EN ECB-PUBLIC  
 
 
OPINION OF THE EUROPEAN CENTRAL BANK 
of 24 October 2012  
on fiscal rules and on the servicing of bank a ccounts and payments of budget organisations 
(CON/2012/79) 
 
Introduction and legal basis 
On 28 August 2012, the European Central Bank (ECB) received a request from the Bulgarian Ministry of 
Finance for an opinion on a draft law on public finance (hereinafter the ‘draft law’). 
The ECB’s competence to deliver an  opinion is based on Articles 127(4) and 282(5) of the Treaty on the 
Functioning of the European Union and the third indent  of Article 2(1) of Council Decision 98/415/EC of 
29 June 1998 on the consultation of the European Ce ntral Bank by national authorities regarding draft 
legislative provisions1, as the draft law relates to Българска  народна  банка  (Bulgarian National Bank or 
BNB). In accordance with the first sentence of Articl e 17.5 of the Rules of Procedure of the European 
Central Bank, the Governing Council has adopted this opinion. 
 1.  Purpose of the draft law 
The aims of the draft law are to: (a) improve th e system for public finance management, including 
through the application of fiscal rules by the central  and local authorities; (b) provide for the common 
organisation and structure of public finances as an in tegrated system for ensuring and financing public 
goods and services, the reallocation and transferring of incomes and the accumulation of resources by 
budget organisations; (c) consolidate national fiscal rules, inter alia , by introducing rules for the structural 
deficit, and for the deficit and cons olidated debt of the general gove rnment sector; (d) transpose Council 
Directive 2011/85/EU of 8 November 2011 on require ments for budgetary frameworks of the Member 
States
2 and create the conditions for the implementati on of related regulations ; and (e) provide for 
detailed rules on the servicing of bank accounts and pa yments of budget organisations by BNB and by 
banks, and for the interaction between BNB and the Mini stry of Finance with regard to such servicing. 
The system for public finance management established by  the draft law is combined with a system for the 
servicing of bank accounts and payments of budget or ganisations. The servicing of bank accounts of 
budget organisations and budget organisa tion payments is carried out by BNB and by banks, subject to 
the rules laid down in the draft law, and in accordan ce with the joint instructi ons of the Minister for 
                                                 
1  OJ L 189, 3.7.1998, p. 42.  
2  OJ L 306, 23.11.2011, p. 41.  
ECB-PUBLIC  
2 Finance and the Governor of BNB. Funds from the Union are paid into, kept and serviced in bank 
accounts at BNB. A limited number of exceptions to  this rule are set out in the draft law.  
In order to ensure that public funds are secured, where accounts and payments of budget organisations are 
serviced by banks, the banks will guarantee the full am ount of available cash funds in all accounts and 
deposits serviced by them in levs and exchangeable currency of the budget organisations. In this respect, 
BNB shall carry out services to enable the banks to guarantee the funds in favour of the Ministry of 
Finance. The types of guarantee are set out in the draf t law. The Minister for Finance and the Governor of 
BNB can change the amount and the type of bank as sets which serve as guarantee, as well as the terms 
and conditions of the guarantee referred to in the draft law3. 
The accounts of the budget organisations with BNB are organised and serviced in a single system for 
collection, deposit, payment and accounting (hereina fter the ‘single account’). BNB services the single 
account and the other accounts and payments of budge t organisations in accordance with the rules 
provided for in the draft law, and with the requi rements of Article 43 of the Law on the Bulgarian 
National Bank (hereinafter the ‘Law on the BNB’)4. BNB, on behalf and on the account of the Ministry of 
Finance, services the accounts of the budget organisati ons included in the single account. The Ministry of 
Finance pays BNB on a contractual basis for the servicing of the single account and for the services 
connected with information provision for the accounts of budget organisations5.  
 2. Prohibition on monetary financing 2.1 It is important to safeguard compliance with  the monetary financing prohibition pursuant to 
Article 123 of the Treaty. The prohibition is essentially designed to prevent national central banks (NCBs) from providing overdraft facilities or any other type of credit facility to the public sector
6. 
National legislation may not therefore require that  an NCB finance the performance of functions of 
other public sector bodies7. In this regard, the ECB notes that the draft law stipulates that payments 
in the single account system are carried out up to the amount of the total availability of the single 
account, within the framework of the relevant avai lability and limits referre d to in Article 154(1), 
(13), and (14) of the draft law. BNB does not bear liability for non-payments or delayed payments 
                                                 
