Development of secondary govt bond market could solve problem of financing of state budget 2021 deficit – member of NBU Council
The development of the government domestic loan bonds secondary market by the government and the National Bank of Ukraine (NBU), starting in 2019, as recommended by the NBU Council, could solve the problem of financing the state budget deficit, Vitaliy Shapran, a member of the NBU Council, has said.
"The budget deficit at the level of 6% of GDP in the draft budget 2021 is not something abnormal in the context of a "virus" crisis. The only problem is how to finance the deficit... If the government and the NBU in November 2019 listened to the recommendations of the NBU Council regarding the development of the government domestic loan bonds secondary market (without participation of the NBU as a buyer of the government bonds), today there would not have been this question arising," he wrote on his Facebook page on Wednesday.
Shapran said that the recommendations to maintain the budget deficit to GDP at the level of up to 3% should be perceived not as an economic law, but as a guideline for long-term planning. "When the economy grows, the deficit should be less than 3%, and the national debt should be reduced," he said.
At the same time, Shapran does not share the opinion that a deficit of 6% of GDP will be a necessary threat to macroeconomic stability next year.