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The Macedonian finance ministry is not fully abandoning plans to issue a euro bond, although it was forced to postpone the operation, the ministry announced on Friday.
The issuance of the euro bond was delayed at the last moment on Thursday evening after a member of the opposition Social Democratic Union of Macedonia (SDSM) sent a letter to the joint lead managers on the trade, asserting Macedonia may not have proper legal authority to issue the notes. In the letter, he claimed that the bond issuance, if it were to proceed, may be in violation of certain laws and regulations. This caused the offered interest rates to rise due to the increased risk of the investment. Citibank, Deutsche Bank, Erste Bank, and Societe Generale were the joint lead managers on the trade.
The government believes the correspondence is politically motivated and that there is no legal basis for challenging the authorization or the issuance of the notes.
"The process will continue. What is negative is that the opposition is creating a dangerous precedent and it is ruining the financial reputation of the country," Macedonian Finance Minister Kiril Minoski said.
The government is prepared to continue the cooperation with the potential investors, ensuring them that there are no legal obstacles for issuing the euro bond in spite of the oppositions' claims, he explained.
"The postponement only confirms our arguments that this financial crime is illegal and it is damaging for the citizens, for the economy and for the future generations. We will remain on the stance that if a euro bond is issued it should be under the same conditions and legal provisions as the previous bond issued in 2015," Kire Naumov from the main opposition party SDSM said to Xinhua.
The Macedonian government planned to issue seven-year bonds worth up to 650 million euros (719 million U.S. dollars) and the money was initially intended for financing the budgetary deficit and refinancing old debts. Experts warn that not issuing the notes might put certain strain on the Macedonian budget.
"The financial investors do not want unnecessary risks, especially legal, political and security risks. In the case of Macedonia, I think that they are seeing all of them combined at the moment and they are becoming reluctant," former Governor of the Macedonian central bank Petar Goshev told Xinhua here.
"I would appeal to the government to consider reducing the planned value of the bonds in half. If we need the money to cover some basic expenses such as pensions and salaries, then we must restructure all budgetary expenditure immediately. I am afraid that we will have to go through a reversible process, meaning to reduce the salaries, the pensions, all non-productive expenses, so we don't reach a situation of an insolvent budget," Marjan Petreski, a professor at the University American College in Skopje, stated for the economic news portal Factor.mk.
Although it is not abandoning the plans to issue the bond altogether, the Macedonian government will yet not comment the possible effects of the postponement nor the future plans for issuing the notes. (1 euro=1.11 U.S. dollars)
(APD)
