Treasury borrowed with Brexit and Trump victory in mind

The Treasury of Latvia made borrowing plans for this year, projecting the possibility of Brexit and Donald Trump’s victory in the U.S. presidential election, Jevgenija Jalovecka, director of the Treasury’s forecasting and financial planning department, told members of the Saeima public expenditure and audit committee Wednesday, reported LETA.

“These two events shook financial markets this year, but we projected such a possibility when planning our borrowing programs and timed the borrowing prior to these events,” the Treasury representative said.

The Treasury has borrowed €1.3 billion in total this year. The first loan, worth €650m, was raised in May. The interest rate on this loan was the lowest in 20 years.

Another €650m were borrowed in September to avoid the financial markets’ distress caused by Trump’s election, Jalovecka said.

“The borrowing plan for next year will be worked out at the end of December. For now, we are waiting for the financial markets to calm down after these shocks,” the Treasury representative said.

She added that Latvia’s external debt had now reached 40% of GDP, but that in February 2017 is expected to contract to less than 40% of GDP after Latvia repays €1 billion.

“Already now, Latvia’s external debt is the fourth lowest among EU member states,” Jalovecka said.

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