from Global Macro Monitor
It was the autumn of 1996 when I arrived in Sofia, Bulgaria. I was working for a major Wall Street investment bank and had a clear and urgent mission to assess the sustainability of Bulgaria’s sovereign debt. The atmosphere in the capital was tense; the economic and political uncertainty hung thick in the air. The government was hanging by a thread while struggling to roll over its maturing Treasury bills. The early signs of a major burst of inflation were no longer subtle, as confidence in the Bulgarian currency was rapidly diminishing. In a series of high-level meetings with senior officials, one stood out: a particularly strained and revealing encounter at the Bulgarian National Bank (BNB), where the full scale of the crisis came into sharp focus.
Central Banker Confession
What I remember most vividly was sitting across from a senior BNB official. When I asked how the government would roll over its large tranches of domestic Treasury bills coming due, he looked me in the eye and said, “Gregor, we will not let the government default.”