Bulgarian Parliament ratified on June 9 two separate bills to extend government guarantees on loan agreements signed by the state deposit guarantee fund with the European Bank for Reconstruction and Development and the World Bank.
The agreements, each for 300 million euro, were signed in March and would be used to increase the deposit guarantee fund’s reserves, depleted by payouts to depositors of the insolvent Corporate Commercial Bank (CCB), the country’s fourth-largest bank by assets when it collapsed in 2014.
The fund did not have enough money and required two billion leva (about one billion euro) loan from the government to ensure all the depositor claims were paid out.
The EBRD loan has a maturity period of nine years and the World Bank loan has to be repaid in 10.5 years; both agreements stipulate a grace period of six years. At the time, the Finance Ministry did not disclose details on the interest rates, but news website Mediapool.bg quoted Finance Minister Vladislav Goranov as saying that the interest was below one per cent.
During the debate on the House floor prior to the votes, the bills were criticised by the opposition socialists and several other small opposition parties. Several MPs had incorrectly referred to the ratification agreements as the government taking on new debt.
Goranov hit back, saying that such statements were “speculation” and accused the socialists of showing a lack of interest in strengthening the country’s financial system and taking an “irresponsible attitude towards the deposits of Bulgarian citizens.”
(Bulgarian Parliament photo: Clive Leviev-Sawyer)