Банкеръ Weekly



TRANSPORT MINISTRY PROPOSES A SCHEME FOR SETTLEMENT OF BDZ'S LIABILITIESThe Deputy Premier and Minister of Transport and Telecommunications Nikolay Vassilev also lined up among the candidates for financing from the fiscal reserve. On Wednesday (December 10) he held a meeting with the resident representatives for Bulgaria of the World Bank and the International Monetary Fund (IMF) - Oscar de Bruyn Kops and James Rolf. Mr. Vassilev asked from them institutional, political and financial support for the future restructuring of the Bulgarian State Railways (BZD) in 2004. In front of the representatives of the two international institutions he pointed out that reforms in the railroad sector were indispensable, necessary, and to a certain extent late. The Transport Minister assured Mr. Oscar de Bruyn Kops that all commitments under the PAL programme, taken a few years ago, would be fulfilled and the railways would pay off their liabilities to the Unemployment Fund. Mr. Vassilev said also he would hold negotiations with the Finance Ministry for the allocation of BGN47MN from the fiscal reserve in order to repay overdue liabilities of BDZ, for whose settlement the World Bank had insisted. The Government will release that amount as a temporary financial aid, and BDZ will immediately direct it to the budget by paying off its BGN17MN debt to the National Insurance Institute (under the Unemployment Fund) and settling its BGN30MN liabilities in overdue fees and taxes. Mr. Vassilev specified that this financial assistance would not increase the budget deficit. I'm probably the fourth transport minister who cannot repay BDZ's liabilities to the Unemployment Fund. Therefore, I believe that through a non-cash operation we could settle the debt and clear this outstanding payment, he added. Paradoxically, as it may sound, the temporary financial aid will be in fact to the benefit of the budget as well. It won't be entered in accounting books as expenditure (as BDZ should pay it back) and this won't result in an increase of the shortage in the Treasury. At the same time, BDZ will pay its taxes and debt to the National Insurance Institute, and will thus raise the budget revenue. Otherwise, the allocation of a temporary financial aid is not the more advantageous option, because the Treasury will be deprived of interest on these liabilities. The problem could also be solved if the above-mentioned liabilities are written off. But hardly any finance minister would write off almost BGN50MN just like that. The Tax Procedures Code and the Social Insurance Code admit another possibility as well - rescheduling of liabiliteis. But an eventual deferring of payments won't help BDZ very much. The only benefit from such a measure will be that the interest would be less if the debt to the tax authorities is rescheduled.Over the last few weeks the Transport Ministry sent 110 letters to big Bulgarian and foreign transport, forwarding and railway companies, inviting them to take part in the contest for granting a licence for a private railroad carrier. Mr. Vassilev has assured the representatives of the World Bank and the IMF that his ministry is interested in creating a competitive environment for BDZ's operation.

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