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Bulgaria: Selected Issues and Statistical Appendix

Author(s):
International Monetary Fund
Published Date:
January 2000
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III Why is Private Sector Credit So Low in Bulgaria?1

A. Introduction and Summary

1. This chapter explores the reasons for and implications of low bank credit to the private sector in Bulgaria, and discusses measures that would facilitate prudent credit growth. The perception that the provision of bank credit to the private sector is inadequate is widespread in Bulgaria. For example, a recent report by the Bulgarian Industrial Association (BIA, 2000) claims that the “availability of credit resources is turning into a determining factor for ensuring and encouraging the growth of the economy.” This chapter attempts to answer a number of pertinent questions: (i) to what extent credit levels in Bulgaria can be considered low; (ii) whether lack of credit is a significant obstacle to faster economic growth; (iii) what factors account for the observed low levels of bank credit to the private sector, and (iv) what steps can be taken to promote a healthy expansion of private sector credit. The remainder of this introductory section provides a summary of the main findings.

2. Bank lending to the private sector is low in Bulgaria by any standard. As of end-1999, the ratio of private sector credit to GDP was only 12 percent. This represents almost half of the level reached before the 1996 banking crisis, and only two thirds of the average level for transition economies. The difference is much starker when compared with the industrialized countries, which typically have ratios above 100 percent. Financial intermediation is low even when controlling for Bulgaria’s stage of development. A cross-country regression for 176 countries during 1989–98 indicates that per capita output and the ratio of private sector credit to GDP are positively correlated, and that a country with Bulgaria’s per capita GDP is expected to have a 30 percent ratio of private sector credit to GDP. This is even true when restricting the comparison to transition economies, which tend to have underdeveloped banking sectors.

3. A more developed banking system would likely help Bulgaria achieve faster economic growth. There is mounting international evidence that increased financial intermediation can have a significant impact on economic growth. This is because financial intermediaries mobilize saving, transform maturities, exert corporate control, and channel funds to their most productive uses. These factors can be especially relevant for Bulgaria, where the economy is still maturing and becoming more market oriented. Estimates from a cross-country study suggest that were Bulgaria to develop its banking system to the average level of countries in its income group, its yearly growth rate could be 1–2 percentage points higher.

4. The low level of private sector credit reflects mostly supply and institutional factors. Low credit demand does not appear to be the reason for the present low levels of bank lending, because investment is strong, and alternative financing channels are not readily available. However, the supply of credit is limited for a number of reasons. Banks have become more cautious because of the 1996 banking crisis and the ensuing new environment where they had to build up risk management capacities. The economic restructuring also adversely impacted credit to private sector, because many old customers ceased to exist. New customers from the emerging private sector typically do not have a credit history or appropriate collateral, and transparent financial information is often lacking. Another factor is the lack of full competition, which has allowed banks to keep credit levels low while maintaining high interest spreads. Finally, banks have been cautious in their lending behavior because of an imperfect legal environment. The resolution of financial disputes is often slow, and contract enforcement is weak. Collateral is hard to seize, and bankruptcy and liquidation procedures remain fraught with ambiguity and uncertainty. A legal provision that criminalizes the extension of loans without “proper security” even in the absence of fraudulent intent acts as a deterrent for bank officials.

5. The Bulgarian authorities have already taken significant measures to facilitate prudent growth of bank credit to the private sector. Continuing bank privatization is promoting competition in the banking sector. A central credit registry will soon be made operational fully, improving the information base for credit decisions. The planned training of judges on financial issues should help accelerate the resolution of disputes. Amendments to the Commercial Code are being drafted to accelerate and improve the handling of bankruptcy cases. A law on land registration and cadastre, which would facilitate the use of land as collateral, is being discussed in parliament.

6. However, challenges remain. While the existing legislation is generally solid, and is set to improve further with planned changes, more effort is needed to enforce this legislation strictly. In addition, it should be complemented by clear implementing regulations. To improve transparency and help overcome information asymmetries, accounting standards and disclosure rules need to be implemented stringently. To help banks gain more confidence, creditor’s rights should be enforced more consistently. Enterprise bankruptcy cases should be handled more quickly. To this end, the existing draft amendments to the Commercial Code should be adopted quickly. A thorough review of the existing practices governing insolvency and liquidation procedures would be desirable. Finally, consideration should also be given to the removal of the provision in the Criminal Code that penalizes the extension of loans without “proper security”. At a minimum, the law should be clarified so as not to criminalize reasonable lending practices.

B. The Level of Bank Lending to the Private Sector

7. As of end-1999, bank credit to private sector was low, at only 12 percent of GDP. Before the severe banking crisis in 1996, the level of credit to the private enterprises was almost twice as high, at around 20 percent of GDP (Figure 1). At the time, credit to the state-owned enterprises (SOEs) stood at a similar level, so that total credit to the non-government sector was around 40 percent of GDP in 1995 (Table A32).2 However, because of the banking crisis and the ensuing macroeconomic instability and hyperinflation, the value of total credit to the non-government sector eroded rapidly. By mid-1997, bank credit to both the SOEs and the private enterprises were halved. With the setup of the currency board, the government dramatically reduced its borrowing from the banking system (Tables A32 and A37). This in principle allowed for a “crowding in” of enterprise credit. In fact, the credit to private sector started to increase moderately, as real credit growth reached 15 percent per annum on average in 1998–99. However, this increase was partially due to higher leva value of the U.S. dollar denominated loans, and real credit remained well below the pre-crisis levels. Credit to the SOEs has continued to shrink, partly because average credit volume to these enterprises declined, and partly the number of SOEs decreased as a result of privatization and liquidation. Credit to households was the only component of the total credit to the non-government sector that exceeded its pre-crisis levels, but remained low in absolute terms.3

Figure 1.Bulgaria: Credit to the Private Sector, 1995-99

Source: Monetary Survey, the BNB, and staff calculations.

8. The level of bank credit to the private sector is low compared with other countries. Industrial countries have much deeper financial structures, with the ratio of private sector credit to GDP well above 50 percent (Figure 2). Transition countries also tend to have higher ratios, with an average of 17 percent. Even controlling for Bulgaria’s stage of development, financial intermediation is low. A regression of the ratio of private sector credit to GDP on the per-capita PPP-GDP and its square for 176 countries during 1989-98 indicates that a country with Bulgaria’s income should have 30 percent private sector credit to GDP ratio.4 Even when restricting the estimation to the group of transition economies or developing countries with similar income levels the results remain broadly the same: a regression with 25 transition countries yields a predicted value of 19 percent for Bulgaria, while a regression with 25 non-transition economies with similar GDP per capita results in a predicted value of 24 percent for Bulgaria.

Figure 2.Bulgaria: Credit to Private Sector, 1989-98

Source: International Financial Statistics, and staff calculations.

1/ The solid line indicates the fitted values from a regression of the ratio of private sector credit to GDP on per capita PPP-GDP for 185 countries in 1989-98.

