SOFIA: Bulgaria's parliament approved a government plan on Wednesday to raise 8 billion euros of new debt through overseas bond sales over three years, even though the scheme is opposed by one of the ruling coalition's four parties.
Prime Minister Boiko Borisov, who formed a minority government after a snap election in October that produced a fractured parliament, had hinted that he might resign if the plan was not voted through.
After the collapse of a local bank last year forced the state to contribute to repaying depositors, the European Union's poorest country wants to tap international markets twice in 2015 to roll over existing debt and finance its budget shortfall.
A heated debate among lawmakers saw one government party and two opposition parties throw their support behind the plan at the last minute, and parliament is expected to finally pass the deal at a second reading later on Wednesday.
"We cannot print money and this is the only alternative to today's decision (to raise debt)," Finance Minister Vladislav Goranov told lawmakers.
Bulgaria pegs its lev currency to the euro via a currency regime which constrains its central bank's ability to set interest rates.
The government aims to raise 3.5 billion euros this year through the programme, to be managed by Citi, HSBC , Unicredit and Societe Generale.
The four banks provided Bulgaria with a 1.5 billion euro debt-to-bond loan in December, to help Sofia repay 3.6 billion levs ($2.09 billion) in guaranteed deposits after Corporate Commercial Bank failed after a bank run in June.
The opposition Socialists and nationalist Attack party have warned the bond sales could tip Bulgaria into a debt spiral similar to neighbouring Greece's, and have demanded more transparency on how the government plans to use the proceeds.
Hundreds of supporters of the two parties protested in front of parliament on Wednesday.
The nationalist Patriotic Front, which is a member of the government, also expressed concerns over the debt programme. Bulgaria is one of the EU's least indebted member states, although the Balkan country's fiscal deficit jumped to 3.7 percent of gross domestic product in 2014, reflecting the cost of bailing out Corpbank depositors and an economic slowdown.
The government plans to cut the shortfall to 3 percent of GDP this year and further lower it to 2 percent in 2017.
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