The government wants to ban writing about debts

The government, in its proposed amendments to the Capital Market Law, has, without a public debate, added two articles that prohibit the publication of information, data and estimates related to the issuance of government securities by which the state borrows, as well as other data from the moment of preparation to the conclusion of the issuance, the publication of which "could affect the willingness of potential investors to purchase government debt securities."

The ban applies to publication in the media and at public gatherings. The media is also threatened with fines of 5.000 to 40.000 euros, responsible persons in the media in the same amount, and individuals from 1.000 to 5.000 euros.

Several interlocutors of "Vijesti" from the domestic and international capital markets said that this form of ban does not exist in any country in the European Union or the region.

Last week, “Vijesti” sent questions to the Ministry of Finance and the Ministry of Culture and Media regarding these subsequently added articles in the draft law, but received no answers. According to unofficial information, the Ministry of Finance did not consult the Ministry of Culture and Media about these articles and interdepartmental consultations are underway.

The Croatian Capital Market Law, which is fully aligned with EU directives, also does not have such or similar prohibitions, except for the prohibition for those participating in the preparation of a securities issue to provide insider information until the moment the issue prospectus is published, when that information becomes public and available to everyone for reading and commenting.

The writer did not refer to the directives

The explanatory notes for most other articles of the law that are being amended or added state that they are being harmonized with certain EU directives and regulations, but these articles do not state what they are being harmonized with and from which legislation they are being copied.

The articles of the law relating to these prohibitions were not in the draft law that was publicly debated in June and July last year, but only in the version adopted by the Government at its session on May 15 of this year. A day later, this law was sent to the parliament for consideration and approval by the legislative and economic committees, which will subsequently decide on it.

Prime Minister Milojko Spajic In March last year, when the state borrowed $750 million through bond issuance, he said that the publication of information about the issue led bond buyers to demand higher yields, which allegedly caused a greater increase in costs for the state. However, the Minister of Finance Novica Vuković He then boasted about the low interest rates that would be paid on that debt.

The formal proponent of this law, which amends 133 articles of the existing law, is the Ministry of Finance. During the public debate, two suggestions were submitted by the Montenegro Stock Exchange and the Central Clearing and Depository Company, one of which was accepted and the other rejected. However, the then draft law did not contain these articles relating to the prohibitions on the publication of information.

Repeated the same article text twice

Whoever inserted new articles of the bill into the version sent to MPs, now called 92a and 93b, made a serious technical error, unless there is an intention to continue hiding something from the public.

Although these two articles of the law have different chapter titles, before 92a it says “Prohibition of publication of data and assessments regarding government securities” and before 93b it says “Prohibition of public publication of information on the issue of government securities”, the text of both articles of the law is exactly the same down to the last detail.

Both articles state: “It is prohibited from the moment of preparation of the issue of government debt securities until the moment of the official announcement by the state administration body responsible for financial affairs on the conclusion of the procedure for the issue of government debt securities to publish in the media and at public gatherings material information and other data the publication of which could affect the willingness of potential investors to purchase government debt securities. Material information is information of strategic importance that may have an impact on the movement of the price of public debt on the domestic and international capital markets.”

It is only clear from the explanation that one of these two articles should have said something different. The explanation of Article 92a states that it “prescribes the period during which it is necessary to prohibit the publication of data and estimates regarding the issue of government securities and prescribes the definition of material information”. The explanation of Article 93b states that it “provides that from the moment of preparation of the issue of government securities until the moment of the official announcement by the Ministry of Finance on the conclusion of the procedure for the issue of government securities, the publication of information about the issue is prohibited”.

The new Article 407a stipulates that a fine of between EUR 5.000 and EUR 40.000 shall be imposed on a legal entity that, from the moment of preparation of the issue until the moment of the official announcement by the state administration body responsible for financial affairs on the conclusion of the issue procedure, publishes material information and other data in the media and at public gatherings, the publication of which could affect the willingness of potential investors to purchase government debt securities. For a responsible person in a legal entity and a responsible person in the media, the fine would be between EUR 5.000 and EUR 20.000, and for a natural person, the fine would be between EUR 1.000 and EUR 5.000.

Questions to ministries, what's next?

In questions sent to the Ministry of Finance, "Vijesti" sought answers on the specific reasons for introducing a ban on publishing information on the issuance of government securities, how they define "material information" and who decides what falls into that category in the context of this article.

They were also asked why the draft law that was on public debate did not include these articles but were included later, as well as who initiated the introduction of this ban - whether the Ministry of Finance or some other actor from the executive branch, whether the provision was added based on recommendations or documents from international organizations and which ones. Novica Vuković's department was also asked whether they consulted the Ministry of Culture and Media, legal experts or the media community before proposing this ban, whether they analyzed the possible consequences for the transparency of public finances and freedom of the media, and whether there is an international example that the Ministry refers to when justifying this legal change, and which one and where.

The Ministry of Culture and Media was asked whether they believe that this ban is contrary to the right to freedom of expression and freedom of the media, whether they were consulted when introducing these articles into the law, how they interpret the penal provisions, and how and in what way they plan to protect the media and journalists from potential abuse of this legal provision. This department was also asked whether it sees this law as an introduction to a broader practice of banning reporting on sensitive topics, whether it will initiate an assessment of the constitutionality of these provisions in view of their possible collision with the Law on Media and international standards on freedom of expression, as well as whether there is a practice in EU countries that supports this type of ban on publishing information and if so, where.

Publishing all bad information would be prohibited.

An integral part of the announcement of the issue of securities, with which the state wants to borrow, is a prospectus that lists all the important economic data of the state, on the level of public debt, gross domestic product, stability of public finances, inflation, trade balance, foreign investments,... economic forecasts and projections, possible economic risks,... In other words, everything that the media writes about every day and that makes up the economic life of a state.

So if any of these economic indicators deteriorate during that period, the media should not report it because it could "affect the willingness of potential investors to buy government debt securities."

The period of information prohibition begins, as stated in the disputed articles, from the "moment of preparation of the broadcast" until the Ministry's announcement of its completion.

It is unclear how the media can know when the "preparation phase" begins, as it is supposedly a secret and can last for months. During this entire period, there would be a moratorium on bad information about government work and economic indicators, so as not to scare off investors.

It is also unclear who will determine that an investor from London, New York, Singapore, and Dubai gave up on the purchase and trusted a local media outlet more than the prime minister and minister.