C. How Important is Credit for Growth in Bulgaria?

9. Financial intermediation facilitates the efficient allocation of resources in an economy. Financial intermediaries mobilize savings, transform maturities, exert corporate control, and channel funds to their most productive uses.5 For example, if some firms are denied access to credit, they need to finance investments with retained earnings. In such cases, the economy wide selection of investment projects will be determined by enterprise liquidity rather than project profitability. In addition, those firms that invest using their own resources usually do not benefit from external monitoring.

10. There is mounting international evidence that the level of financial intermediation has a causal effect on growth. Levine, Loayza, and Beck (1999) find strong econometric evidence for the hypothesis that financial intermediary development exerts a statistically significant and economically large impact on economic growth.6 Their estimates suggest that if Bulgaria increased its share of private sector credit in GDP to the mean predicted by its GDP per capita (0.3), its annual growth rate could be 1–2 percentage points higher.7

11. In the case of Bulgaria, it is likely that the availability of credit will have an important influence on growth. Bulgaria is in the midst of a large-scale structural transformation of the economy. While the public sector is downsizing, a whole new group of entrepreneurs is emerging, and new small and medium-sized enterprises are trying to establish themselves in the market. In most cases, these new firms are dependent on bank financing for their expansion. Increased financial intermediation through banks would contribute to an improvement in corporate control and thereby enhance the business climate for private sector development. Such gains can be expected to be higher in a transition country that is striving to develop fully functioning markets than in a mature economy.

D. The Reasons for Low Credit to the Private Sector

12. Low credit to the private sector can in principle reflect both demand and supply factors. Potential factors reducing credit demand include the absence of profitable investment opportunities, and the availability of alternative financing instruments, such as capital markets, inter-enterprise arrears and informal lending. Factors affecting loan supply include liquidity, the impact of the 1996 crisis, increased uncertainty as a result of economic restructuring, lack of competition in the banking system, underdeveloped short-term capital markets, the punishment of risky behavior by depositors, lack of information about the quality of borrower, changes in regulation, and an imperfect legal environment. Since it is notoriously difficult to quantitatively separate demand and supply effects on credit markets, this section discusses the potential factors in mostly qualitatively terms, supported by quantitative evidence where possible.8

13. A review of the potential factors suggests that the reasons for low private sector credit in Bulgaria are mostly linked to supply and institutional factors. Depressed demand for credit is unlikely to be the main reason for the low lending levels, because investment is strong, and alternative financing channels are not readily available. On the supply side, the behavior of the banks has changed dramatically after the 1996 banking crisis and the ongoing restructuring in the economy. In addition, lack of competition has not promoted credit expansion. Finally, institutional factors, including legal and contract enforcement problems, insufficient information about borrowers, and strict bank laws and regulations contributed to banks’ reluctance to lend. The remainder of this section elaborates these arguments.

Demand factors

14. Significant and accelerating investment activity and high lending rates suggest that low credit demand is unlikely to be the main reason for the observed low lending volumes. Weak credit demand would typically be associated with low investment and lending rates, neither of which is the case in Bulgaria. Spreads between deposit and lending rates have been high, around ten percent since the introduction of the currency board arrangement (see Figure 3). These levels are similar to those currently prevailing in Mexico, a country seen as suffering from a severe “credit crunch” since the 1994-95 crisis, and higher than those in other countries that experienced credit contractions in the aftermath of crises, such as Argentina, Korea, and Thailand.9 In addition, investment rates have been increasing from 11.4 percent of GDP in 1997 to 18.5 percent in the first three quarters of 1999 (Table A2). These investment rates are not excessively low by international standard.

Figure 3Bulgaria: Credit to Private Sector Indicators, 1996-99

Source: The BNB, Kaufmann, Kraay and Zoido-Lobaton (1999), and staff calculations.

15. Alternative financing channels, including capital markets, inter-enterprise arrears, and informal lending, are unlikely to substitute significantly for bank credit. Capital markets are very small in Bulgaria, with a stock market capitalization only a fraction of GDP (around 5 percent). Inter-enterprise arrears are not large and are unlikely to increase, because budget constraints have been hardened substantially over the last three years. Bulgaria now scores much better in this regard than many other transition economies: in a survey carried out by the EBRD (1999), the percentage of firms reporting that they had substantial arrears with either the national government, the local government or state-owned utilities companies was only 12 percent. While this figure is higher than those for some more advanced transition economies are, it is roughly equal to that for the Slovak Republic and only slightly higher than that for Poland. The percentage of firms that failed to pay their taxes in 1999 is much lower than in Czech Republic, Croatia, Poland, the Slovak Republic, and Slovenia.10 However, while their significance is difficult to assess, other informal lending mechanisms may still play a role in financing investment in Bulgaria.

Supply and institutional factors

16. The main factors that may affect loan supply are bank liquidity, the need to adjust to the new environment after the 1996 banking crisis, the ongoing restructuring, lack of competition in the banking system, lack of information about the quality of borrowers, and an imperfect legal environment. Underdeveloped short-term capital markets, the punishment of risky behavior by depositors, and changes in regulation may also affect loan supply. At the outset, we should note that the low levels of credit are not the result of a lack of liquidity. Banks are liquid, but prefer to hold domestic or foreign bonds instead of loans as assets. Banks hold only 29 percent of their earning assets in the form of loans to enterprises and households. Bank lending capacity has increased markedly since the establishment of the currency board and is at similar levels as in late 1996 (Figure 3, second panel).11 The other factors are discussed below.

The 1996 banking crisis

17. Bank credit to private sector remained low in Bulgaria after the banking crisis, which is consistent with the experience of other countries. International comparisons show that when a banking crisis is associated with a decline in credit, it sometimes takes many years for the credit levels to recover. Figure 4 shows the behavior of the share of private sector credit in GDP after banking crises in eight countries.

Figure 4Bulgaria: Share of Private Credit Around Banking Crises

(t = 2 denotes date of banking crisis)

Sources: IFS, and staff calculations.

18. One reason is that the banks started to lend cautiously to strengthen their balance sheets, which were weakened in the run up to the crisis. Before the crisis, in 1995, the share of capital in total liabilities was more than 6.5 percent. However, this ratio dropped substantially during the crisis, to close to 4 percent. At the same time, the share of classified loans in total loans increased from 60 percent to close to 70 percent in 1996. Since then, banks have managed to boost the share of capital in total liabilities to more than 10 percent. At the same time, capital adequacy ratio doubled from around 20 percent in 1995 to close to 40 percent in 1999 (Table A38). In parallel, the share of classified loans in total loans declined to 15 percent.

19. Moreover, Bulgarian banks are now operating under very different circumstances than three years ago, and need time to adjust particularly their risk assessment capacities. Banks, which prior to the crisis channeled funds to state-owned enterprises and engaged in connected lending, are still in the process of building up risk assessment, credit evaluation, and project monitoring techniques. Such a process, which requires personnel training and hiring, accumulation of experience, as well as the implementation of adequate computer and software capacities, is likely to take time. However, as noted by the OECD (1999), the incentives for banks to invest in the acquisition of these skills will depend on the institutional environment, including the degree of competition, and the ability for banks to collect their claims—a point discussed further below.

