A debt of BGN 7.2 bn accumulated by state-run companies
State-run companies have accumulated a total of BGN 7.2 bn in debt, which is a jeopardy to the stability of the Bulgarian economy, Georgi Angelov, senior economist at the Open Society Institute, pointed out at a discussion called ‘The Economic Situation 2012’. According to him, the liabilities of state-owned firms are a serious obstacle to the development of the country’s economy because most of them hold a dominant position on the domestic market and if these fall into insolvency, the State has to repay debts. Presently, however, the Government has no free resources to operate in such a situation, explained the economist.
The National Electric Company (NEK) is the top debtor with aggregate liabilities of BGN 2.17 bn, followed by the National State Railways (BDZ) and the Kozloduy NPP, whose debts amount to BGN 767 mln and BGN 750 mln, respectively. Thus, the liabilities of these three state-run companies alone exceed BGN 3.68 bn. Debts over BGN 0.5 bn have also been accrued by Maritsa Iztok Mines – 2 (BGN 648 mln) and the Sofia Central Heating Utility (BGN 548 mln). The other big debtors with liabilities exceeding BGN 100 mln are: Sofia Airport (BGN 150 mln), Bulgartransgaz (BGN 107 mln), the Sofia Public Transport Company (BGN 164 mln), Port Infrastructure (BGN 175 mln), Maritsa Iztok Mines (BGN 209 mln) Railway Infrastructure (BGN 213 mln) and Bulgargaz (BGN 341 mln).
According to Angelov, some financial institutions, such as Municipal Bank PLC and the Bulgarian Development Bank, also have sizable liabilities. However, the structure of banks’ receivables is different and the liabilities of these two financial institutions, amounting to BGN 2.15 bn, are actually reported as attracted funds, specified the economist. According to him, a public register is needed for monitoring these debts. Angelov pointed out that according to data from the end of January 2012, Bulgaria’s aggregate public debt stood at BGN 11.68 bn, out of which BGN 4.92 bn was internal debt.
Economists warned that over the next eight or nine months, Bulgaria should repay a total of BGN 3 bn in debt settlement for bonds and deficit. According to Lachezar Bogdanov, Managing Partner at Industry Watch, the Cabinet has to introduce a balanced budget. “Had that happened a year ago, we would not be wondering now how to find BGN 1.6 bn for paying the bonds maturing in January 2013. Bulgaria’s revenues from privatisation are low, its reserves have decreased and it is not clear who will lend us this money,” Bogdanov stated.
Dimitar Chobanov, economist and professor at the University of National and World Economy, said that the Government could not raise these funds on the domestic market. A few days ago, the Finance Ministry issued government securities worth BGN 50 mln, but bonds worth only BGN 42 mln were purchased because investors seek higher returns, which the Bulgarian bonds cannot yield. According to Chobanov, seeking financial assistance from the IMF is a realistic option, despite the negative effects which such funding could have.
Georgi Angelov also commented on the issue of resorting to the money from the so-called Silver Fund. The decrease of the fiscal reserves from BGN 12 bn in 2008 to BGN 4.5 bn in 2012 is among the main economic problems in Bulgaria. He expressed concern that if money for future payment of pensions was set aside, the fiscal reserve would decrease from BGN 4.5 bn to some BGN 2.5 bn. However, this money cannot be used because of Bulgaria’s commitments to the European Union. Thus, Bulgaria will practically remain without any reserves, the economist pointed out, specifying that such steps would position our country at the bottom in the European Union in terms of amount of reserves.
Text: Klassa.bg
Photo: Klassa.bg