BRATISLAVA, February 24, (WEBNOVINY) – Bailout guarantees to troubled countries from the European Financial Stability Facility (EFSF) will not increase Slovakia’s net debt. Finance Ministry’s spokesman Martin Jaros told SITA news agency that based on the decision of the European Union’s statistical office Eurostat from late January, countries participating in the bailout fund have to increase their Maastricht, or gross debt by their portion in the bailout on financial markets but at the same time they will create receivables against the country which gets the bailout from the stabilization mechanism. “The net debt of each member country will thus equal zero,” adds Jaros.
According to analyst with Slovakia’s largest bank Slovenska Sporitelna Michal Musak, including the guarantees for bailout help into the gross public debt is logical. “Even if we do not need to take a loan for the bailout fund, the Slovak Republic risks a loss and it is therefore logical that the public debt includes this liability,” said Musak. He added that similarly, the debt covers also guarantees for loans to some companies from the past.
Eurostat will thus release two data on government debts of individual EU members. Twice a year, it will make public the overall Maastricht debt of individual members, as well as the debt excluding the bailout transactions. These transactions should not influence the general government gap, unless troubled countries are unable to repay the loan from EFSF. “If it comes to a country not repaying its debt against the EFSF, guarantees will be applied. Slovakia will have to take a loan and that will result in a one-off increase of its public finance deficit,“ the bank analyst added.
In January, Eurostat said that bond sales by the euro-zone’s bailout fund must be recorded in the gross government debt of participating member states, in proportion to their share of guarantees supporting the EUR 440 billion fund. Any proceeds such as interest, margin, and service fees from the fund’s help will be transferred to accounts of the guarantying countries, positively affecting their balances.
SITA