20. The more aggressive lending strategies on the part of foreign banks, which can be assumed to possess the necessary expertise, attest to this need. The average ratio of loans to total assets is 44 percent for foreign banks against 35 for domestic ones. It is noteworthy that the title “Banker of the Year” was awarded by the magazine “The Banker” to the manager of a foreign bank, BNP-Dresdner Bank, in recognition of that institution’s fast-growing lending business. This is despite the general view that foreign banks are less likely to be familiar with specific Bulgarian borrowers, an effect which tends to work in the opposite direction.

Economic restructuring

21. During economic restructuring investment risk can increase, and information asymmetries may worsen, leading banks to curb lending. When markets are changing fundamentally, objective default risk is likely to be higher. This implies that even if banks could correctly assess the probability of default of an individual borrower, so that there were no adverse selection problem, they would supply credit only at higher interest rates. On the other hand, even if objective risks do not increase with restructuring, information asymmetries are likely to do so as a result of the loss of old customers bases.

22. While it is not possible to fully assess the level of investment risk in Bulgaria in this study, the current indicators do not indicate high risk levels. In fact, the percentage of nonperforming loans has decreased sharply since the banking crisis, and has stabilized below 10 percent. This is comparable to the CEE economies, where this ratio is close to 7 percent, although still substantially higher than the EU average, which is less than 2 percent. On the other hand, the Agency for Economic Analysis and Forecasting (AEAF) wrote in its report on the first half of 1999 (p. 17) an opposite view: “Risk in the Bulgarian economy remains rather high and makes changes in banks’ strategies for asset and liability management unlikely”.

23. The restructuring of Bulgaria’s economy has led to a sharp increase in informational problems. Under the large structural changes in the economy since 1997, many old bank customers ceased or reduced operations, or have become uncreditworthy. New customers from the emerging private sector and previously state-owned enterprises under new management typically do not have a credit history or appropriate collateral. Moreover, given the economic instability prior to the establishment of the currency board, past performance is not likely to be a good predictor of future performance even for firms that have already been operating for many years.

24. While these factors imply that restructuring may initially adversely affect credit levels, they do not account for all the difference in lending between Bulgaria and other countries. The private sector share of GDP, and indices measuring progress in liberalization of the economy, such as those compiled by the EBRD, are all positively correlated with credit. However, countries like the Czech Republic and Hungary had already achieved deeper intermediation when their private sector share of GDP was similar to Bulgaria’s current levels. Other countries, like Croatia or Slovenia, do not have higher private sector shares in GDP, but markedly higher levels of private sector lending. Similarly, while countries that have made more progress with privatization and bank liberalization, tend to have higher credit levels, variations in indices attempting to measure progress in this regard are not able to explain much of the variation in lending across transition economies. Table 1 shows some of these indicators for seven European transition economies.

Table 1.Bulgaria: Private Sector Credit and other Indicators in Transition Economies, 1995-99
Private Sector Credit as percent of GDPPrivate Sector Share in GDPEBRD Banking Reform and Interest Rate Liberalization IndexEBRD Large-Scale Privatization IndexEBRD Small-Scale Privatization Index
Bulgaria13(1999)603-33+
Croatia30(1996)60334+
Czech Republic58(1998)803+44+
Hungary22(1995)80444+
Poland17(1997)653+3+4+
Romania13(1998)603-3-4-
Slovenia29(1997)553+3+4+

Lack of competition

25. The degree of competition influences the level of intermediation, as well as the spreads between lending and deposit interest rates and the efficiency of the banks. A monopolist, or an enterprise in an oligopolistic market, would maximize its profits by limiting its lending much below the levels attainable under perfect competition, and keep the prices—in this case, interest rate spreads—high. This microeconomic principle mirrors in empirical results, including a panel study by Rother (1999) where he finds a negative correlation between market concentration measures and financial intermediation levels in transition economies. In addition, in non-competitive markets, banks have little incentives to minimize costs, and thus in general operate inefficiently.

26. State-owned banks dominate the Bulgarian banking system. Out of 35 banks, the top two banks are state owned and hold 40 percent of the total assets in the banking system. The next five largest banks, which were mostly state-owned until this year, hold 30 percent of the total assets, with the remaining 28 banks holding only 30 percent of the total assets. These 28 banks are mostly very small, or branches of foreign banks.

27. There are indications that the Bulgarian banks behave oligopolistically. All the characteristics of a non-competitive market are present: intermediation is low, interest rate spreads are large, and banks in general are inefficient. They have high operating costs relative to the CEE average and industrial countries in Europe (Table 2).

Table 2.Bulgaria: Financial Ratios, 1995-1998
Bulgaria 1/CEE 1/2/EU Other 1/3/EU Large 1/4/
(In percent)
Net Income/Total Capital Funds
199519.923.39.78.2
199688.717.810.68.2
199791.015.810.48.4
19986.8-1.011.010.9
Net Income/Total Assets
19952.51.90.60.4
19966.71.40.70.5
199711.41.30.70.5
19981.2-0.10.80.6
Liquid Assets/Total Assets
199555.942.535.834.0
199663.641.635.234.5
199773.842.433.534.5
199865.442.030.433.0
Total Loans/Earning Assets
199533.252.254.854.3
199632.653.653.553.6
199726.751.253.553.2
199829.752.953.353.6
Non-Interest Expense/Income
199555.037.830.830.1
199660.845.932.031.3
199755.046.234.630.8
199872.156.035.829.7
Non-Interest Expense/Total Assets
199519.25.82.62.2
199641.67.62.52.1
199719.47.32.42.0
19987.68.92.51.9
Non-Interest Expense/Total Deposits
199528.17.73.63.5
199675.99.93.63.4
199731.79.33.533
199810.711.23.73.2
Source: BankStat and Bank Scope.

Based on most banks in these countries that publicly disclose their balance sheets and income statements. For a complete list, see BankStat.

CEE: Bulgaria, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, and Slovak Republic.

EU Other: Austria, Belgium, Denmark, Finland, Greece, Ireland, Netherlands, Portugal, Spain, and Sweden.

EU large: Germany, France, Italy, and the United Kingdom.

Source: BankStat and Bank Scope.

Based on most banks in these countries that publicly disclose their balance sheets and income statements. For a complete list, see BankStat.

CEE: Bulgaria, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, and Slovak Republic.

EU Other: Austria, Belgium, Denmark, Finland, Greece, Ireland, Netherlands, Portugal, Spain, and Sweden.

EU large: Germany, France, Italy, and the United Kingdom.

28. Empirical evidence based on a panel data covering the past two years also supports the view that the banking system in Bulgaria is not perfectly competitive (see the annex for the technical details). The empirical work makes use of the result from microeconomic theory that links the degree of competition and the sensitivity of total revenue to costs (see Panzar and Rose (1987) for this type of methodology). A one-to-one correlation would indicate perfect correlation, while lack of any correlation would indicate that banks behave like local monopolies. The panel estimation results and the tests on the relevant coefficients show that while there is some correlation between costs and revenues, it is significantly less than one, implying that the Bulgarian banks behave oligopolistically.

