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Business and Economics > Finance: General

You are looking at 1 - 10 of 51 items for :

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Cover Selected Issues Papers
Bulgaria: Fiscal Risks from State-Owned Enterprises
Anh D. M. Nguyen
State-owned enterprises’ (SOEs) economic and financial performance may have important fiscal implications. This study evaluates related fiscal risks in Bulgaria from both aggregate and firm-level perspectives. The low level of state-guaranteed debt of SOEs poses minimal fiscal risk. However, contingent liabilities could be a fiscal concern in the long term due to the low profitability of major SOEs and their inefficient resource allocation. Given their crucial role in the production network, their inefficiencies likely negatively impact the overall economy’s productivity and competitiveness. Additionally, liquidity and solvency risks are evident in several key SOEs. These findings underscore the need for monitoring and improving SOEs’ financial performance.
Keywords:
Bulgaria; State-Owned Enterprises; SOEs; Fiscal Risks; SOEs’ financial performance; solvency risk; risk threshold; return on assets; health check tool; loss-making SOEs; Public enterprises; Contingent liabilities; Energy sector; Solvency; Europe
Cover Selected Issues Papers
Bulgaria in Global Value Chains: Leveraging Integration with the EU: Bulgaria
Giacomo Magistretti
and
Iglika Vassileva
As a small open economy, Bulgaria benefits from economic exchanges with global partners. However, after a boost before the Global Financial Crisis and EU accession, its integration in global value chains has been growing only modestly in recent years and it remains particularly low when it comes to links with EU partners. To capitalize from the integration with the EU Single Market and exploit the opportunities that will come from joining the euro zone and the Schengen area, Bulgaria should focus on enhancing its non-cost competitiveness by improving its governance and investing in infrastructure and human capital.
Keywords:
Bulgaria; global value chains; forward linkages; backward linkages; international trade; machine learning; SHAP values; EU accession; EU single market; leveraging integration with the EU; EU country; links with EU; Exports; Foreign direct investment; Imports; Competition; Global
Cover IMF Working Papers
ECB Euro Liquidity Lines
Silvia Albrizio
,
Iván Kataryniuk
,
Luis Molina
, and
Jan Schäfer
Central bank liquidity lines have gained momentum since the global financial crisis as a crosscurrency liquidity management tool. We provide a complete timeline of the ECB liquidity line announcements and study their signalling and spillback effects. The announcement of an ECB euro liquidity line decreases the premium paid by foreign agents to borrow euros in FX markets relative to currencies not covered by these facilities by 51 basis points. Consistent with a stylized model, bank equity prices increase by around 1.75% in euro area countries highly exposed via banking linkages to countries whose currencies are targeted by liquidity lines.
Keywords:
liquidity facilities; central bank swap and repo lines; spillbacks.; ECB liquidity line announcement; ECB Euro liquidity line; cross-currency liquidity management tool; central bank liquidity line; Liquidity; Currencies; Currency markets; Currency swaps; Asset prices; Global
Cover IMF Staff Country Reports
Romania: 2022 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Romania
International Monetary Fund. European Dept.
After a solid recovery from the pandemic, Romania is now, like other EU countries, facing strong headwinds related to the war in Ukraine. Output reached pre-crisis levels in H1 2021 and growth in Q1 2022 was strong. But inflation has risen rapidly, and the external and fiscal positions are weak. The authorities are implementing a support package of energy price caps and subsidies for vulnerable groups.
Keywords:
inflation expectation; EU membership; inflation outlook; EU accession; EU funds; cap scheme; Inflation; Fiscal stance; Energy prices; Consumer price indexes; Europe; Global
Cover IMF Working Papers
Weather Shocks and Exchange Rate Flexibility
Mr. Selim A Elekdag
and
Maxwell Tuuli
This paper assesses the stabilization properties of fixed versus flexible exchange rate regimes and aims to answer this research question: Does greater exchange rate flexibility help an economy’s adjustment to weather shocks? To address this question, the impact of weather shocks on real per capita GDP growth is quantified under the two alternative exchange rate regimes. We find that although weather shocks are generally detrimental to per capita income growth, the impact is less severe under flexible exchange rate regimes. Moreover, the medium-term adverse growth impact of a 1 degree Celsius increase in temperature under a pegged regime is about –1.4 percentage points on average, while under a flexible regime, the impact is less than one half that amount (–0.6 percentage point). This finding bolsters the idea that exchange rate flexibility not only helps mitigate the initial impact of the shock but also promotes a faster recovery. In terms of mechanisms, our findings suggest that the depreciation of the nominal exchange rate under a flexible regime supports real export growth. In contrast to standard theoretical predictions, we find that countercyclical fiscal policy may not be effective under pegged regimes amid high debt, highlighting the importance of the policy mix and precautionary (fiscal) buffers.
