Ministry of Finance: We shall develop the state securities market for the private pension funds
The Ministry of Finance announced today they will develop the state securities market by increasing the issuing volume, expanding the maturities (by introducing the 15 year maturity securities) and even by the possibility of issuing securities indexed with the inflation rate, according to the government’s strategy on public debt management for 2008-2010. The strategy was already published on the website of the Ministry of Finance, thus placing the domestic market and the state securities on the first position among the priorities to attract the public funding needs.
“The strategy for funding the budget deficit and refinancing the public debt shall focus on contracting loans from the domestic market by launching state securities issuances intended for the development of the domestic market for state securities. Such a strategy focusing more and more on the domestic market as a financing source has the advantage of adopting an optimal combination of macro-economic policies, given the liquidity in excess in the system and the potential significant foreign capital inflows in Romania, as well as the lower FX risk, the increase in the negotiable debt and the decrease in the number of operations related to the governmental debt”, according to the strategy published today.
In the strategy, the Ministry of Finance stated that developing the state securities market “also considers the emergence of the most important institutional investors on the Romanian financial market, namely the private pension funds".
Moreover, the Ministry of Finance says they plan to issue 15-year maturity securities (at the moment, the longest maturity is 10 years), but they also “consider expanding the maturity for state securities to be issued over this period of time, as well as the possibility to launch state securities indexed with the consumer price index", which “can thus protect from inflation the private pension funds, and others".
The private pension funds might also be consulted on the issuing volume and the expectations they have regarding the market conditions. "At the same time, we shall conduct regular consultations with the participants on the domestic market (dealers, mayors, investors etc.) to ensure the transparency and predictability in contracting and administrating the governmental public debt in RON, as well as for a regular evaluation of the market’s investment needs and the expectations in terms of market conditions", as indicated in the Ministry’s strategy.