Lack of reliable financial information

29. Informational asymmetries are at the heart of credit markets. Lenders lack full information about the characteristics and the behavior of borrowers, and this has implications for the behavior of both parties. In particular, it may induce credit rationing on the side of banks.12

30. A general lack of reliable financial information makes it difficult for banks to assess the situation of borrowers. While international accounting standards have largely been adopted in Bulgarian laws, in some areas, there is still scope for improvement. More important, the degree of implementation and enforcement of accounting standards is very weak. For example, although the law contains reasonable disclosure requirements, in practice most companies do not provide this type of information, reducing the informational content of balance sheets and income and loss statements. In addition, a central credit registry is only now being put in place.

Legal and contract enforcement problems

31. An environment fraught with legal uncertainties and contract enforcement problems, will restrict banks’ willingness to lend. For example, banks often require collateral as a way of overcoming the informational asymmetry problems described above. If, however, it is difficult to establish a clear title regarding collateral, or if the judicial system works too slowly or unpredictably to ensure that collateral can in fact be seized, this avenue of dealing with informational asymmetries will be closed.

32. Bulgaria still ranks low in an international comparison of the prevalence of the “Rule of Law”. Kaufmann, Kraay and Zoido-Lobatón (1999) have recently constructed an aggregate variable measuring the prevalence of the “rule of law” for 167 countries based on a variety of individual surveys and ratings. According to this variable, Bulgarian ranks number 81, below most transition economies that show higher financial intermediation. Across countries, stronger prevalence of the rule of law is clearly associated with higher levels of credit to the private sector, and in a simple OLS regression, the rule of law variable explains 43 percent of variation in credit shares in GDP. Interestingly, the rule-of-law variable seems to be matter for private sector credit to GDP even after controlling for per-capita GDP (Figure 3, third panel).13

33. More disaggregated results from various surveys support the view that major additional efforts are needed to improve governance in Bulgaria. For example, the EBRD has recently carried out an enterprise survey asking firms how problematic different factors were for the operation and growth of their businesses. The results concerning “Law and order” landed Bulgaria on place 15 of 20 transition economies. In the 1999 Transparency International Corruption Perceptions Index, Bulgaria fares slightly better, ranking on place 63, below other transition economies such as Slovenia (25), Czech Republic (39), Lithuania (50), the Slovak Republic (53), Latvia (58), and at the same level as Macedonia, Romania, Egypt and Ghana. In the same vein, the 1999 Corruption Assessment Report published by the Coalition 2000 highlights the inefficiency of the judicial system and stresses the need for judicial reform. On the other hand, a recent report by FIAS mentions that investors did not see corruption as a particularly acute problem in Bulgaria. The general perception of a lack of reliable legal framework appears to be affecting banks directly. According to a survey among banks conducted by Koford and Tschoegl (1999), nine out of ten respondents answered positively to the question “Do you have difficulties with court action?” A recent assessment of the judicial system by the World Bank (1999) highlights a variety of shortcomings such as understating, low salaries, potential corruption, insufficient training mechanisms, and overly complex legal procedures.14 Since law enforcement is weak, banks have difficulties in seizing collateral.15 It can often take many months before the creditor can physically assume possession of the pledged property. Courts are generally overloaded16, and enforcement by the executive is often slow.

34. Bankruptcy and liquidation procedures remain fraught with ambiguity and uncertainty. Debtors can delay the process easily, allowing them to continue operating with impunity.17 Currently, the Commercial Code contains provisions under Part IV for bankruptcy and under Chapter 17 for liquidations. However, Chapter 17 addresses procedures for voluntary liquidation only. The application of the provisions in Chapter 17 for insolvent companies leads to many practical complications: for example, there is no order of priority concerning the payment of creditors. On the other hand, according to the provisions in Part IV, bankruptcy procedures are entirely controlled by the Court, which generally results in slow procedures. Recently, an amendment to the Commercial Code was submitted to parliament, which addresses some of these problems and should help to accelerate bankruptcy procedures. A related issue concerns the selection, training, and supervision of trustees in bankruptcy cases. The Ministry of Justice maintains a list of persons eligible as trustees, but their training and supervision are inadequate. As a result, trustee practices vary widely, and often lack the required professionalism.

35. Until recently, there were problems with establishing a clear title for collateral. According to the aforementioned survey by Koford and Tschoegl (1999), banks reported that, when trying to seize collateral, they often found out that the borrower had pledged it to several banks. However, a central collateral register for moveable property has by now been established and appears to be operating well. In agriculture, there are still some remaining problems regarding the clarification of ownership and the registration of land, which constitute obstacles for the extension of credit to farmers.18 The current cadastre and registration system does not function well. A new Registration and Cadastre Law has been drafted, but has been moving very slowly through Parliament.

36. In the absence of a predictable enforcement of creditor’s rights, banks will have little incentive to invest in the acquisition of skills and technology. If the marginal return to an additional investment in the human capital and equipment needed for an expansion of lending activities is not greater than the return from holding safe assets, banks will have no incentives to change their current practices, and the problems discussed in section D will continue to limit their role as financial intermediaries.

Restrictive laws and regulations

37. While changes in bank regulations can to some extent explain the decline in borrowing after the crisis, these regulations are not overly restrictive and cannot alone account for the low intermediation levels. Several requirements have been either tightened substantially or implemented more strictly after the crisis, including those on capital adequacy, foreign exchange open positions, large loans and minimum reserves. However, these changes were consistent with a return to more prudent banking, and are in line with the Basel Core Principles in Effective Banking Supervision (see IMF (1999b)). In addition, part of these restrictions are being relaxed, including the provisioning rules, and the minimum reserve requirement, in parallel to the decreasing risk in the banking sector.

38. However, the articles of the Criminal Code that relate to lending may have an adverse impact on banking intermediation. The law criminalizes the extension of loans without “proper security” when the loan is not paid back. The corresponding provision in the Criminal Code, Article 220 (3), was created in 1997 as a reaction to the banking crisis. The law does not require the presence of any embezzlement intend from the part of the bank official. The “proper security” prescribed by the law is not clearly defined, and could be interpreted as to prescribing 100 percent collateral—a stricter requirement as those contained in the Banking Act. While not many bank officials have been punished under this provision, the law is certainly exerting an effect on bankers’ behavior. According to BIA (2000), the requested collateral is usually about or over 200 percent of the amount of the requested credit. Similar information was obtained by the mission in conversation with bankers. It is noteworthy that an excessive reliance on collateral for lending decision not only typically results in a suboptimal allocation of resources, since many profitable investments are not carried out, but also does not protect the banking system from aggregate shocks.19

High liquidity requirement in a currency board

39. Banks may feel obliged to maintain high liquidity given the limited lender-of-last resort function of the currency board.20 As pointed out by Caprio and Honohan (1993), banks can be faced with sudden bunching of withdrawals, the nonrenewal of credit lines by other intermediaries, or the sudden need to make credit available to important clients. In the absence of the possibility of borrowing from the central bank, the amount of liquidity that banks will hold will depend on the depth of money markets. If short-term money markets are shallow, banks will be forced to hold larger reserves. A lack of advanced technology of liquidity management will similarly induce banks to hold higher liquidity.

