November 16 (SeeNews) - Bulgaria's Finance Ministry on Monday denied a Financial Times report that the government plans to deposit part of the country's fiscal reserve at commercial banks in a bid to revive lending.
The Financial Times (www.ft.com) on Sunday quoted Bulgarian Finance Minister Simeon Dyankov as saying in a telephone interview that the government plans to place about one billion levs ($765.2 million/511.2 million euro), or around 12%, of its fiscal reserve as short-term deposits at commercial banks through an auction process to stimulate the economy by helping bring down interest rates for borrowers.
"[...] the cited comment by Minister Dyankov is old and irrelevant," the ministry said in a statement.
The work of the minsitry is now focused on achieving a balanced budget this year and completing the adopting of the 2010 budget bill, it added.
Last month Dyankov suggested to deposit part of the country's fiscal reserve at commercial banks as means of generating additional revenue for the government budget in times of economic downturn.
Prime Minister Boyko Borisov, however, said several days after Dyankov floated the idea that the fiscal reserve will not be touched, neither will it be transferred, and auctions for managing part of it will not be held.
Bulgaria operates under a currency board system since 1997, a tough monetary arrangement which obliges the government to keep a fiscal reserve to protect the peg of local lev currency against the euro and meet foreign debt payments. The reserve, which totalled 7.7 billion levs ($5.88 billion/3.94 billion euro) at the end of August, is kept with the central bank and is part of Bulgaria's foreign currency reserves.