Bulgaria Parliamentary Body Thrashes Out Budget Draft 2011

Bulgaria's parliamentary budget committee will vote at second reading the country's budget draft for next year, two weeks after it was approved by the MPs. 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. 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 budget 2011, financing is going up the most in the social assistance, defense and health care sectors, according to the draft. Between the two readings the draft budget will have to take into account the increase by 1.8 percentage points in social contributions payments, which was agreed by the government, representatives of the employers and trade unions in the middle of October. Analysts say Bulgaria's budget 2011 resembles its predecessor in its overly optimistic forecasts and risks. According to them the government's economic-growth estimate for 2011 will be difficult to achieve as credit growth remains moribund and consumer demand weak.

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. 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.

News source: Novinite.com link: article

Greece's NBG leads bank stocks higher on capital boost

Shares in National Bank gained more than 4 percent on Wednesday, leading Greek banks higher, as tighter bond yield spreads and the completion of a big rights issue improved investors' risk appetite.
"There is improved sentiment as regards Greek risk, reflected in the bond market with tighter yield spreads and in the equity market with the oversubscription of NBG's rights offering," said analyst Nick Koskoletos at EFG Eurobank Securities.

At 0818 GMT shares in NBG, Greece's largest lender, were up 3.93 percent at 8.45 euros, with the Athens bourse's banking index .FTATBNK gaining 3.18 percent and outperforming the broader stock market's 1.77 percent rise. NBG's 1.8 billion euro rights issue which ended on Oct 11 was covered 1.83 times, a welcome confidence boost for the banking sector, battered by the country's debt crisis.
"There is a risk-on trade with regards to Greece, NBG stands to benefit given its best-in-class capital position after its rights offering," Koskoletos said.

News source: Reuters link: article

Greece planning "diaspora" bonds

Greece plans to sell bonds to Greeks abroad as it eyes a return to international bond markets some time next year, the country's finance minister said on Wednesday.
Greece's fiscal derailment last year, when its budget deficit hit 13.6 percent of GDP, drove its borrowing costs to prohibitive levels sparking a debt crisis that shook the euro zone and eventually led to a 110 billion euro ($140 billion) bailout.
"We are talking at the moment and designing what is called a 'diaspora bond' to tap Greek money that is abroad and we feel that we will be quite successful," Finance Minister George Papaconstantinou told Reuters Insider TV.



news source: Reuters link: article