40. While Bulgarian banks are very liquid, this is not only due to prudential reasons or the absence of short term capital markets, but also because of weak liquidity management. The minimum reserve requirement has been set high at 11 percent, given the limited lender-of-last-resort capability of the BNB, and the legacy of the crisis. Even then, banks have regularly maintained excess reserves that fluctuated between 2 and 23 percent of minimum required reserves in 1999. Also, the primary and secondary liquidity ratios for the banking system have been 15 and 35 percent, respectively, much higher than what can be expected for prudential reasons.

Depositor threat

41. If depositors punish risky behavior by banks, this may induce a conservative bank asset management. Martínez and Schmukler (1999) provide international evidence that this is indeed the case.21 Using bank panel data from Argentina, Chile and Mexico, they find that even small, insured depositors withdraw money from risky banks.

42. There are incentives for the depositors to punish risky behavior by banks in Bulgaria. The currency board arrangement limits the lender-of-last-resort function of the BNB, and the memories of the banking crisis are still alive. In addition, the new deposit insurance scheme that was introduced in 1998 protects most depositors up to BGN 5,000, without full coverage.

43. However, this does not seem to have a substantial effect on bank lending. To the extent that the smaller banks are seen as less likely to be bailed out by the government in case of difficulties, they may be the ones to be more subject to depositors’ discipline.22 Accordingly, if the disciplining effect exerted by depositors is important, we should ceteris paribus observe a more conservative asset management by smaller institutions. This is not the case for Bulgaria – the correlation between the ratio of loans to assets and total assets is not significantly different from zero. Moreover, when the State Savings Bank (SSB) was given full deposit insurance during the banking crisis, this did not result in a noticeable change in the structure or volume of deposits, indicating that this factor is not likely to be the decisive one explaining the conservative banking practices prevalent in Bulgaria.

E. Policy Implications

44. While it cannot be in the interest of Bulgaria to promote a return to lax lending practices, policies to foster sound financial intermediation can be beneficial for growth. Tight controls of risks in the banking system are particularly important in the context of a currency board with a very limited lender-of-last resort facility, and when it comes to bank regulation, it is good to err on the side of caution. However, the discussion above revealed a number of areas where policy measures could be implemented to promote the development of healthy lending without jeopardizing the stability of the banking system:

  • Competition in the financial sector needs to be promoted through a continuation of privatization of banks. The authorities are taking steps to complete the privatization of the banking system. This is expected to increase the incentives in the banking sector to maximize profits by reducing inefficiencies in bank operations and investing in the acquisition of skills. Moreover, the engagement of strategic foreign investors is likely to accelerate the adoption of modern practices in the banking sector.

  • Creditors’ rights could be improved further, the enforcement of existing laws could be enhanced, and processes streamlined. In order to accelerate and improve the handling of bankruptcy cases, the authorities have drafted amendments to the Commercial Code. Quick adoption of these amendments would be a step in the right direction. Moreover, a thorough and broader review of existing practices governing insolvency and liquidation procedures with a view of strengthening creditors’ rights would be desirable. Another important measure would be the establishment of a body within the Ministry of Justice that supervises and trains trustees in bankruptcy cases.23 Courts’ capacities to handle these cases need to be strengthened through increased training of judges and improvement of caseload management.

  • The flow of information and transparency in the financial sector could be promoted further. The central credit registry is about to be operational fully. In the area of accounting standards, existing requirements, particularly in the area of disclosure, may need to be strengthened and be enforced more stringently. The development of the accounting profession could be encouraged and the tax administration personnel could be trained further accordingly.

  • The provision in the Criminal Law penalizing the extension of loans without “proper security” could be removed or clarified. Careful consideration should be given to the removal of this provision in the Criminal Code. At the minimum, the law could be clarified so as not to criminalize reasonable lending practices.

  • The development of short-term money markets could be promoted. The deeper money markets are, the lower banks’ precautionary holdings of liquidity need to be. The development of markets for certificates of deposit, commercial paper, treasury bills, interbank lines, and bankers acceptances would contribute to increased levels of financial intermediation.24

  • The remaining obstacles for the establishment of a working agricultural land market could be removed. The existing system of notarizing deeds needs to be replaced with a parcel-based registration system linked to a unified cadastre. A registration and Cadastre Law is currently being discussed in parliament. Its adoption would represent an important step in the right direction. After its adoption, this and other laws regulating the land market need to be implemented consistently, which requires the building of adequate institutional capacity.

References
ANNEX I This appendix describes the methodology used in estimating the market structure of the banking system in Bulgaria, and presents the technical results.

The methodology for estimating the market structure

1. The methodology is based on microeconomic theory that links total revenue to the marginal cost curve (see Panzar and Rosse (1987)). When input prices increase and shift the marginal cost curve up, a monopoly’s total revenue declines. On the other hand, in a perfectly competitive market, a similar increase would lead to a one-to-one increase in total revenues, because those firms that cannot increase their revenues fully start incurring losses and have to exit the market. In between these two extremes is the case of an oligopolistic market, where, as marginal cost curve shifts upward, total revenues increase, but less than one-to-one with the percent increase in costs. More specifically, let

y = q(x, z),

where, y is total revenue, x is a vector of input factor prices, z is all other factors that affect revenue—mostly cost and demand side variables—and q is the revenue function. Panzar and Rosse show that if the sum of the input factor price coefficients are less than zero, then it means that as costs increase, total revenue declines, indicating a monopolistic market structure. Instead, if the sum of the input coefficients is between zero and one, then the firms behave like oligopolies. Finally, if the sum of the input coefficients is one, then firms increase their revenue one to one with their costs, and thus operate in a fully competitive environment. Any sum that is larger than one is not compatible with this methodology, and indicates a misspecification. All these arguments are for elasticities, therefore the variables are all in natural logs.

2. In the case of the banking sector, the production function of the banking services are defined as follows:

where, trit is the total revenue, iit is the unit price of funds, wit is the unit labor cost, oit is the unit price of other costs, zit is all other variables that affect total revenue, and b is the vector of coefficients of (see Coccorese (1998) for an application to the Italian banking system).25 Specifically, unit price of funds is calculated as the ratio of total interest expense of a bank to total deposits; unit labor cost is calculated as the ratio of total salaries and social security contributions to total assets; and unit price of other costs is the ratio of other operating costs to total assets. Other variables consist of total deposits (td) to use as a proxy for demand; total administered funds (taf) to capture the fact that the larger the funds are, the larger on average total revenues should be; and the risk capital to administered fund ratio (rcqf), and the loans to administered funds ratio (laf) to proxy for risk. All variables are in natural logarithms.

