Date: 21.03.2012

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Тhe association sees as unacceptable the main argument for the changes - the Fund's low rate of return
The Bulgarian Industrial Association (BIA) stands firmly against the proposed changes to the law regulating the Silver Fund, the Association told BTA in a statement ahead of a meeting schedueld for Wednesday, at which the National Council for Tripartite Cooperation will discuss the amendments.

The Silver Fund, formally known as State Fund for Guaranteeing the Stability of the State Pension System, was established in 2008 as a reserve accumulating financial resources for payment of pensions in a future when pensioners are expected to outnumber employed persons. Finance Minister Simeon Djankov recently proposed legislative changes that would allow active management of the Fund and make Bulgarian government securities and instruments traded on Bulgarian and foreign stock exchanges eligible for investment of its assets.

The BIA sees as unacceptable the main argument for the changes - the Fund's low rate of return. Responsibility for the management of the Fund's assets lies with its Management Board, which includes the ministers of labour and finance, government officials and representatives of trade unions and employers. It was precisely by their decision that the Fund's assets be deposited with the Bulgarian National Bank instead of investing them on the international financial markets, the BIA argued. "If the Fund has a low rate of return, it means that it is poorly managed, and government officials are mainly responsible for this," the Association said.

"Investing the Fund's assets in government securities will dent the fiscal and foreign-exchange reserves, which may lead to a downgrading Bulgaria's credit rating." According to the BIA, the consequences will include a decrease of money in circulation, a pressure on sales, jobs, income and wages, an increase of lending rates, and destabilization of the Bulgarian stock market.

The Association urges the Silver Fund's Management Board to draft a strategy for management of the Fund's assets and insists that the provisions of the law regulating the Fund be no onger circumvented so as to solve budget problems at the expense of the stability of the pension system.

The Confederation of Independent Trade Unions in Bulgaria (CITUB) and the Union of Democratic Forces already took a stand against Djankov's idea for a revision of the State Fund for Guaranteeing the Stability of the State Pension System Act because of the Fund's low rate of return.