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SOFIA, April 6 (Reuters) - Bulgaria can raise up to 10 billion levs ($5.52 billion) this year, almost five times more than initially planned, to alleviate the economic impact of the coronavirus pandemic and finance an expected fiscal gap, parliament decided on Monday.
The lawmakers rubber-stamped a revision in the 2020 state budget that sets a new fiscal deficit target of 3% of GDP and expects the small, open economy to contract by 3% this year because of the coronavirus crisis.
The Balkan country has closed schools, restaurants and bars and restricted travel between cities to contain the spread of the respiratory disease. Over 40,000 people in the country of 7 million have lost their jobs as businesses limit or halt operations. Infections have risen to 549, including 22 deaths.
“We are at the beginning of an unpredictable economic crisis,” Finance Minister Vladislav Goranov told parliament.
“By increasing the limit of the state debt, I will seek the most optimal decisions to finance the budget and let’s hope we would not need to reach the limit,” he said.
Bulgaria, one of the poorest but least indebted European Union member states, can tap global markets by up to 4.8 billion euros ($5.18 billion) this year, lawmakers said.
It can also tap the local market, where it has already sold treasury bonds worth 1 billion levs since January. The Finance Ministry plans to auction 10.6-year bonds next Monday and raise a further 200 million levs.
Bulgaria has pegged its lev currency to the euro under a currency board arrangement that prevents the central bank from setting interest rates and leaves fiscal policy as the main tool to influence the economy.
Goranov has said raising debt is the only way for the country under a currency board to ensure enough liquidity. He has rejected for the time being initial plans from his ruling GERB party to have an option for a loan from the International Monetary Fund.
Bulgaria has prepared an aid package that includes portfolio loan guarantees to companies and interest-free loans for small businesses and workers on unpaid leave, as well as covering 60% of workers’ salaries in the coronavirus-hit firms.
The banks are expected to come up later this week with a plan to delay payments on bank loans. ($1 = 1.8123 leva) ($1 = 0.9262 euros) (Reporting by Tsvetelia Tsolova; Editing by Sandra Maler and Peter Cooney)