Download Report-to-the-Parliament--Fiscal-Yr-2007

REPORT TO PARLIAMENT ON THE ADMINISTRATION OF THE
“GOVERNMENT BOND SINKING FUND”
Introduction
The report is drawn up in compliance with article 2, paragraph 3, of Law 432 of 27
October 1993, and illustrates the purchase dynamics that go to form the yearly balance, as well as
the management of the utilizations in pursuing the aims of the Government Bond Sinking Fund.
The Ministry of Economy and Finance (MEF) holds account number 522 in the name of
the Fund at the Bank of Italy.
The management of the sums credited to and utilized by the account in the name of Fund
at the Bank of Italy is assigned to the Minister, who acts in ways deliberated by decree (the latest
version is Ministerial Decree (MD) of 29 May 2001).
Income, see article 3 of Law 432 of 27 October 1993, arrives to the Fund through budget
items 4055 (asset dismissals) and 3330 (donation deposits and possible allocations from the MEF).
The amounts that transit in budget are transferred to account 522 in the name of the Fund by means
of decrees of variation from income to expenditure, subject to the recording of the Court of
Accounts, and by subsequent orders of payment through expense item 9565, within the competence
of the department in charge – the Treasury – (base provisional unit 3.3.9.7. – Government bond
depreciation) of the MEF.
The dismissal of stock held directly by the MEF is the Fund’s main source of income.
The main purpose of reducing the amount of outstanding public debt is sought by using both
market buy-backs of circulating securities and refunds at maturity: during 2007 a refund at maturity
transaction for a value of 4.050 million Euros was carried out.
Income and transfers to the Fund
As a total, in the year 2007, 3.500.872.127 Euros have been cashed to the Fund’s items, and
then transferred to the relative account at the Bank of Italy.
In detail, the proceeds deriving from the following have entered the Fund’s account at the
Bank of Italy:
• SACE S.p.A.’s reduction of capital, whose surplus, according to paragraph 1339 of article
1 of Law 296/2006 (2007 Financial Law), has been set aside for the Government Bond
Sinking Fund; in February 2007 the relative amount of 3.500 million Euros was then
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credited on the Fund’s item 4055.
•
The revenue deriving from Telecom Italia Media S.p.A.’s adhesion to the voluntary
takeover bid of its own shares, carried out in July 2005, with a value of 872.127 Euros
transferred to the Fund in December 2007, following the approval of the balance
adjustment law.
A donation of 1.000 Euros, moreover, has been made by a private citizen to the Fund’s post
office account, included in item 3330 (which concerns deposits for donations and allocations) in
November 2007 that, due to accounting needs, will be transferred to the Fund’s account in the
second semester of 2008.
As every year, on 1 January and 1 July, the interest accrued on the balance registered by the
Bank of Italy in the previous semester has been directly credited on the Fund’s account. The
amounts credited were 4.162.735,83 Euros in January and 11.063.486,20 Euros in July.
Income to the Fund’s budget items 4055 and 3330 are highlighted in detail in the attached
reports (Table A – Book balances up to 31.12.2001 and Details of income activity from 2002 to
2007).
II. Utilizations
Refunds at maturity
The balance deposited in the Fund’s account can be used not only for market buy-back
transactions, but also for refunding securities that reach maturity. This possibility becomes
especially advantageous if the security’s lifespan on the secondary market becomes too long or
when one prefers to unburden potentially critical deadlines due to the high concentration of
renewals.
Security refunds at maturity have been completed through the following transaction :
a)
partial refund, with a face value of 4.050 million Euros, of Treasury Bonds 1 June
2004 – 1 June 2007 – bond code IT0003674238 – out of a total face value of
15.409.742.000,00 Euros.
The amount of the transaction used the entire sum of the SACE deal and 550 million Euros
taken from the 2006 remaining balance (account 552’s balance at the end of 2006 was
552.944.402,52 Euros)
For a complete presentation of the Fund’s account activity, please see the tables on inflows
and activity, which illustrate, for every date, the amounts transferred and their utilization, including
the interest deposited every year. (Table B – Income and Utilization from 2002 to 2007) and (Tables
C and C/bis – Summary of activities and interest broken down by year up to 31.12.2007).
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The Fund’s balance on 31 December 2007, corresponding to the availability recorded in
the account at the Bank of Italy, was of 19.042.751,55 Euros.
Attachments follow.
THE ECONOMY AND FINANCE MINISTER
(Giulio Tremonti)
Roma, 7 May 2008
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TABLES:
•
Table A - Book balances up to 31.12.2001 and Details of income activity from 2002 to 2007;
•
Table B - Income and Utilization from 2002 to 2007;
•
Table C - Summary of the Fund’s account activity per year;
•
Table C/bis - Summary of interest credited to the Fund’s account per year;
•
Table D - Fund balance sheet description for 2007;
•
Table E - Summary of debt relief operations with the Fund from 1995 to 2007.
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