Keywords:
Exchange rate regimes; Economic growth; Climate change; weather shock; growth impact; regime s; decline in government expenditure growth; peg exchange rate regime; temperature shock; government consumption growth; regime window; Exchange rate arrangements; Exchange rate flexibility; Conventional peg; Exchange rate adjustments; Emerging and frontier financial markets; Global
Cover IMF Staff Country Reports
Bulgaria: Technical Assistance Report-Bank Supervision
International Monetary Fund. Monetary and Capital Markets Department
This Technical Assistance report on Bulgaria reviews the formalization and implementation of a comprehensive Supervisory and Review and Evaluation Process (SREP) that includes an explicit and detailed supervisory Pillar 2 capital requirement. The paper highlights that unsound banking practices or regulatory breaches cannot be compensated by complementary capital charges. Loan loss provisions and capital charges for loans created as a result of such practices cannot be created and judged on the basis of the common standards. Banking Supervision Department has developed a methodology for the combined risk assessment and subsequent definition of an additional capital requirement for credit risk. Individual outcomes of the top-down stress tests carried out by the Macroprudential Supervision and Financial Stability Directorate can make a valuable contribution to the SREP. It allows the assessment of the quality of internal control in the institution and its capacity to timely produce complete and reliable data. While capital positions globally are adequate, and soundness indicators have improved, partly as a result of the 2016 Asset Quality Review, nonperforming loans remain high in Bulgaria, with notable differences between the banks.
Keywords:
ISCR; CR; SREP process; draft SREP manual; SREP outcome; BNB regulation; SREP assessment; SREP cycle; capital requirement; SREP approach; SREP manual; SREP element; Credit risk; Stress testing; Nonperforming loans; Internal controls; External balance assessment (EBA); Global
Cover IMF Staff Country Reports
Bulgaria: 2017 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Bulgaria
International Monetary Fund. European Dept.
This 2017 Article IV Consultation highlights that the Bulgarian economy is performing well. Growth has been on an upward trend and is estimated to reach 3.8 percent in 2017 and 2018, driven by strong exports, easier financial conditions, and growing confidence. The current account remained in surplus in 2017, despite rapid wage growth. The economy shows signs of a closing output gap. Headline inflation turned positive in 2017 and inflationary pressure is rising. Fiscal outcomes have been stronger than budgeted in recent years, reflecting mainly revenue overperformance and under-execution of capital spending. The main challenge is to translate this recent recovery into sustained and inclusive growth and convergence with other European Union countries.
Keywords:
ISCR; CR; Bulgaria; government; GDP; finances; public goods; EU average; Bulgarian authorities; BNB legislation; per capita income; Wages; Income; Financial Sector Assessment Program; Global; Europe
Cover IMF Staff Country Reports
Bulgaria: Financial Sector Assessment Program: Technical Note - Non-Performing Loans Reduction Strategy
International Monetary Fund. Monetary and Capital Markets Department
This Technical Note examines the current state of nonperforming loans (NPLs) in Bulgaria and makes recommendations for a strategy to substantially reduce NPLs. The Bulgarian National Bank should adopt a comprehensive strategy in the near term to achieve a substantive reduction in NPL levels over a three- to five-year time horizon. The strategy should focus on more intensive measures to enhance bank practices in three main areas: (1) loan loss provisioning; (2) loan write-downs of NPLs, in whole or in part, where collection is unlikely; and (3) collateral valuation. This effort would be supported further by enhanced supervisory guidance, supervisory reporting, and risk disclosure.
Keywords:
ISCR; CR; loss allowance; credit risk; balance sheet; retained earnings; write-off policy; interest income; accounting practice; Bulgarian bank; collateral valuation; NPL market; bank financing; bank management; bank capital; debt forgiveness; loan loss allowance; Nonperforming loans; Loans; Collateral; Loan loss provisions; International Financial Reporting Standards; Global
Cover IMF Staff Country Reports
Bulgaria: Financial Sector Assessment Program: Technical Note-Risk Assessment and Stress Test of the Banking System
International Monetary Fund. Monetary and Capital Markets Department
This Technical Note discusses results of risk assessment and stress tests (ST) of the banking system in Bulgaria. ST results reveal that the Bulgarian banking system is vulnerable to the extreme realization of internal and external risks coupled with the need to clean the balance sheets from nonperforming loans (NPLs). In the baseline scenario, characterized by a modest economic growth and decline in unemployment, as well as stable and low interest rates, two banks—including a systemic one—exhibit weakness in terms of capital buffers to cope with accumulated losses in the past. These banks also experience substantial increase in their NPLs as a result of the asset quality review adjustment.
Keywords:
ISCR; CR; bank; capital; loan; AQR finding; funding shock; cash flow; domestics bank; interest rate; bank capital; quality data; banks experiences shortfall; ing bank N.V.; performing loan portfolio; Stress testing; Nonperforming loans; Commercial banks; Loans; Liquidity requirements; Europe; Global
Cover IMF Staff Country Reports
Bulgaria: Financial Sector Assessment Program: Technical Note-Stocktaking of Progress Achieved by the Bulgarian National Bank in Strengthening Banking Supervision
International Monetary Fund. Monetary and Capital Markets Department
This Technical Note evaluates the progress achieved by the Bulgarian National Bank (BNB) in strengthening banking supervision in Bulgaria. Progress in responding to the recommendation of the 2015 Basel Core Principles Assessment is under way. As part of the reforms initiated in October 2015, the BNB has put in place a new governance model to enhance the effectiveness of supervision. The activities of the Banking Supervision Department (BSD) will now be governed by new formal policies adopted by the Governing Council (GC). Through a new quarterly report, the GC is now better informed on banking risks and progress in addressing them. The BSD is also subject to annual internal audit.
Keywords:
ISCR; CR; risk assessment; BNB's GC; advisory council; governance model; BNB plan; risk management; EU bank Recovery; risk tolerance; BSD understanding; policy awareness; B. bank Governance; BNB's supervision function; BNB supervisor; Bank supervision; Basel Core Principles; Asset quality review; Operational risk; Anti-money laundering and combating the financing of terrorism (AML/CFT)