The Macedonian government plans to borrow €470mn from local and foreign financial markets to finance the planned budget deficit of 2.7% of the country’s GDP in 2018, Finance Minister Dragan Tevdovski said, cited by media on November 13.

This supports the recent reports that the Macedonian government led by the Social Democrats is planning a new Eurobond issue, even though the Ministry of Finance said earlier this month that no such decision has yet been made. International media reported that such a move is likely in the first quarter of 2017.

The funds from borrowing will be also used for financing due liabilities accumulated during the rule of the previous VMRO-DPMNE government, Tevdovski was cited by news agency MIA.

According to Tevdovski, foreign borrowing will depend on the market conditions and the interest rate.

“It’s not the same, if we place a Eurobond with an interest rate of 3% to 5% or 9%-10%,” Tevdovski said, adding that the decision on tapping international markets will be taken if the price of borrowing is low.

Tevdovski said that analyses are being made for such borrowing.

“We are mulling the option for foreign borrowing next year as interest rates are low now. At the moment the three Eurobond issues historically have the lowest rates,” Tevdovski said.

In July 2016, Macedonia placed a seven-year €450mn Eurobond to finance the budget gap for 2016 and 2017.  It also tapped international markets in November 2015, when it raised €270mn through the sale of a five-year Eurobond at a yield of 5.125%. In July 2014, the country also sold €500mn worth of seven-year Eurobonds.

Macedonia is planning a state budget for 2018 based on real economic growth of 3.2% and a deficit of 2.7% of the country’s GDP.