The Ministry of Finance is considering all possibilities and models of borrowing, including the issue of bonds on the domestic market up to the remaining half a billion euros, as much as is left under the legally defined loan, “Pobjeda” was informed by the department headed by Aleksandar Damjanović.
Economic analyst Oleg Filipović believes that it is a good idea that would allow the state to borrow more cheaply than recently with Deutsche Bank, while citizens would have a higher return from interest on savings, which they earn in banks.
The Ministry states that, after analyzing all possibilities, they will decide which option is the best “in order to create the conditions for the smooth settlement of all obligations planned in the budget, and above all the repayment of debt in accordance with the due dates, the settlement of pensions, salaries, social benefits and all other obligations”.
Oleg Filipović is of the opinion that the issuance of government bonds on the domestic market should be supported, because the state borrowed about twenty days ago at an interest rate that depends on the six-month Euribor and exceeded 9.2%.
– By issuing bonds on the domestic market, the state would borrow much cheaper, I guess somewhere between three and five percent – said Filipović, who believes that this would be an incentive for the securities market, and citizens would have the chance to get a quality partner by buying government bonds – the state and earn more than interest on savings.
– Citizens now have an offer from banks of up to three percent per year for savings, while investing in government bonds would earn 60% more per year – said Filipović.
He believes that the state is thinking that in that case there would be a sudden decrease in the liquidity of banks, if citizens would place their savings in bonds.
– That would be a signal to the banks that they have to increase interest rates on savings. This would have multiple benefits, because citizens would earn more, they would get a new market, and banks would have to adapt to the new situation by increasing interest on savings and a different approach to companies and citizens – believes Filipović, who is also convinced that banks would be extremely interested in buying government bonds.
At the beginning of the week, the Council of the Central Bank recommended caution when making a decision on state borrowing on the domestic market, insisting that a detailed analysis of the impact on the banking system be prepared before making the decision.
– The issuance of bonds on the domestic market could lead to an outflow of deposits from banks, which would affect their liquid position, that is, the availability of funds that they place to the population and the economy – warned the CBCG Council.