Bulgaria 

Bulgaria country policy

Policy established 28 June 2009

• ILC, bank guarantee or central public guarantee (conditional)
• The country ceiling is 1500 mln euro
• Early warning signal 500 mln euro
• - of which was used as at 2012-02-29 9 mln euro

Country class: 4

Bulgaria country facts

Atradius Dutch State Business  Economic Research
Country Report last updated : 13 September 2011
Country :  BULGARIA 

political situation 

Reasonably Stable

Head of state
President Georgi Parvanov.

Form of government
Government of Citizens for European Development of Bulgaria (GERB), headed by prime minister Boyko Borisov.
 
Internal Economic Situation
Weak Recovery From Recession

General situation
Following a fall in real GDP by 5.5% in 2009, the economy has shown a weak recovery since then: the impact of a rebound in exports (+16% in 2010) was exceeded by a further real decline of domestic demand. Especially sectors oriented on the home market are hurt (construction, retail trade, food) due to a prolongued deleveraging process in the overdebted private sector after years of exuberance: minimal credit growth by banks, high unemployment, fallen real estate prices, public sector spending cuts. After a peak mid-2008 of 15%, inflation has fallen to the 2-4% range since 2009. The main banks are foreign owned (mainly Austrian and Greek); despite less profitability and high level of NPL’s (13.5%), banks are still solid and well capitalized. New lending by the foreign mother banks to the local subsidiairies has been scaled back substantially since end 2008, also causing domestic bank lending to private debtors come to a virtual standstill.  
 
EXTERNAL FINANCIAL SITUATION : HIGH (PRIVATE SECTOR) DEBT SERVICE
Main sources of foreign exchange
Light industrial products, machinery, tourism.

Main foreign markets
EU (57%, incl Greece 8%), other Europe, incl. Turkey.

Main expenses of foreign exchange
Fuels/minerals (28%), machinery and equipment (25%).

Balance of payments
Thanks to a marked drop in imports in 2009, slow recovery since then and a good export performance, the trade and current balances have improved strongly since 2009. But  EU- and other transfers, inflows of FDI and borrowing from parent banks have declined, keeping the level of
external economic situation
good liquidity, weaker solvency but no payment
problems ahead. This prospect and the strongly improved external position have underpinned the currency peg to the euro.