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BULGARIA PowerPoint Presentation

BULGARIA

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BULGARIA

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Presentation Transcript

  1. BULGARIA Country and Financial Sector Presentation

  2. Main Economic Indicators

  3. Developments in 2006 • High growth starting with Q2 • Sizable reduction in net export’s negative contribution to GDP • Tight fiscal policy • Strong private domestic demand • High growth of gross fixed capital formation • High rate of credit growth • High Current Account Deficit

  4. Prospects for 2007 • High growth continues more broadly based • Export oriented industries fast growth materializes in a higher growth rate for exports than imports • Tight fiscal policy • Sustained inflationary pressure put some pressure on the currency board • High levels of FDI

  5. Financial Sector • Currency Board arrangement since 1987 • Banking Sector dominant at 90% of financial sector assets • Bank assets to GDP 78% at end 2005 • High concentration (first 5 hold over 50% of assets)

  6. Banking Sector • 34 banks as at end 2005 (15 foreign owned, 12 locally owned, 2 state owned, 5 local branches of foreign banks) • Share of bank assets owned by foreign banks and branches 72% in 2005 • Share of loans by local banks 21% • Share of deposits in local banks 13.4% • Capital adequacy ratio > 12%

  7. Banking sector (cont.) • Deposit Insurance Fund • Credit registry • Declining interest rates and spreads • Increased volume of MLT loans • Good ratio of non-performing loans to total assets (2.2%) but increasing since 2004 • Responsible for >25% of private foreign debt

  8. Banking Sector (cont.) • Since 2001 high credit growth • Bank credit to non-government sector increased from 4% of GDP in 1998 to 12% at end 2004 (still low) • In 2005 BNB introduced quantitative limits on credit growth • Consequently increase in non-bank financial intermediation (including cross-border lending) • Restrictions to be removed in 2007

  9. Capital Markets • Still low turnover in the Stock Exchange • Market capitalization < 10% of GDP • Rapid growth in the market index • Private pensions picking up at 2% of GDP • Gross premium income of all insurance 2.5% of GDP

  10. Thank You