NEWS

Statement Made by President Rosen Plevneliev after the Consultations Held between the Political Parties Represented in Parliament and the Executive Branch of Power on the Financial State of the Country

Good afternoon and welcome to all of you.

I would like to acquaint you with the consultations that were held today. They were on financial issues in the state. I would like to tell you that the consultations were not the first ones, neither will they be the last ones. You know very well that at the Consultative Council for National Security held at the beginning of June as well as at the last consultations at the Head of State’s Office, we agreed and reached a broad consensus on holding a series of consultations in different formats, including such in the National Assembly and the President’s Office.

I would like to inform you about the issues we reached an agreement on and those we failed to reach an agreement on at the consultations held today.

We agreed that the public trust in the banking system is a key condition for the financial stability in the country and for the functioning of the economy. The parties and institutions that took part in today’s consultations reached a full agreement on the necessity of adopting a package of measures by the Bulgarian state, which is important, it is a fact and they will be initiated.

As for Corporate Commercial Bank, all of us agreed that the institutions should act in line with the principles of justice and responsibility, of prevention and punishment and should help restore the Bulgarian people’s trust. We discussed measures in great details concerning how to create a mechanism with respect to the case involving CCB, which you know is very different from all other Bulgarian banks so that we can draw a clear distinction and guarantee, on the one hand, that the bank’s honest Bulgarian taxpayers and conscientious clients will be protected. At the same time the speculative transactions should be at the expense of those who have made them possible and the committed crimes should be punished with all the powers of the law.

Here are some concrete measures on which we reached a broad consensus after today’s consultations.
First, bank deposits of up to 100,000 euros are guaranteed by law. This concerns also clients of Corporate Commercial Bank.  The Bulgarian Deposit Insurance Fund and the government have sufficient resources to fulfill this commitment.

Secondly, the state’s power will be focused on punishing the committed crimes with all the powers of the law. The Bulgarian Prosecutor’s Office and the law-enforcing bodies will act categorically. All mechanisms of the international legal cooperation will be applied to uncover all affiliated persons and offshore companies to which loans have been extended against the regulations, if there are such cases – all from the first to the last person and of course, up to the final owner.

We debated and agreed on the necessity to conduct an international audit of the bank, to uncover the assets bought through these loans and to take action to recover the due payments to the state budget and to the Bulgarian Deposit Insurance Fund. Anyone who has violated the law, this time, unlike during the 1996 crisis, will be held responsible.

The next measure we reached a full agreement on is that the Bulgarian National Bank should request that the European Bank body conducts a check to assess the efficiency of the supervision on Bulgarian banks. A legislative initiative will also be launched to improve the efficiency of the bank supervision and to ensure that the necessary people are held responsible. I would like to clearly say that this is a well-established European procedure, which is initiated by the Bulgarian National Bank and is addressed to the European Bank body and we agreed that it should be launched and completely carried out.

The next measure we agreed on, and I think that this is the great news from today’s consultations, which is positive and important for all, is that we all reached a consensus on immediately launching a procedure for Bulgaria’s entry in the EU Single Supervisory Mechanism. This is the first step toward Bulgaria’s joining the European Banking Union. We have reached a full agreement on this issue.  The people can be calm. Bulgaria will continue to quickly integrate in all up-to-date European mechanisms.

We also held a debate on the topic of EU funds and how Bulgaria will manage to maximally speed up the utilization of the funds in the remaining year and a half. You know that the EU funds are a generator of economic development and are a condition for modernizing the country. Up to 2015 Bulgaria will have to utilize about three billion euros. There is a temporary problem with the two operational programs. With a view to supporting the Bulgarian municipalities in their capacity of big beneficiaries, we reached an agreement that the government, no matter which one, should envisage the funds necessary to ensure that the EU aid is absorbed and help and motivate the beneficiaries even if this requires legislative amendments, including a revision and reallocation of budget spending, so as to speed up the process. I would like to clearly and firmly say – it is better if we give 200 million now so that we can utilize two billion by the end of next year. Although I cannot say exactly how much the money is, today the principle was changed whereby instead of supporting the municipalities, they were used as a convenient excuse not to utilize the funds and protract things.

I would like to thank all who took part in the debate.

Also the government declared its readiness and we reached an agreement on updating the budget of the National Health Insurance Fund so that the normal functioning of the system is ensured in the period when there will not be an operating parliament. A legislative initiative will be launched in the next couple of days by the Oresharski cabinet.

The next measure we reached an agreement on is that the National Assembly should adopt amendments in the State Budget Act, initiated by the government, which aim at guaranteeing a slow transition to a caretaker government. This means being more flexible with regard to the budget deficit by increasing it to 3 percent and thus providing for the increase of the national debt within reasonable limits. It is yet to be debated in Parliament. Furthermore, naturally the caretaker government should be given the powers to sign agreements for state loans, which is envisaged by article 84, clause 9 of the Bulgarian constitution, so that it can take other measures with a view to guaranteeing the resources necessary to support the financial stability in the country.

These measures we reached an agreement on will hopefully soon be implemented, initiated by the government and adopted by the National Assembly.

What did we fail to reach an agreement and consensus on?

We failed to reach an agreement on whether to apply the effective legislation or to adopt a new one regarding the case involving Corporate Commercial Bank. We held long debates on this issue. I would like to assure the nation that the effective Bulgarian legislation in the financial sector, the way it is, is functioning well, it is in line with the good European practices and has absolutely clear mechanisms for action.

The relevant issue was whether in addition to the effective legislation a special law should be adopted concerning the case with CCB. In this respect the political parties and institutions, namely BNB, mainly the government, the Finance Ministry and some other major institutions, will apparently continue to seek similar positions in the next couple of days.

For me this is not a problem, due to the fact that the effective legislation in Bulgaria is up-to-date, it clearly stipulates what should be done when a bank faces insolvency. If a consensus is not reached on adopting a new special law, a well-stipulated and in my opinion absolutely adequate and reasonable legislation is effective and it should be observed. This is why the BNB will probably set the specific time limits within which the aforementioned bank will resume operations, as well as other details. They are the result of ultimate efforts whether to or not to adopt a special law.

I would once again like to firmly say before the whole nation that the Bulgarian legislation is good enough. Simply the procedures it stipulates should be followed. However, if an improvement is sought, I am ready to hear every argument. I did so today, we spent over four hours debating. I would be happy if we reach a consensus on this issue as well.

Thank you for being together with us today. We have great news that Bulgaria is starting its integration in the European Banking Union.

Of course, consensus is not always reached in the President’s Office, nor in other institutions. However, I think that the four hours we spent debating on so many important topics and the agreement we reached, as I already said, are very important. I would like to thank the political leaders. I do hope that the debates on the topic we failed to reach an agreement on will continue so that a solution is found.

From now on the Bulgarian National Bank and the government should play a leading role in discussing the topic involving Corporate Commercial Bank. You heard clear and categorical messages about everything else which ensure a more long-term future for Bulgaria – a stronger supervision, integration in the European banking mechanisms and a new step to practically utilize the EU funds in a manner which I believe is more fair for the municipalities. Of course, revision of the budget is necessary, which should be more purposeful, quick and concrete so that the caretaker government could have the opportunity to operate in a currently unpredictable environment.

I wish you a nice evening and thank you for being together with us. Have a nice evening!