Bulgaria Plans to Issue Bonds Worth EUR 1 B in 2011

Bulgaria is planning to sell bonds amounting to EUR 1 B on the international market in 2011 to shore up its finances, according to a finance ministry draft paper, cited by local media.

Bulgaria aims to have a budget deficit of 2.5% of gross domestic product and a growth of 3.6% in 2011, according to the budget draft.

In June, the center-right cabinet revised the state budget increasing its 2010 target for deficit to 4.8% of GDP on a cash basis and 3.9% of GDP under EU accounting rules, far wider than initial estimates.

The center-right government dropped its plans for applying for ERM II after raising the alarm that the 2009 budget gap was 3.7% of gross domestic product rather than the 1.9 % due to unaccounted procurement deals.

Bulgaria's economy contracted by 3.6% on an annual basis in the first quarter of 2010 from 5,9% in the previous quarter, but the government hopes for a 1% economic growth for this year as recovering exports bolster the expansion.

Prime Minister Boyko Borisov's government previously estimated the economy would grow 0.3% after a 5.1% contraction in 2009 as investments dwindled and consumption shrank.

Bulgaria boasts one of the lowest public debt-to-GDP ratio among European Union member states at about 15%.

Economists are cautious in their forecasts for Bulgaria's economy and say it will remain in recession or be about zero this year.