site.btaEC Sees Persistent External and Internal Vulnerabilities of Bulgarian Economy and Finances, Continues to Monitoring

EC Sees Persistent External and Internal Vulnerabilities of Bulgarian Economy and Finances, Continues to Monitoring

Brussels, November 27 (BTA) - In a European Alert Mechanism report to the European Parliament Thursday, the European Commission says that due to lingering external and internal vulnerabilities, in particular in the financial sector, in Bulgaria, it will continue to monitor this country as it deals with the persistent macroeconomic risks.

The report is also sent to the Council, the European Central Bank and the European Economic and Social Committee.

The report recalls that in February 2015, the Commission concluded that Bulgaria was experiencing excessive macroeconomic imbalances requiring decisive policy action and specific monitoring, in particular linked to concerns about financial sector practices. In the updated scoreboard, a number of indicators are beyond the targets, including the net international investment position, private sector debt, unit labour costs and unemployment as well as an increase in long-term unemployment.

"While the financial sector appears to have stabilized, the institutional and regulatory problems that became apparent with the failure of Corporate Commercial Bank have yet to be adequately tackled," the report says.

It also warns that private sector debt, concentrated in the non-financial corporate sector, remains high.

The EC notes that despite past efforts to improve the business environment, the insufficient development of Bulgarian preinsolvency and insolvency frameworks slow down deleveraging, increase uncertainty among market participants and reduce the country's overall attractiveness to investors.

It further catalogues persistent structural issues on the Bulgarian labour market - long-term unemployment and skill and qualification mismatches - and says these cause underutilisation of human capital and higher economic and social costs.