Банкеръ Weekly

Briefs

STEFAN SOFIANSKY PRESENTS TO PARLIAMNET THE LARGEST LOAN FOR SOFIA

On November 9, a day after celebrating his 50th birthday, Sofia's Mayor Stefan Sofiansky appeared in person in front of the Parliamentary Commission for Transport and Telecommunications to present the financial parameters of the loan from the Japanese Bank for Internatioanl Cooperation (JBIC). The JPY 12.894BN credit will finance the most difficult (from a technological point of view) section of the Sofia Metropolitan. This is the railway between the 7th and 9th Metro station beneath the capital's central part - from the St. Nedelya square under Tsar Osvoboditel boulevard to the tunnel under Dragan Tsankov boulevard, leading to Metro station 10 infront of Interpred. The loan agreement will be signed by JBIC and the Sofia Municipality.In order to extend the loan the creditor requires a mandatory guarantee from the Bulgarian State. However, under the Constitution and the Municipal Budgets Act, a guarantee agreement between the two countries' governments can be also closed with an approval of the National Assembly. For that purpose on October 31 Premier Simeon Saxe-Coburg-Gotha presented a draft for such a decision. The National Assembly Chairman Ognyan Gerdjikov, on his part, moved the draft for discussion in the parliamentary Budgetary and Finanec Commission and the Commission for Transport and Telecommunications.The loan parameters, agreed in advance, on which negotiations have been held between the municipal councils and the creditor since the beginning of 1998, are interesting. The term for repayment is 30 years, including a 10-year grace period. An annual interest rate of 2.2% on the principle has been agreed - the money will be used for construction; 1.8% will be the interest rate on the money for consultancy services. An impressive amount of JPY734MN (about USD6.1MN) is also earmarked for sucg services. JPY1.105BN (around USD9.1MN) will be released for contingencies.

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