3  Article 152(8) of the draft law. 
4  According to this provision, the BNB shall act as a fis cal agent and depository of the State pursuant to contracts 
concluded and under market conditions and at market pr ices of services. In th is capacity, the BNB is inter alia  
responsible for executing bank servicing of accounts and paymen ts included in the single ac count system, in the name 
and for the account of the Ministry of Finance; collecting and submitting to the Ministry of Finance regular information 
about the accounts of public-financed enterprises with banks in Bulgaria; and acting as a government debts agent and a 
government guaranteed debts agent. In its capacity as a gove rnment debts agent, the BNB keeps government securities 
accounts, which shall be registered according to debt transfer ees. BNB may act as an authorised representative of the 
Council of Ministers for purposes and under conditions es tablished thereby and by the Council of Ministers. 
5  Article 154(12) of the draft law. 
6 The precise scope of application of the monetary financing prohibition is further clarified by Council 
Regulation (EC) No 3603/93 of 13 December 1993 specifying defi nitions for the application of the prohibitions referred 
to in Articles 104 and 104b(1) of the Treaty, (OJ L 332, 31.12.1993, p. 1). 
7  ECB Convergence Report 2012, p. 29. 
ECB-PUBLIC  
3 due to an insufficiency of funds in the single account8. The ECB understands that temporary 
interest-free loans9 from accounts which will be serviced by  BNB do not involve any financing by 
the BNB as this would otherwise not be compliant  with the monetary financing prohibition.  
2.2 The ECB acknowledges that the draft law refers to  services to be carried out by BNB as agent of 
the State. Article 21.2 of the Statute of the Europ ean System of Central Banks and of the European 
Central Bank (hereinafter the ‘Statute of the ESCB’) establishes that the ‘ECB and national banks 
may act as fiscal agents’ for ‘Union institutions, bodies, offices or agencies, central governments, 
regional, local or other public authorities, othe r bodies governed by public law, or public 
undertakings of Member States’. The ECB unders tands that the provision of services by BNB 
pursuant to the draft law is to be read in c onjunction with Article 43 of the Law on the BNB, 
according to which BNB shall act as the fiscal ag ent and depositary of th e State by virtue of 
contracts concluded at market conditions and prices. As noted in the ECB’s Convergence Report, national legislation that enables an NCB to hold government deposits and to service government 
accounts does not raise concerns about the complia nce with the monetary financing prohibition as 
long as such provisions do not allow the extension of credit, including overnight overdrafts, and 
that deposits or current account balances are not remunerated above market rates
10. 
 3. Central bank independence The ECB expects that BNB’s involvement will be full y compatible with its in stitutional and financial 
independence
11 to safeguard the proper performance of its tasks under the Treaty and the Statute of the 
ESCB. The principle of central bank independence, inter alia , requires that Member States do not put 
their NCBs in a position where they have insufficien t financial resources and inadequate net equity to 
carry out their tasks related to the European System of Central Banks or Eurosystem12. The ECB 
acknowledges that the envisaged arrangements serv e the system of servicing of the bank accounts and 
payments of budget organisations, a nd consequently of the system for public finance management. The 
ECB understands that instructions of the Minister fo r Finance relating to the services of BNB are limited 
to the role of the State and the budget organisations  as clients and beneficiaries of accounts serviced by 
BNB. Furthermore, the ECB notes that BNB is able to charge appropriate fees for the provision of 
services under the draft law. 
 
