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STATEMENT OF MINISTER OF FINANCE VLADISLAV GORANOV AT THE NATIONAL ASSEMBLY IN RELATION TO THE GOVERNMENT'S POSITION ON THE BRIDGE FINANCING TO THE HELENIC REPUBLIC BY THE EUROPEAN FINANCIAL STABILITY MECHANISM

17.07.2015

 

President,

Ladies and gentlemen Members of the National Assembly,

 

This is not a standard procedure but we were anxious to present the official position of the Government in relation to the bridge financing from the so called Financial Stability Mechanism of all EU Member States which will be used as a guarantee mechanism for bridge financing of the Greek state to enable it to repay as soon as possible its liabilities both to the IMF and the ECB. This guarantee mechanism envisages the European general budget to be guarantor in a possible default in respect of the EUR 7,160,000,000 granted. This is the proposal for the next few weeks before the euro zone Member States use the large mechanism for financing the third package which the Hellenic Republic will use to stabilise its banking system and finances and to be able to stabilise its economy as a whole through the package of measures approved by the Greek Parliament. At the beginning the United Kingdom, the Czech Republic and Republic of Bulgaria expressed very strong reserves to using that mechanism as a common European mechanism and not the one of the euro zone states. In a communication in an EFC format where Bulgaria is represented by a Deputy Minister of Finance, we have expressed a categorical position that any measures to be taken, and regardless how this mechanism would be structured it should not lead to future commitments of our country for direct financial assistance to the Hellenic Republic. This categorical position of Bulgaria provoked a debate between the Member States, the euro zone Member States and the Commission and we have legally binding commitments that even in case a default procedure is triggered under this advance bridge loan to Greece from the European Financial Stability Mechanism, the euro zone Member States will compensate in full the losses for the European budget as a result of the triggering of such a guarantee due to default of Greece. To the last minute the United Kingdom held the firm position that those commitments should be made legally binding. We held a similar position. Today, after intensive communications in the past few days, we have assurance and will support for the last time the use of this mechanism. This is also the commitment of the Commission - to amend the regulation on the basis of which this mechanism is functioning so as it is used for the last time and never again euro zone countries to be able to tap this mechanism for support before this has been agreed by the non-euro zone Member States and before guarantees are put in place that they would not be forced to financially support euro zone States. This gives us grounds to support, under clear guarantees that we will not be directly affected financially, the common European position and the with difficulty reached agreements at the Council meeting on 12 July. You are aware that the Greek Parliament fulfilled the requirements of the European Council. In this context Bulgaria will not be an obstacle for granting the EUR 7.16 billion bridge loan to Greece when there are in place categorically written legal guarantees that the Bulgarian State and the other EU Member States not members of the euro zone will not be financially affected by unfavourable developments in the Hellenic Republic, and that the additional compensations to the European budget will be made or provided by the euro zone Member States. After these categorical and legally bound guarantees to the Bulgarian State, the Government is of the opinion that there is no impediment or risk for this mechanism to be triggered and for Bulgaria to join the positive decision of the United Kingdom and the other non-euro zone Member States to ensure bridge financing before the third bailout package for Greece is triggered, which will provide the possibility to avoid a default to ECB which pursuant to the legislative procedures would be impending if by 20 July the Hellenic Republic does not pay its maturing debt to the ECB. I stand here before you with the clear certainty that we are not assuming any financial risk by supporting the use of this mechanism for bridge financing, for which the non-euro zone countries are guaranteed by the euro zone Member States. We wished to tell you this, to close the debate whether Bulgaria should participate and to what extent our interests would be affected by such a decision. We have full guarantees that we will not be affected regardless of the developments in the Hellenic Republic.

 

Thank you!