3. Tests are as follows: Let H = bi + bw+bo, where the three coefficients correspond to the unit cost of funds variable, the unit labor cost variable, and the unit price of other costs variable, respectively. If the null hypothesis that H is less than or equal to zero is rejected, this implies that the market structure is not monopolistic. In addition, if the null hypothesis that H is between zero and one is rejected, then the market structure is not oligopolistic either. However, in addition, if the null hypothesis that H is equal to 1 is rejected, then the results would be inconsistent with the theory, implying that there is misspecification in the model or the estimated equation.

Results

4. The model is applied to a panel data set on the Bulgarian banks. The data set contains bank specific data on all Bulgarian banks that were in operation in 1998-99. For estimation, standard panel data estimation techniques are used, which include fixed and random effects.

5. The results show that Bulgarian banks behave oligopolistically (Table 3). The sum of the input factor price coefficients of the panel data estimation are significantly larger than zero, allowing us to reject the hypothesis that the banks behave monopolistically. At the same time, the sum of the coefficients is smaller than one, allowing us to reject also perfect competition in the banking system. Both factor prices of funds and of other costs are significantly greater than zero, while unit labor costs are not correlated with total revenues. The results from fixed and random effects do not differ substantially.

Table 3.Bulgaria, Market Structure Regression Results, 1998-99
Full sampleInsignificant coefficients excluded
Variables 1/Coefficient estimates 2/
constant0.89

(0.61)
1.26

(0.43)
i0.42

(2.15)
0.43

(3.52)
w0.42

(1.61)
0.30

(2.72)
o-0.38

(1.03)


td0.54

(2.11)
0.65

(5.99)
taf-0.03

(0.20)


rcaf0.01

(0.08)


laf0.02

(0.09)


R20.990.96
Market structure tests 3/
Monopolistic (Ho: H<= 0)Not RejectReject
Oligopolistic (Ho: 0 < H < 1)Not RejectNot Reject
Perfect competition (Ho: H >= 1)RejectReject
Misspecified (Ho: H > 1)RejectReject
Source: staff calculations.

The dependent variable is total revenue (tr). The independent variables are as follows: the unit price of funds (i), the unit labor cost (w), the unit price of other costs (o), total deposits (td), total administered funds (taf), the risk capital to administered fund ratio (rcaf), and the loans to administered funds ratio (laf). All variables are in natural logarithms.

Results pertain to random panel data estimation, with a sample from 1998 to 1999. Regular ordinary least squares results are similar. Fixed effects results are all insignificant, given the shortness of the time series dimension. These results are not reported; however, they can be requested from the author. T-statistics are in parenthesis.

H = b_i + b_w + b_o, where b_x is the coefficient estimate of variable x. The tests use 10 percent significance level.

Source: staff calculations.

The dependent variable is total revenue (tr). The independent variables are as follows: the unit price of funds (i), the unit labor cost (w), the unit price of other costs (o), total deposits (td), total administered funds (taf), the risk capital to administered fund ratio (rcaf), and the loans to administered funds ratio (laf). All variables are in natural logarithms.

Results pertain to random panel data estimation, with a sample from 1998 to 1999. Regular ordinary least squares results are similar. Fixed effects results are all insignificant, given the shortness of the time series dimension. These results are not reported; however, they can be requested from the author. T-statistics are in parenthesis.

H = b_i + b_w + b_o, where b_x is the coefficient estimate of variable x. The tests use 10 percent significance level.

6. Other coefficient estimates indicate that the level of risk and the size of the banks in addition to what is captured by their deposit base are not important in determining their total revenues. This can be seen from the coefficient estimates of the two risk measures—the ratio of risk capital to total administered funds (rcqf), and the ratio of loans to total administered funds (laf)—which are very close to zero, and insignificant. This is not surprising, given that the sample period coincides with good banking supervision and a period of cautious banking, also have expected signs.

STATISTICAL APPEDIX
Table A1.Bulgaria: National Accounts, 1991-95

(Old classification) 1/

1991 2/1992 2/1993 2/19941995
(Gross value added at basic prices and GDP)
(In current prices, in millions of leva)
Agriculture and forestry20.923.329.760.4111.4
Industry53.9178.497.71157.4272.7
Manufacturing and mining46.066375.45120.9212.5
Construction6.3511.716.1625.141.6
Other1.53.76.111.418.7
Services69.592151.7272.4450.2
Trade11.81826.652.9101.8
Transport7.410.113.925.237.5
Communications1.62.44.88.812.2
Other (non-material)48.761.5106.4185.4298.7
Taxes on products11.416.627.126.924.5
Adjustments-20-9.5-7.38.521.4
GDP at market prices135.71200.8298.91525.6880.3
Household consumption73.2131.2218.9389.1622.1
Government consumption26.141.357.190.3134.4
Gross fixed capital formation24.632.638.772.3134.3
Changes in inventories67.47-23.03.5
Net exports5.8-11.7-22.8-3.3-14.0
Exports5994.6114.2236.8393.2
Imports53.27137240.1407.2
Statistical discrepency
(Growth rate in prices of previous year, in percent)
GDP-11.7-7.3-1.51.82.1
Agriculture and forestry4.3-14.8-30.29.414.5
Industry-21-6.4-6.25.9-5.4
Services-26.9-20.70.6-3.14
Household consumption-15.71-0.7-2.6-1.8
Government consumption-10.3-14.6-12.6-11.5-7.4
Gross fixed capital formation-19.9-7.3-17.51.18.8
(Percent change)
Memorandum items:
GDP implicit deflator238.659.615.172.764.1
(In percent of GDP)
Agriculture and forestry15.411.69.911.512.7
Industry39.739.032.729.931.0
Services51.245.850.851.851.1
Taxes on products8.48.39.15.12.8
Adjusment-14.7-4.7-2.41.62.4
Household consumption53.965.373.274.070.7
Government consumption19.220.619.117.215.3
Gross fixed investment18.116.212.913.815.3
Net exports4.3-5.8-7.6-0.6-1.6
Exports43.547.138.245.144.7
Imports39.252.945.845.746.3
Sources: National Statistical Institute and staff estimates.

In 1996, the classification of activities changed.

Including holding gains.

Sources: National Statistical Institute and staff estimates.

In 1996, the classification of activities changed.

Including holding gains.