                                                 
8  Article 154 (21) of the draft law. 
9  Articles 104 and 142 of the draft law. 
10  ECB Convergence Report 2012, p.31; see also Opini ons CON/2012/44 paragraph 3. 3 and CON/2012/63 paragraph 
6.2.2.All ECB opinions are published on the ECB’s website at  www.ecb.europa.eu. 
11  See ECB Convergence Report 2012, pp. 21-28. 
12  See Opinion CON/2012/63 paragraph 6.1. 
ECB-PUBLIC  
4 4. Accountancy and statistics 
With regard to accountancy, the ECB notes that Article  165(1) provides that the Ministry of Finance, 
upon agreement with the National Statistical Author ity, may instruct enterprises which are not budget 
organizations and which fall within the general government sector to  apply the relevant standards, 
instructions and accountancy plans. The list of the se enterprises shall be published on the websites of both 
institutions. The ECB is of the opinion that complete  and reliable public accounting practices for all sub-
sectors of general government are a precondition for th e production of high-quality statistics. In addition, 
Article 169 of the draft law specifies that the standard s, instructions and accounting plan will provide the 
statistical information for preparation of the data on the general government sector and its subsectors in 
accordance with the requirements of th e Union. To ensure high-quality st atistics, the ECB considers that 
this provision could benefit from a reference to C ouncil Regulation (EC) No 679/2010 of 26 July 2010 
amending Regulation (EC) No 479/2009 as regards the qua lity of statistical data in the context of the 
excessive deficit procedure13 which strengthens the Commission’s powers to access a widened scope of 
information for the needs of data quality assessment , in full compliance with Council Regulation (EC) 
No 223/2009 of the European Parliament and of the Council of 11 March 2009 on European statistics14 
establishing a legislative framework for the production of  European statistics. The latter Regulation also 
lays down the principles governing the development,  production and dissemination of European statistics 
as regards professional independence, impartiality, objec tivity, reliability, statistical confidentiality and 
cost-effectiveness. 
 5. Numerical fiscal rules The draft law contains numerical fiscal rules asso ciated with automatic correction mechanisms where 
expected budgetary outcomes deviate from targets. The ECB considers that numerical fiscal rules 
contribute to enhancing fiscal discipline as in tended under the strengthened Union governance 
framework. To ensure full compliance with Union fiscal governance rules and possible future changes 
thereto, the draft act should refer to the relevant Union legislation
15.   
 6. Fiscal transparency The availability of timely and reliable fiscal data is crucial to the proper functioning of budgetary 
surveillance and the monitoring of budgetary develo pments. A key element in ensuring the quality of 
fiscal data is transparency, which must entail the re gular public availability of such data. However, the 
draft law does not cover all the requirements unde r Directive 2011/85/EU, such as the obligation to 
publish cash-based fiscal data (or the equivalent fi gure from public accounting if cash-based data are not 
                                                 
13  OJ L 198, 30.7.2010, p. 1. 
14  OJ L 87, 31.3.2009, p. 164. 
15  This includes the Treaty on Stability, Coordination a nd Governance in the Economic and Monetary Union, which 
Bulgaria signed on 2 March 2012, as well as the six legislation changes to st rengthen the Union economic governance 
framework (the so-called ‘six-pack’) which entered into force on 13 December 2011, including Directive 2011/85/EU. 
ECB-PUBLIC  
5 available) on a monthly basis for central government , state government and social security sub-sectors, 
and on a quarterly basis for the local government sub-sector. Moreover, for fiscal transparency reasons and to ensure compliance with the relevant Union le gislation, the ECB suggests that the draft law also 
obliges the government to publish a detailed re conciliation table showing the methodology of 
transmission between cash-based data and data b ased on ESA 95 as required under Directive 2011/85/EU. 
 7. Government deposits and liquidity management 
Article 154(22) of the draft law allows the Minister for Finance to manage the government liquidity, 
including the single account, without any prior coor dination with BNB, except for general guidelines 
about the government liquidity management. The ECB notes that the management of the government 
liquidity may interfere with the smooth implementati on of monetary policy by BNB. Indeed, placing the 
government liquidity either with BNB or with the Bu lgarian banking system may trigger large liquidity 
effects for the economy which are equivalent to mone tary policy operations. As a result, the lack of any 
prior coordination with the BNB regarding the mana gement of the government liquidity may jeopardise 
the smooth fulfillment of the monetary policy mandate of  the BNB, which is a deficiency that should be 
addressed in the draft law. 
 This opinion will be published on the ECB’s website.    Done at Frankfurt am Main, 24 October 2012. 
 
[signed] 
 
The President of the ECB 
Mario DRAGHI