"The fiscal reserve will be managed far more transparently than under the previous government," Bulgarian Deputy Prime Minister and Finance Minister Simeon Djankov said, addressing Parliament during Question Time on Friday.
"From now on, the Finance Ministry will release quarterly reports on the state and yield of the fiscal reserve," Djankov said. He noted that his idea to deposit part of the fiscal reserve was prompted by a desire to boost budget revenues.
By September 30, 2009 the fiscal reserve amounted to 7,691 million. Eighty-six per cent of this amount is now deposited with the Bulgarian National Bank (BNB), of which 30 per cent on day deposits, which pay a weighted average annual interest of 0 per cent, and in some weeks the interest is even negative, Djankov said. He explained that this means that the Exchequer actually pays the BNB to keep these 30 per cent of the fiscal reserve. Another 63 per cent, or 4,200 million leva, are kept on weekly deposits with the BNB, earning an interest of 0.3 per cent, the Finance Minister said. He sees this as an indication that the previous government did not implement a good revenue policy.
Under the previous government, 14 per cent of the fiscal reserve were in 17 commercial banks, Djankov also said. He added that the money of the National Fund and of some ministries were in commercial banks even though former finance minister Plamen Oresharski last week declared himself against depositing part of the fiscal reserve with commercial banks.
"My team, however, ran across a secret agreement concluded between Oresharski and BNB Governor Ivan Iskrov, making it possible to deposit an extra 1,000 million leva of the fiscal reserve with commercial banks at their discretion," Djankov said. In this way, a large portion of the fiscal reserve under the previous government was insecure. "The reasons for concluding this agreement are being analyzed," the Finance Minister said.
Oresharski answered that the agreement was concluded in October 2008 and was "precautionary, in case banks had to be bailed out." "Fortunately, we avoided the dangerous consequences, but I wouldn't make public things that can jeopardize financial stability," Oresharski said.
The Fiscal Reserve Account (FRA) consists of, first, the balances in leva and in foreign exchange on bank deposits with domestic and foreign banks, including the central-government budget, ministries and agencies, central government off-budget resources, as defined in the annual National Budget Act, the National Social Security Institute, and the Health Insurance Fund, and, second, other highly liquid foreign assets of the central government.