Table A2.Bulgaria: National Accounts, 1996-99(New classification)
1996199719981999 Q1-Q3 1/
(Gross value added at basic prices and GDP)
(In current prices, in millions of leva)
Agriculture and forestry253.74,062.74,045.42,558.4
Flabing0.76.27.1
Industry497.94,316.35,508.83,965.8
Mining and quarrying29.2344.7294.0237.2
Manufacturing345.82,857.63,664.32,541.8
Electricity, gas and water supply52.6689.3832.9647.8
Construction70.2424.6717.6539.0
Services898.96,915.59,649.17,659.7
Trade, repair of motor vehicles, personal and household appliances179.61,304.91,470.3992.1
Transport92.6814.41,025.7677.6
Communications30.6340.6551.6557.5
Financial intermediation and insurance143.9398.2407.2346.9
Other services 2/17.6139.6320.25,085.7
Total of economic activity groupings1,650.415,294.519,203.214,183.8
Adjusments98.31,760.72,373.81,937.1
GDP at market prices1,748.717,055.221,577.016,120.9
Household consumption1,340.211,981.715,733.712,296.0
Government consumption207.52,188.13,255.32,470.5
Gross fixed capital formation238.51,841.02,495.62,317.5
Changes in inventeries-91.6100.8685.6661.5
Net exports54.1943.6-228.0-1,130.0
Exports of goods and services1,100.010,555.99,755.57,282.3
Imports of goods and services1,045.89,612.29,983.58,421.3
Statistical discrepency0.00.0-365.2-485.5
(Growth rate in prices of previous year, in percent)
GDP at market prices-10.9-6.93.52.0
Agriculture and forestry-7.432.91.46.7
Industry-11.8-11.34.3-4.0
Services-9.3-19.30.52.7
Household Consumption-2.1-15.78.11.7
Government Consumption-28.7-11.54.17.2
Gross fixed capital formation-52.8-23.916.428.9
(Percent change)
Memorandum items:
GDP implicit deflator122.9949.122.21.5
(In percent of GDP)
Agriculture and forestry14.523.818.815.9
Industry28.525.325.524.6
Services51.440.644.747.5
Total of economic activity groupings94.489.789.088.0
Adjustments5.610.311.012.0
GDP at market prices100.0100.0100.0100.0
Final consumption88.583.188.091.6
Individual consumption82.876.979.883.3
Households expenditures76.369.972.475.8
NPISHs expenditures0.30.40.50.5
Government expenditures6.26.66.97.0
Collective consumption5.76.28.28.3
Gross fixed capital formation13.610.811.614.4
Changes in inventories-5.20.63.24.1
Net exports3.15.5-1.1-7.1
Exports of goods and services62.961.945.245.1
Imports of goods and services59.856.446.352.2
Statistical discrepency0.00.0-1.7-3.0
Sources: National Statistical Institute and staff estimates.In 1996, the classification of activities changed.

Preliminary data.

Includes: hotel and restaurants; real estate, renting and business activities, public administration and defense.

Sources: National Statistical Institute and staff estimates.In 1996, the classification of activities changed.

Preliminary data.

Includes: hotel and restaurants; real estate, renting and business activities, public administration and defense.

Table A3:Bulgaria: Selected Transition Economies: Cumulative Change in GDP, 1989-99
1989-99Peak Decline Since 1989 1/
Albania-7-40
Bulgaria-34-37
Czech Republic-5-16
Hungary-1-18
Poland27-14
Romania-28-29
Average (unweighted)-8-26
Source: WEO.

Compares the GDP in the year of its lowest level since the beginning of the transition with

Source: WEO.

Compares the GDP in the year of its lowest level since the beginning of the transition with

Table A4.Bulgaria: Industrial Sector, 1991-95 1/

(Old classification) 2/

1991 3/1992 3/1993 3/1994 3/19941995
(In current prices, in millions of leva)
Industry value added
Total53.978.497.7182.3157.4272.7
Manufacturing and mining46.163.075.5145.5120.9212.5
Construction6.411.716.125.425.141.6
Unincorporated activities 4/1.43.76.111.411.418.7
State50.470.079.847.8122.9197.1
Manufacturing and mining45.061.270.3135.5110.9181.9
Construction5.48.89.512.312.015.3
Private3.58.417.934.534.575.6
Manufacturing and mining1.11.85.210.010.030.6
Construction1.02.96.613.113.126.3
Unincorporated activities 4/1.43.76.111.411.418.7
(Growth rate in prices of previous year, in percent)
Total6.4-6.26.0-5.4
Manufacturing and mining10.1-6.66.9-8.0
Construction12.5-7.3-0.32.2
Unincorporated activities 4/27.93.510.86.5
State-9.2-12.73.7-16.2
Manufacturing and mining-10.4-10.66.7-15.6
Construction0.7-27.1-18.5-21.1
Private33.647.716.233.1
Manufacturing and mining0.8133.510.176.3
Construction79.752.526.123.3
Unincorporated activities 4/27.93.510.86.5
(Percentage)
Share of economy (gross value added)
Total industry37.440.535.035.432.132.7
Of which:
Manufacturing and mining31.932.627.028.324.725.5
Construction45.06.05.84.95.15.0
Unincorporated activities 4/1.01.92.22.22.32.2
Share of state sector
in total industry93.589.381.781.178.172.3
Manufacturing and mining97.697.193.193.191.785.6
Construction84.475.259.048.447.836.7
Share of private sector
in total industry6.510.718.318.921.927.7
Manufacturing and mining2.42.96.96.98.314.4
Construction15.624.841.051.652.263.3
Unincorporated activities 4/100.0100.0100.0100.0100.0100.0
Sources: National Statistical Institute and staff estimates.

Includes state and private sectors, using the SNA methodology.

The classification changed in 1996.

Including holding gains/losses.

Self-employed and other small private unincorporated firms engaged in market production; included in other headings from 1997.

Sources: National Statistical Institute and staff estimates.

Includes state and private sectors, using the SNA methodology.

The classification changed in 1996.

Including holding gains/losses.

Self-employed and other small private unincorporated firms engaged in market production; included in other headings from 1997.

Table A5.Bulgaria: Industrial Sector, 1996-99 1/

(New Classification) 2/

1996 5/19971998 3/1999 Q1-Q3 3/
(In current prices, in millions of leva)
Industry value added
Total497.94,316.35,508.83,965.8
Mining and quarrying29.2344.7294.0237.2
Manufacturing345.82,857.63,664.32,541.8
Electricity, gas and water supply52.6689.3832.9647.8
Construction70.2424.6717.6539.0
Public374.02,832.73,075.91,859.8
Mining and quarrying28.2330.3274.2216.2
Manufacturing270.71,688.41,773.5837.8
Electricity, gas and water supply52.6688.2831.6646.9
Construction22.6125.8196.7158.9
Private123.81,483.62,432.82,106.0
Mining and quarrying1.014.419.821.0
Manufacturing75.11,169.21,890.71,704.0
Electricity, gas and water supply0.01.11.31.0
Construction47.7298.9520.9380.0
(Growth rate in prices of previous year, in percent)
Total-12.9-11.34.3-4.0
Mining and quarrying-7.33.0-7.6
Manufacturing-14.96.5-4.1
Electricity, gas and water supply23.7-5.2-3.8
Construction-20.8-21.45.8-2.3
Public-15.9-24.8-5.9-19.4
Mining and quarrying-7.90.1-10.1
Manufacturing-35.9-8.0-29.7
Electricity, gas and water supply23.6-5.2-3.8
Construction-30.7-24.62.5-0.7
Private4.729.423.816.5
Mining and quarrying10.970.422.9
Manufacturing60.927.621.7
Electricity, gas and water supply197.3-5.15.7
Construction-15.1-19.97.2-3.0
(Percentage)
Share of economy (gross value added)
Total industry30.228.228.728.0
Of which:
Mining and quarrying1.82.21.51.7
Manufacturing20.918.719.117.9
Electricity, gas and water supply3.24.54.44.6
Construction4.32.83.73.8
Share of public sector
in total industry75.165.655.846.9
Mining and quarrying96.795.893.391.2
Manufacturing78.359.148.433.0
Electricity, gas and water supply99.999.899.899.9
Construction32.129.627.429.5
Share of private sector
in total industry24.934.444.253.1
Mining and quarrying3.34.26.78.8
Manufacturing21.740.951.667.0
Electricity, gas and water supply0.10.20.20.1
Construction67.970.472.670.5
Sources: National Statistical Institute and staff estimates.

