site.btaSuccess of Bulgaria's Recovery Programme Is in the Hands of Business - Expert

Sofia, June 24 (BTA) - "The Recovery Programme will not be an
anti-crisis measure, it will rather support companies that are
already recovering from the pandemic crisis," Latchezar
Bogdanov, Chief Economist at the Institute for Market Economics,
 commented for BTA. "The success of the programme will depend on
 the interest of business in contracting loans."

Under the Recovery Programme, which was unveiled on Tuesday by
Finance Minister Assen Vassilev and Economy Minister Kiril
Petkov, 2.5 billion leva will be available to corporate
borrowers, with the Government sharing in the cover of the
systemic risk and covering 80 per cent of the credit exposure.
    
First Investment Bank, DSK Bank, Tokuda Bank, United Bulgarian
Bank, Raiffeisenbank and Post Bank have so far signed contracts
as Recovery Programme partners.

Bogdanov recalled in his interview for BTA that non-financial
corporations and households are holding some 96 million leva on
bank deposits, while the funds that are extended in loans
approximate 63 billion leva. This means that the banks still
have enormous financial resources that they want to lend at a
profit, but this would require high-quality and sensible
investment projects, he added.
 
In the economist's opinion, it is difficult to say which
particular recovering sectors will show interest in the new
programme because part of the Bulgarian business community has
always faced the dilemma of whether to borrow or obtain grants
under various EU programmes to finance at least part of an
investment in, say, new machines. 
   
Entrepreneurs will be even more cautious in applying under the
new programme, given that it requires from borrowers to become
co-debtors as natural persons and incur liability for the loan
with their personal rather than corporate assets, the expert
emphasized. Another factor that will impact the popularity of
the programme will be the banks' increased prudence in extending
 loans from the pre-crisis period.

To underpin his argument that the programme is targeted at
companies emerging from the crisis, the expert noted that the
economy in both Bulgaria and in the industrialized world has
been recovering back since last autumn. 
   
In March and April, Bulgaria's exports reached historically
record highs, and this also applies to global trade, Bogdanov
added. Much of industry, consumption, services and trade are
recovering, as evident from the figures for March and April
suggesting a rebound to the pre-crisis levels, and even better
results are expected in May. The only sectors in difficulty are
tourism and the related international air transport but, they,
too, are recovering, although far from the pre-crisis levels,
Bogdanov said. NV/BR/LG