The controversial articles banning reporting on state debt have been deleted from the proposed amendments to the Capital Market Law after the Ministry of Finance accepted the amendments of CIVIS MP Maja Vučelić at the meeting of the Economy Committee today, which became an integral part of the bill.
This was done after consultations with the European Commission and the definition of the issue of reporting on borrowings will be further coordinated with Brussels within the framework of the closure of Chapter 9 (Financial Services).
"Vijesti" announced on May 28 that the Government, in its proposal for amendments to the Capital Market Law, 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 applied to both publication in the media and at public gatherings, and fines of 5.000 to 40.000 euros were imposed on the media, the same amount on responsible persons in the media, and 1.000 to 5.000 euros on individuals.
Vuković did not come to the session
Minister of Finance Novica Vuković, whose department added two articles to the proposed amendments to the Capital Market Law, bypassing the public debate, prohibiting the publication of information, data and assessments 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", did not appear at the committee session, but sent his assistants Andrijana Ulić Rajović, Aleksandra Popović and head of the cabinet Jovana Bojić.
At the session of the Committee on Economy, the chairman of that body and SD MP Boris Mugoša first asked representatives of the Ministry of Finance whether it was true that the draft law during the public debate did not contain articles prohibiting the publication of data on debts, and who later proposed that they be included in the draft law and in which analyses.
Ulić Rajović said briefly, "The Ministry of Finance will provide a detailed explanation when the amendments that they need to vote on are on the agenda of the session."
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DPS MP Mihailo Anđušić said in the debate on the bill that the disputed articles best reflect the way the Government works and that he is the Minister of Finance so he would stand firmly behind this norm and would not withdraw it but defend it. He said that he hopes that such frivolity will not happen again, that we must "open our eyes" every day to monitor that the Government does not slip something through the laws.
Zdenka Popović (Democrats) responded to this, pointing out that the DPS government hid debt data in 2018. She said that she agreed with Vučelić's amendments.
BS MP Mirsad Nurković (BS) assessed that he "is not sure that the amendments are going in the right direction if we think that we should publish everything in the field of finance."
"Some things should remain between the issuer and the bond buyer before the deal is concluded," Nurković said.
He read the controversial article on the ban on publishing data from the moment of preparation of the broadcast until the official announcement by the Ministry of Finance, assessing that he sees nothing controversial in it and that behind such a norm "secutorial or criminal acts may be hidden", and that this is not unknown in the world. He called on the Ministry of Finance not to give up on the proposed solution.
"Jealousy" over the amendment
Mugoša said that he believed Vučelićka had written the amendments that he praised and asked whether the European Commission had communicated directly with her, since in the justification for deleting the disputed article, she stated that "the European Commission's request to postpone the issue of prescribing a ban on the publication of information on the issuance of government securities, in accordance with Regulation 596/2014, to a later stage of the negotiation process, proposed the deletion of this article."
"If the European Commission wrote to you, I am very proud that someone in Brussels is dedicating themselves to you personally," Mugoša emphasized.
Vučelić replied, "I'm sorry you're jealous of my amendments," and that she had referred to the directives and regulations of the European Commission in her writing.
Mugoša questioned the definition in the disputed article that "it is prohibited to publish in the media and at public gatherings material information and other data whose publication could affect the willingness of potential investors to purchase government securities" and the definition that material information is of strategic importance.
"Who assesses what is strategic importance and what other data is? Based on this, you can prohibit MPs from talking about the debt and then have someone from the government decide at their discretion what someone can and cannot talk about and what is punishable," Mugoša pointed out.
Reading from paper
Ulić Rajović read the position of the Ministry of Finance from a sheet of paper. She stated that the process of state borrowing represents one of the most important issues that directly affects the preservation of the public interest of all citizens and that the importance of the issue in question is evidenced by the fact that during the procedure, materials related to borrowing towards the Government are prepared, and all information contained in the materials related to borrowing and, in accordance with the Law on Data Secrecy, is marked with a level of secrecy internally.
"The reasons for marking the subject material with a degree of secrecy are to preserve the stability of the financial market, prevent market manipulation, protect the public interest, prevent influence on the decisions of domestic and foreign investors, and movements in the prices of state debt on the domestic and international capital markets. The Ministry of Finance proposed standardizing the issue in question precisely because the publication and manipulation of this information in question can have a direct impact on investor decisions, as well as movements in the prices of state debt," stated Ulić Rajović.
She said that in relation to the above, there have already been concrete cases in practice where the reporting and transmission of individual views in domestic media have resulted in "the aforementioned negative impacts", which was a reason to propose this solution as a mechanism for protecting the public interest.
"Specifically, investors who learn about the planned issue in advance may readjust the sale of existing bonds on the secondary market in order to prepare for the purchase of new ones, which can lower the price of existing bonds and increase yields, which affects the interest rate for new debt," said Ulić Rajović, stating that the EU has regulations on the protection of privileged information, according to which the issue must be confidential because it represents insider information and can cause market disruptions if it is carried out before the conclusion, which can cause the cost of government debt.
She added that these reasons for the solution proposed by the Ministry of Finance are because the price of government debt is something that directly affects the standard of living of citizens, without jeopardizing freedom of speech and reporting.
"For the above reasons, the Ministry of Finance agrees with the temporary deletion of the aforementioned articles and, in cooperation with the competent directorates-general of the European Commission, to reopen the resolution of this issue when the closure of Chapter 9 is considered and when work is underway to harmonize the capital market law with the European directives regulating this issue," said Ulić Rajović.
She also said that they agree with Nurković's presentation and that the Ministry will not give up on standardizing this issue.
"We would especially emphasize that the hiring process has never been more transparent than during Minister Vuković's term," concluded his assistant.
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