Банкеръ Weekly


Ex-FinMin Worked Hard to Be Dismissed

Former Finance Minister Simeon Dyankov have worked hard to be asked to leave his position. His letter to Commissioner Olli Rehn, infuriated ex-Premier Boyko Borisov and he asked for financial minister's resignation, Dyankov not only scandalized Brussels with his ignorance and arrogance, but also put at stake the reputation of our country. This comments came from bankers and financiers who are familiar with the practice of international financial institutions. Obsessed with the notion of financially stable poverty, ex-financier No 1 of Bulgaria used an extremely undiplomatic tone in his communication with Commissioner Rehn. This is because the country's contribution to the IMF, of which Dyankov was so worried, was not so pressing an probably in a foreseeable future will not be requested.

First, the opinion of the Ministry of Finance was sought. From there the comments were: Under the provisions of the Statutes of the IMF, each member state is required to pay the increased quota within thirty days starting from the date on which it has notified the Fund on its agreement to increase the quota or from the date on which the IMF notified all Member States that they the conditions for entry into force of the quota increase are fulfilled, depending on whichever is the later.

Conditions for entry into force of the increase in quotas are three and so far only one has been met. Namely, the change of the IMF's Memorandum of Association relating to the reform of the Board of Executive Directors. This should be done by a majority of 85% of the votes of the Member States. As at 11 March 2013, 148 IMF member states, holding 77.42% of total voting rights, have adopted the proposed amendment. A leading central banker asked for comment said that the obstacle to complete the procedure for payment of increased quotas in the IMF are the United States, explaining that the delay was due to them, because they do not want to ratify the agreement as the EU Member States did. The USA hold about 17% of the capital of the Fund. The mood in Washington now are extremely negative in terms of ratification, so Dyankov's outbreak may have been influenced by his last visit there.

What Dyankov did not realize is that payments to the IMF were actually an investment, not a cost to the state as he believes, as stated in his letter to Commissioner Olli Rehn. This was explained by the representative of the Central Bank: Our contributions are an investment in the IMF because they carry interest on them. Moreover, once we become accurate payers, we can use low-interest short-term financing at any time without formal protection or standby arrangements.


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