Bulgaria wants to sell its $1.75bln Iraqi debt to the highest bidders

SOFIA – Bulgaria announced yesterday it wants to sell its $1.75 billion Iraqi debt to foreign investment banks or companies instead of waiting for official creditors to deal with the problem. Deputy Finance Minister Krassimir Katev told Reuters that Sofia had already received several inquiries from US and other international institutions, which were interested in various schemes to buy Baghdad’s debt to Sofia. Bulgaria, one of the European Union’s poorest aspirants which carries its own foreign debt burden of over $10 billion, is not willing to forgive Iraqi dues and wants as much back as possible, Katev said. He added it was too early to give details of the debt talks. «We have two options – wait for the Paris Club (of sovereign creditors) to restructure and most probably write off some of the Iraqi debts in at least two years or try to be pro-active in the coming months and get back a bigger amount of our debt via a private deal,» he said. «We’ve decided not to wait and we are taking concrete steps on the second option.» Katev last week visited the United States together with Finance Minister Milen Velchev. Bulgaria, like other ex-communist Eastern European states, supplied Iraq with arms and other goods in return for oil during the 1980-88 Iran-Iraq war. The United States, which along with Britain is running postwar Iraq, has been pushing for debt relief for Baghdad, whose overall dues are estimated at some $120-$130 billion and have not been serviced since the 1980s. If Iraq gets a similar principal write-off of 66 percent as former Yugoslavia did in 2001, Bulgaria might receive some $200-$300 million, Katev said, adding this was not good enough. Much of the outstanding debt is in the form of interest. «It is not politically popular for us to write off the Iraqi debt, which accounts for some some 11-12 percent of our GDP – the highest ratio among Iraq’s creditors… Bulgaria is servicing its communist-era debt and is not complaining.» Iraq’s debt includes $1.55 billion in principal and interest owed to the Bulgarian government and $200 million in principal and interest owed to companies, he said.

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