Galery

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     In this case the state acted very quickly and adequately, especially in the case of First Investment Bank. According to economic theory, bank run does not occur if there is no genuine weakness of a bank and the case with Corporate Commercial Bank confirms it to some extent. This close link between the policy and the relevant business interests and the dependence of the economic interests of the banking business on the state played a bad joke on the bank.
     In your opinion, why was First Investment Bank attacked, instead of Raiffeisen Bank or UniCredit Bulbank?
     The case is currently under investigation but I am not involved in it to tell you exactly what happened and why. However, I think the attack against this bank was purposeful, in view of the fact that it is a Bulgarian bank with Bulgarian capital. It is a bit more vulnerable compared to the others, as it has no major international owner behind and is therefore more prone to such attacks. Obviously, this was an intentional attack and due to the shaken trust, it very easily managed to find firm ground and spread, but the banking crisis was averted. To some extent, this indicates the mature economy of Bulgaria that did not allow the banking crisis of 1996-1997 to repeat.
     In general, the government budget is in a relatively good condition, the revenue forecasts set in it are quite optimistic but are currently not implemented. In view of the overall macroeconomic situation and the state of the European Union, we cannot expect significant revenue growth. Nevertheless, it appears that the economy is recovering compared to the end of last year and there are more convincing signs that we have already left the crisis behind. One of those signs is the labour market, where there is serious net job creation, which was missing in 2009-2013. It is also apparent that the number of discouraged unemployed has been gradually decreasing since last year, and they are actively looking for a job, which is good news.
     Economic growth has increased compared to the previous year but the biggest disappointment comes from the decline in exports in the first quarter of the year. I hope that, due to the relative strength of the European economy, things here will improve in the coming months.
     What do you think of the banking supervision in Bulgaria? Is it effective in your opinion?
     In general, the requirements to the banks in Bulgaria are much stricter compared to those in the majority of the European countries in terms of capital adequacy and liquidity ratios. Moreover, the central bank very strictly follows the developments in the banking sector, continuously draws up instructions for capital allocation and increase, and its report show this very clearly in. In my opinion, the banking supervision in Bulgaria is one of the best and none of the banks has fallen within the risk categories as shown by the stress tests carried out by the European Union on the banks in the country. The big problem of Corporate Commercial Bank was due to the political status quo and to the fact that it held huge resources of public companies. However, beyond this relationship, the banks operate in an extremely competitive environment and the very fact that there have been no bankruptcies over the past 20 years means that the banking supervision works properly.
     Recently, the European Commission decided to approve a scheme that would allow the Bulgarian government to possibly support the banking system with 3.3 billion leva. Do you think the government will have to grant a financial aid to the banks at this stage?
    The situation has settled down and an additional support does not seem necessary. You know that the government has obtained a loan, which is also supposed to support the banking sector, but most likely, it will not be used because it is not necessary. I think it was rather a nine days’ wonder and it passed away. It will only take time to recover the shaken trust in the banks. The current situation is very fragile and requires reasonable talk, and all institutions should support the recovery of trust.  
     Won’t these bonds, which the Bulgarian government issued ten days ago, be a burden to the state? Will it be able to return them?
     They are long-term loans and generally, there is no problem with the fiscal balances. There is a fiscal reserve, which is above the legal minimum, and it is the guarantee of the return of government borrowing. Moreover, the projected budget deficit this year is relatively lower than that of the other European Union member states; it amounts to 1.8% of GDP. As an organisation that is fighting for less government involvement, we would like to see some reduction of government spending as well as deficit reduction, and in an even better case, balancing the budget, as every deficit must be financed from the fiscal reserve or with new debts that will have to be repaid sooner or later.
     This year it is expected that the government will obtain more loans for three reasons. The first is to refinance the maturing debt, the second is to finance the deficit through a debt and the third reason that requires larger loans is the Eurobond that will mature early next year. It is one of the two bonds, which were emitted by the government of Simeon Saxe-Coburg, in order for the funds of these Eurobonds to finance the Brady bonds emitted during Bulgaria’s default in the early 1990s.