Even the great advocates of GDP-indexed bonds, such as Eduardo Borensztein and Paolo Mauro, who wrote an IMF discussion paper making their case, have reservations about “the verifiability of GDP data”.
In Bulgaria’s case, however, it seems that even the currency of measurement is unclear: should it be dollars or the leva, the national currency? Fitch Ratings has always assumed the calculation was to be made in leva at constant prices. Now it seems that there is doubt and that Bulgaria could owe $228m in interest arrears in the worst case scenario, using leva at current prices.
