The Ministry of Finance informs that in 2015 following transactions were concluded on the financial market:
- Foreign Exchange Swap Transactions (FX swap),
- Cross Currency Swaps,
- Exchange of foreign currency.
1. Maturity of particular transactions was no longer then two months and was established to satisfy borrowing requirements of State budget. In 2015 transactions were concluded using USD/PLN currencies with the total notional amount of USD 1.20 bn that equals of acquiring PLN 4.71 bn. These transactions consist of simultaneous exchange of one currency for another for a specific period of time with exchange rate set up at the moment of conclusion.
This liquidity management instrument allowed to use foreign currencies in order to borrow zloty.
The total cost of acquiring funds in domestic currency was lower than cost of alternative cost of financing with the comparable maturity.
Due to the fact that these transactions included assets only, and not liabilities, they had (according to Eurostat's guidelines) no impact on the public debt level as well as on the budget deficit reported to the European Commission.
The Supreme Chamber of Control didn't raise objections connected with purposefulness and effectiveness of these operations.
2. In 2015 r. the Ministry of Finance concluded cross currency swaps. These transactions consist of the nominal exchange of one currency for another one on the start and maturity date of the swap. The same exchange rate is used for initial and final exchange of nominal amounts. Additionally there are temporary exchanges of interest cash flows calculated on the basis of nominal amounts and fixed interest rates agreed on the date of concluding the transaction.
As a result of conducted cross currency swaps the Ministry of Finance exchanged EUR 0.90 bn for CHF 0.94 bn. During the 5-7 years life of the transaction, the Ministry of Finance will receive annually fixed interest in EUR and pay zero interest in CHF. Conducted transactions allowed to borrow CHF on the more favorable conditions in comparison to the direct issuance on the Swiss market. Substantial difference between two interest rates will cause a decrease of debt servicing costs over 5-7 years.
These contracts were published in the fiscal notification for 2015 which was reported to the European Commission. In accordance with the Council of Europe legal act cross currency swaps change the currency structure of debt and therefore are calculated in the level of general government debt.
The Supreme Chamber of Control didn't raise objections connected with purposefulness and effectiveness of these operations.
3. In 2015, similar to previous years, Ministry of Finance concluded the exchange of foreign currency resources received from the EU and related to the public debt both on the financial market and in the central bank. Total exchange on the financial markets amounted to equivalent of EUR 6.39 bn.
The Supreme Chamber of Control didn't raise objections connected with purposefulness and effectiveness of these operations.