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