The Ministry of Finance suggests a 4 bln euro increase of the Medium Term Notes (MTN) Framework Program (MTN) from 27 billion to 31 billion euro for covering financing needs from the international market in the period 2019 - 2020, according to a draft decision released by the institution.
"In order to cover the financing needs from international markets in the period 2019 - 2020 and taking into account the remaining amount of 0.022 billion euro, the increase of the total value of the MTN Program by 4 billion euro is necessary.We hereby mention that 3.5 billion euro worth of eurobonds will reach maturity between 2019 - 2020 (1.5 billion euro in November 2019 and 2 billion euro in September 2020). As the cap of the MTN Program is released at the time the bonds are being repaid, in calculating the rise of the program's cap, we have considered that the bonds become due at the end of each year, and new eurobond issues take place depending on market conditions, most likely in the first part of the year and in the third quarter," the Finance Ministry said.
The authorities explain the decision to increase the cap for loans from foreign markets by the need to continue strengthening the Treasury's foreign currency reserve in order to protect public finances from potential external shocks that could send government bond interests on the domestic market rising.
According to the substantiation note accompanying the draft decision, other reasons that led to the decision to increase the amounts are the need to attract financial resources from foreign markets in order to cover the budget deficit and refinance public debt and the need to provide the legal framework allowing the flexible use of the MTN Program through government bond issues on foreign markets between 2019 - 2020.