The Bulgarian government is seeking to wrap up by October 20 talks about the terms of a BGN 700mn (EUR 360mn) loan it plans to take from German banks to finance its budget gap, Capital daily reported citing sources.
According to the report, the government decided to apply for the so-called Schuldschein loan instead of issuing bonds mainly due to the fact that such loans are cheaper and faster to arrange. Schuldschein loans are promissory notes issued privately under German law. The loan will reportedly have a maturity of 7 to 10 years. The finance ministry has already contacted 10 banks that are potential borrowers.
The socialist-led cabinet of PM Plamen Oresharski raised this year’s budget deficit target to 2% of GDP from previously expected 1.3% and also lifted the ceiling on new debt issued during 2013 to BGN 3bn from BGN 2bn to accommodate its spending plans.
Since taking power in late May, the government has borrowed a total of BGN 508.2mn (with BGN 78.2mn denominated in euro). Bulgaria has accumulated BGN 1.92bn in new debt so far in 2013, while the country's total public debt (excluding state guarantees) stood at BGN 12.75bn at end-August, equal to 15.9% of the full-year GDP forecast, according to latest data.
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