Central Bank Independence in Transition Economies

5C. Limitations on Lending 

The Bank must not cover the budget deficit by monetary emission (Art. 37) but 

may grant short-term credit to the Government backed by the Government bonds (Art. 

57). The maturity of this credit is limited to six month and the amount to 5% (in 

certain circumstances to 8%) of the average Government revenue in three last financial 

years. The ceiling applies to the purchases of the Government securities but, if it is 

necessary for conducting monetary policy and if the securities are purchased on the 

secondary market, it may be relaxed. The interest rate charged on all credits is 

determined by the market rate.