Bulgaria’s Cabinet to meet on Budget amendments to cater for F-16 deal

Written by on July 12, 2019 in Bulgaria - Comments Off on Bulgaria’s Cabinet to meet on Budget amendments to cater for F-16 deal

Bulgarian Prime Minister Boiko Borissov’s coalition Cabinet will hold a special meeting on the morning of July 15 on amending the state Budget Act 2019 to cater for the $1.25 billion acquisition of eight F-16 fighter jets.

This was announced by the government information service on July 12, a day after Bulgaria’s Defence Ministry announced that minister Krassimir Karakachanov had signed the acquisition contracts.

The government media statement that the bill amending Budget 2019 “was drafted in connection with the acquisition of a new type of combat aircraft by the Armed Forces of the Republic of Bulgaria, which are of paramount importance for the national security and defence of the country, for the implementation of the Nato collective defence mechanisms and the common security and defence policy of the EU”.

On July 12, central Bulgarian National Bank announced that the government would issue a further 200 million leva (about 100 million euro) of new debt in the form of 20-year bonds.

This will be the second debt issue on the domestic market since the beginning of 2019, after a 300 million debt issue in June, linked to the purchase of the F-16s. The issue date is June 21 2019, the settlement date July 22 2019 and the maturity date June 21 2039.

Bulgaria’s Finance Minister Vladislav Goranov told local media on July 12 that Bulgaria is ready to pay for the F-16 acquisition in one go.

Bulgaria’s fiscal reserve had good enough levels, Goranov said.

The contracts for the F-16s would be put to the National Assembly for ratification, as the Budget amendments would be put to MPs for approval, he said.

With the F-16 deal, the deficit would grow to about two per cent, or slightly more, but below the three per cent threshold set in the Maastricht criteria.

“Given that this is the first deal between our two countries, at this stage we will have to fund this deal, and when we have a history in our relationship with the US arms agency, I think we will be able to negotiate a more flexible payment scheme,” Goranov said.

As to whether new debt is envisaged, Goranov said that the Budget Act envisaged a billion leva debt emission, but a direct link between the transaction and the amount of debt should not be sought, because these funds would be used through the year to fill the fiscal reserve and cover maturing payments.

“Our intention is to continue to implement our debt strategy as it was voted last autumn,” Goranov said.

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