The Finance Ministry, tired of being a "toy" in the hands of the money market, plans to become a player itself in the market to better manage debt and cash, the Ministry said on August 16.
The ministry was planning to create a separate institution to manage its liquidity that would directly trade in the money market, Finance Minister Brigita Schmögnerová told journalists.
"The Ministry of Finance will no longer be a light toy in the hands of market players, who can easily estimate the ministry's refinancing needs... and use the information at the expense of the state budget," she said. "We will trade with money in the market like any other participant."
The minister has previously criticised commercial banks for raking in easy profits by lending to the ministry at high rates. The ministry currently manages debt directly and usually holds one state bond and one treasury bill auction every week.
State funds are now held in a central bank account with an interest rate at the discount rate minus one percentage point, currently 7.8%. Under the planned arrangement the ministry would be able to deposit temporary surplus funds at market rates.
Short-term rates up to one week in the Slovak money market stood at around 9.5 to 10.5% on August 16.
The minister said that legislative changes would be necessary before the creation of the new institution, but did not say whether they would allow the ministry to borrow in the market directly. She did not specify when the changes would take place.
23. Aug 1999 at 0:00 | From press reports of TASR and SITA