The outgoing 2020 was not very good in economic terms, but fortunately the crisis provoked by the Covid-19 pandemic did not reach the scale of the world financial crisis form the period 2008-2009. Banks around the globe and in Bulgaria entered the crisis with good liquidity positions, which allowed the system to prove itself as a strategic sector that continued to operate at full speed. Due to the economic consequences of Covid -19, the Bulgarian National Bank (BNB) imposed a moratorium on payments on loans worth about 4.5 billion euros. This has given a breath of fresh air to the clients but led to reduction of banks’ profits – at the beginning of October they had positive results, but profits were 45% lower in comparison to 2019.

By mid-summer, lending had resumed, interest rates remained unchanged and demand in mortgage lending returned to pre-crisis levels. According to BNB data, as of October, consumer and housing loans increased by 7.1%. In other words, predictions of a sharp drop in loan demand caused by the pandemic did not come true. When it comes to deposits - at the end of October those of Bulgarian households reached nearly BGN 58.87 billion, which shows an 8.6% rise in savings compared to the previous year.

Despite the needs, companies have also become much more cautious when taking new debts. This explains BNB's forecasts for a symbolic growth in corporate lending this year.

The Bulgarian Development Bank /BDB/ is an exception.

With the introduction of the emergency measures in March, BDB received permission from the government to set up two anti-crisis programs to support individuals whose work stopped because of the pandemic, as well as one to support the business.

In an interview with Radio Bulgaria, the chief economist of the state bank, Iliya Lingorski, said more about their goals and the progress they have made so far.

According to him, the loans give a breath of fresh air to both business and people whose incomes have been affected by anti-epidemic measures. Under these programs, BDB guarantees up to 80% of the value of loans, and commercial banks decide to reach customers throughout the country.

Funds received by over 1,000 companies that sought assistance under the bank's second business-related program total BGN 136 million. BDB's partners are 8 commercial banks in the country:

"The companies we helped operate in all areas of the economy. Priority for us were those in the most severely affected sectors - trade, tourism, transport and manufacturing. We received permission from the Council of Ministers and the European Commission to expand the scope of the program so that small and medium-sized enterprises can benefit from loans totaling up to BGN 1 million. The period in which they can apply for this assistance has been extended until the end of June 2021. 60% of the program will be available to them."

The expansion also allows large producers and enterprises providing employment for entire regions to receive loans guaranteed by BDB in the amount of up to BGN 2 million.

Program data related to individuals show that it has provided loans to 23,000 people.

What is the balance of BDB's work on the two programs?

"The quantitative effect is expressed in liquidity of over BGN 235 million granted in recent months,” Iliya Lingorski says. “The overall effect of the measures implemented by the government through BDB can be easily traced by the dynamics of employment. In this country, unemployment did not rise sharply, as expected in the spring, which shows that fiscal and liquidity measures have had a good effect."

English: Alexander Markov