Some of the economic advisors of PM Vlado Buckovski have proposed issuing eurobonds to meet budget financing needs, according to A1 television. Reportedly, the issue is to amount to at least EUR 100mn. The experts recommend that the money be used for development projects.
Having in mind the country's relatively high long-term foreign currency credit rating of BB assigned by S&P in late July 2004, Eurobond issues could secure a relatively cheap source of financing the CA gap and consolidating the weal foreign reserve position.
The central bank reports show that the CA deficit has reached some 7.4% of GDP in annualised terms as of January. At 34% of GDP (as of end-February), Macedonia's total external indebtedness is moderate and that also justifies issuing the bonds.
On the other hand, the fact that the government has not managed to meet its capital expenditures target last year (even after it was reduced) leaves doubts whether the proceeds from such an issue will be used effectively.