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The Bulgarian Development Bank CEO Assen Yagodin is also Deputy Chairman of the board of the Association of Banks in Bulgaria and Chairman of the Board of Directors of the Bulgarian Stock Exchange. He took some of his time to answer GRReporter questions not only about the progress of the financial institution he represents but made a general overview of the Bulgarian financial system in times of economic instability in the region. Bulgaria’s firm macroeconomic foundations, according to Assen Yagodin, are low external debt to GDP ratio, sound public finances and stable banking system. These are the prerequisites for attracting new investments, and the bank he represents focuses on bank funding of projects related to export, production and innovation.

The Bulgarian Development Bank signed a loan agreement with the Black Sea Trade and Development Bank. Which companies and sectors of the economy are you going to support?

BSTDB credit line is targeted to companies that meet the legal definition of SMEs. It could be used for investment (up to 50% of project cost) and working capital loans, export and pre-export financing. In general, the line is available to entrepreneurs from all sectors of the economy, but there are restrictions only for some specific activities such as production of weapons, tobacco, alcohol, gambling.

Our intention is to give priority to companies developing innovations, creating export, capable of generating significant auxiliary activities and jobs. BDB priority sectors are energy-saving technologies, agriculture and processing industry, logistics, engineering, environment, renewable energy sources.

Do you expect market recovery and steady growth soon?

The Bulgarian economy is part of the global economy and the recent developments on the financial markets will have an inevitable impact on it. Bulgaria's advantage is that it has stable macroeconomic foundation - low indebtedness, healthy public finances and banking system. I expect the economic growth to continue the next couple of years, albeit not at a pace that everyone would like.

The Bulgarian Development Bank is ready to contribute to the national economic growth. The bank has ambitious targets for business development and is ready to increase significantly the volume of activities in support of the Bulgarian SMEs.

What is the reason for the big drop in the major stock exchanges turnover lately?

The markets respond very nervously to any news in recent months, the situation is unclear and we observe sharp fluctuations in price levels. In such circumstances, lower turnovers are not unusual. Investors need time to adapt to new realities - both those who have spare money, but refrain from investments in anticipation of more favourable rates, and those who wish to sell but consider that the assets they hold are undervalued.

Could you tell us more about the cooperation between the Athens and Sofia Stock Exchanges? What are the benefits of such collaboration?

The relations between the two stock exchanges - the Athens Stock Exchange and the Bulgarian Stock Exchange - have started with the establishment of BSE and their official expression is the Memorandum of Cooperation signed between the two exchanges in 2000.

At present, the relations between the two exchanges are exclusively in the field of exchanging experience and good practices. The Athens Stock Exchange as one of the largest stock exchanges in the region and has always been a source of good practices and experiences in attracting investors - local and especially foreign ones. At the same time, the Bulgarian Stock Exchange has always maintained good relations with the neighbouring markets in the region including Athens and in accordance with our development strategy until 2012 we fully support and recognize the importance of the development of regional cooperation between the markets.

It is now a tradition to organize workshops at various levels between the two stock exchanges at least once a year to exchange experience, attract investors and issuers and discuss the economic situation in the region. /We also organize sports tournaments and meetings./

We believe that now is the right time to intensify the relations between the two stock exchanges to exchange stock information, organize joint representations of issuers and dual listing. This would open the markets to each other and would help the region to form a single image for foreign investors.

Shortly after the world began to recover from the global crisis in 2008, the debt crisis of the countries of the Euro periphery came. How has this affected the Bulgarian financial market?

In a growing debt crisis, Bulgaria stands firm - a fact confirmed by the rating agencies, which reported improved prospects for the country. The impact of the debt crisis on the domestic market is mainly through the reduction of the net inflow of external financing, and the financial system of the country increasingly has to rely on local resources. This is reflected in the prices of the Bulgarian financial market – the interest rates on loans and deposits in the country declined from the peak levels reached in the crisis, but still are at levels higher than those before 2009.

How do you evaluate the method by which Brussels has decided to help Greece, Ireland and Portugal? Do you think that the European financial system will need Eurobonds?

We are all in the same boat in the EU, the interest in resolving the current situation is common. The provision of funds from some states to others within the EU is a process, which should be balanced between the interests of the states providing the resources and the countries - recipients of the aid, demonstrating the fundamental European principle of solidarity between the member states in conjunction with the rigor to conduct the necessary reforms.

The developments indicate that the EU and Euro zone decision-making method in the financial field is slower than needed to calm the markets. Policymakers have to build more operational mechanisms, able to respond quickly and appropriately.

Currently, the aid allows controlling the situation. These and other countries could need some additional support eventually and my personal opinion is that if this is necessary, appropriate ways and means will be found.

The unified bonds of the Euro zone countries are a matter of the future. Apparently, all Euro zone member states, even those able to be funded under the best conditions, would benefit from a bond market of deep liquidity, able to compete as a reliable choice for savers at global level. In the current situation, unified bonds remain a possible tool, figuratively kept in store to be used if necessary.

When will Bulgaria be ready for the Euro, and under what conditions?

When the relevant political decision is taken, Bulgaria is technically able to meet the requirements for joining the "waiting room of the Euro" (ERM - 2) within a reasonable period of one to two years. Then the country will be able to coordinate with its partners and decide when to join the Euro zone. We should not forget that under the contract to join the EU Bulgaria has committed to join the Euro zone, so the question is not whether but when.

Eurostat data show that Bulgaria has the lowest levels of prices, GDP and labour productivity in the EU. A longer term for the introduction of the Euro would allow to soften these differences. Bulgaria has the opportunity to choose carefully the right moment to join in order to prevent the bitter experience of southern European countries, where much of the current problems are due to the non-competitive ratio between labour productivity and price levels, an imbalance resulting from non-optimal choice of exchange rate and time to join the Euro zone.