/ world today news/ Since the beginning of this year, the political party GERB, its leader and its members, with knowledge in the financial sphere, have not stopped calling for a new, larger amount of the state debt.
Their proposals are invariably accompanied by a description of some extraordinary, and known only to them, very dire state of the state’s finances. In what they said on 25.08.2014. they beat even their own worst predictions. I am confused by this sequence. I have no pretensions to understand party approaches and what needs to be said to secure some advantage in the upcoming election struggle. I claim that the chosen approach is not good for anyone, not even for them, as emerging winners /according to sociological surveys/.
The call for the current government to start issuing new debt is unfeasible. The mentioned numbers for upcoming repayments by the end of the year are very well known to those who work in the “Directorate of Public Debt and Financial Markets” of the Ministry of Finance. These payments noted in their analyzes are part of the regular payment calendar and the money for them is provided through the issues of bonds of different terms specified in the same calendar. This is part of the ongoing management of the national debt and there is no need for anyone to call on the government to do anything extraordinary. Any upcoming debt payments mentioned are part of this ongoing debt management. These payments are taken into account in the so-called issue and maturity calendar. All this can be read on the website of the Ministry of Finance under the heading “State Debt”. According to the official information as of 30.06.2014, the total national debt, measured in euros, is 8115.9 billion – of which the domestic debt is 4129.2 billion euros. The ratio of debt to GDP is 19.7% – which is one of the lowest among EU member states.
The Minister of Finance, Mr. Porozhanov pointed out that the deficit of the state budget at the end of the year, both on a cash basis and on an accrued basis, will not exceed 3%. I am convinced that it will be up to 2.5%.
According to official data of the National Revenue Agency, they will fulfill their established program for 2014. All this confirms that the results for 2014 are relatively good against the background of what is happening and especially compared to what is being said.
Until now, the request of the GERB political party, the head of state and the DPS party consisted in the so-called update of the law on the state budget for 2014, respectively the permissible limit for new debt in 2014. as well as for the number showing the amount of debt at the end of 2014. This request was fulfilled by the Oresharski government, which submitted a proposal in its last days. The proposal failed because at the last moment GERB refused to support it. Now this idea is being floated again, asking the impossible of a government that is legally unable to do all this. As I already pointed out – there are no grounds for these fears – how the state would fall into a “liquidity crisis”. Countries do not fall into a liquidity crisis. They may delay in meeting their obligations, but they always pay themselves – in many cases with new loans. This procedure in all democratic countries is carried out by the representatives of the people in the National Assembly. They decide whether and in what amounts there will be such loans.
Candidates to govern us can use the time until the elections by presenting their programs to specifically solve the issues in health care, education, administration. Deficit and debt are a consequence of how these areas are managed and organized. Let’s see what the new candidates’ ideas are for what the budget should look like through the end of 2014 and what it should be for 2015.
We, the voters, will no longer be satisfied with just the story that reforms are needed, nor with the fact that until now someone was very bad and even stupid, and now the good ones are coming. This campaign also offers another challenge to the candidates for power – their opinion on the KTB case.
It is also crucial how the European funds will be organized. Tales on this topic should not be limited to “you have been stopped, but we will be allowed.” I, for example, would vote and campaign for everyone to vote for those who show in advance how they calculated the effect of the European funding so far and what will do for the next period.
It is not a good idea to keep throwing around different numbers about the state of the fiscal reserve. This can at least be traced through the weekly published balance sheets of the BNB emission management, as well as the monthly information on the website of the Ministry of Finance. Everyone who is interested in this topic knows that the number of BGN 4.5 billion, defined in the budget law as the necessary availability at the end of the year, protects the sums of the so-called silver fund and certain other special purpose stocks. The remaining part is mainly for covering the annual budget deficit and for some payments for which funds are provided in advance, as is the case with repayment due on 15.01.2015. Current variations in amounts are also the result of the aforementioned calendar of securities issues and repayments of maturing loans.
It can be argued that the deficit for the months remaining until the end of the year will not increase if the European money is received for the funds previously paid by the state budget. Therefore, the stated figure of 4% deficit is untenable.
I don’t see a problem if part of the unused funds under the so-called Public investment program are redirected and used effectively. It would be good if this was done on an objective basis and not through partisan judgement.
I recommend Mr. Borisov in good faith. He has one of the very best tax specialists – Ms. Menda Stoyanova. Let them get involved in the pre-election struggle with ideas and proposals on the specific organization of payments for the various taxes and insurances instead of relying on our fear of a possible and non-existent financial collapse.
It would also be understandable if part of the discussions in the pre-election struggle also focus on whether it is appropriate to move to an accelerated increase in our debt by solving some problems of health and education, or if we should maintain the current levels around 21% as recorded and in the three-year forecast, which is updated twice a year and presented in Brussels. It would be very useful if the discussions were also aimed at understanding the so-called A plan for reforms, which is also presented compulsorily within the so-called European Semester 20/20. By now this is getting too formal. Let all the candidates for power open these documents. They are affordable. Many useful discussions can be held on the questions of the relationship between the intentions declared in these documents and the real need of our development in the coming years.
I’ll end with something I often quote. These are the words of an American senator – “Everyone has the right to their own opinion, but no one has the right to their own facts.”
—–
Professor Hristina Vucheva, economist and long-time teacher at UNSS. She is a former Minister of Finance and Deputy Prime Minister in the first caretaker government with Prime Minister Reneta Injova /1994-1995/.
#heads #GERB #finances #collapsing