Includes state and private sectors, using the SNA methodology.

The classification changed in 1996.

Preliminary data

Sources: National Statistical Institute and staff estimates.

Includes state and private sectors, using the SNA methodology.

The classification changed in 1996.

Preliminary data

Table A6.Bulgaria: Services Sector: Total, State, and Private, 1991-99
1991 1/1992 1/1993 1/199419951996199719981999

Q1-Q3 2/
(In current prices, in millions of leva)
Value added in service
Total70921522724508996,9159,6497,660
Trade121827531021801,3051,470992
Transport710142538938141,026678
Communications22591231341552557
Other 4/49621061852995964,4566,6025,433
State5562851501993472,7233,8142,932
Trade101112202637286316141
Transport7911192356481533309
Communications22591228310431425
Other 4/3741581021382251,6462,5342,057
Private1430661232575524,1925,8364,728
Trade281433761421,0191,154852
Transport02371537333493369
Communications00230121132
Other 4/122149831662992,6483,8843,203
(Growth rate in prices of previous year, in percent)
Total-26.9-20.70.6-3.14.0-9.3-19.30.52.7
Trade-19.2-13.80.47.62.1-21.5-33.46.9-1.1
Transport3.93.88.53.139.80.00.5-9.8-11.4
Communications2.95.78.00.932.58.15.512.614.8
Other 4/-34.4-28.4-0.9-6.7-1.7-7.0
State-37.9-27.4-9.8-8.3-10.5-3.3-20.7-4.93.1
Trade-44.3-38.3-22.0-9.6-25.5-20.2-30.1-0.4-36.9
Transport-2.8-6.7-2.2-2.221.6-18.62.4-21.9-19.1
Communications2.95.77.20.729.339.02.4-8.08.5
Other 4/-44.7-30.0-9.2-9.8-16.7-1.2
Private15.451.622.43.724.3-5.9-18.54.02.5
Trade87.089.532.022.119.2-21.4-34.28.98.6
Transport139.8160.569.719.391.6-14.1-2.47.8-2.7
Communications13.6357.6149.944.5222.640.7
Other 4/-2.0-9.315.4-3.020.6-21.4
(Percentage)
Share of economy (gross value added)
Total services48.247.554.455.653.954.545.250.254.0
Trade8.29.39.610.812.210.98.67.77.0
Transport5.15.25.05.24.55.65.35.34.8
Communications1.01.21.71.81.51.92.22.93.9
Other 4/33.931.838.137.835.736.129.134.338.3
Share of state service in total service79.367.856.355.044.138.639.439.538.3
Trade81.458.345.938.425.820.821.921.514.2
Transport94.685.175.573.960.060.559.151.945.6
Communications100.0100.0100.098.997.092.791.178.276.3
Other 4/75.866.554.455.146.237.836.938.437.9
Share of private service in total service20.732.243.745.057.161.460.660.561.7
Trade18.641.754.161.674.279.278.178.585.8
Transport5.414.924.526.140.039.540.948.154.4
Communications1.13.17.38.921.823.7
Other 4/24.233.545.644.955.750.259.458.859.0
Sources: National Statistical Institute; and staff estimates.

Including holding gains/losses.

Preliminary data.

From 1996, this row also includes repair of motor vehicles and personal and household appliances

Includes: housing and municipal services; business services; science; education, culture and art; health and social security, sports recreation and tourism; finance, credit and insurance; government; and other sectors of non-material production.

Sources: National Statistical Institute; and staff estimates.

Including holding gains/losses.

Preliminary data.

From 1996, this row also includes repair of motor vehicles and personal and household appliances

Includes: housing and municipal services; business services; science; education, culture and art; health and social security, sports recreation and tourism; finance, credit and insurance; government; and other sectors of non-material production.

Table A7.Bulgaria: Services by Branches, 1992-1999

(Old Classification) 1/

19921993199419951992199319941995
(Growth rate in prices of previous year, in percent)(In current prices, in millions of leva)
Gross value added - Total services-26.90.6-3.14.092.0151.72713450.2
Transport3.98.53.139.910.113.925.237.5
Communications2.98.00.932.52.44.88.812.2
Trade-19.20.47.62.118.0-26.652.9101.8
Business services-51.7176.60.0-0.51.35.911.018.1
Housing, public utilities, and amenities-5.02.1-4.30.719.942.672.6121.5
Sciences-34.4-22.8-26.7-22.81.72.12.93.5
Education6.4-2.1-23.1-10.87.812.117.225.0
Culture and arts-13.25.6-12.0-4.51.11.93.25.0
Health, social welfare, sports, and tourism0.12.2-22.8-11.06.710.715.622.6
Finance, credit, and insurance-71.6-22.720.6-0.714.016.940.164.4
General government6.82.5-19.74.18.613.822.237.5
Other branches of non-material sphere-27.4-15.9-10.119.30.30.30.61.1
Intermediate consumption6.1-5.311.913.862.086.3172.8291.6
Gross output-16.2-1.82.47.8154.0238.0445.2741.8
Memorandum items:
Gross value added per employee (thousand leva)-22.6-1.6-5.4-4.370115203324
Gross output per employee (thousand leva)-11.2-2.81.0-0.8118180332534
Employment in services (1,000)-5.61.01.43.81,3081,3211,3391,390
(New Classification) 1/
1996199719981999

Q1-03 2/
1996199719981999

Q1-Q3 2/
(Growth rate in prices of previous year, in percent)(In current prices, in millions of leva)
Gross value added - Total services-9.3-19.30.52.7898.96,915.59,649.17,659.7
Trade, repair of motor vehicles, personal and household appliances-33.46.9-1.1179.61,304.91,470.3992.1
Hotels and restaurants21.316.419.7222.7396.5
Transport and communications1.7-3.2-2.2123.11,155.01,577.31,235.1
Transport0.5-9.8-11.492.681441,025.7677.6
Communications5.512.614.830.6340.6551.6557.5
Financial intermediation and insurance-74.6-13.43.9143.9398.2407.2346.9
Real estate, renting and business activitie-0.6-2.6290.12,525.93,495.3
-imputed rent of owner occupied dwell0.7-3.6234.62,056.62,845.2
Public administration and defense, compulsory social security-18.26.456.6484.1866.1
Education-1.00.539.1391.2669.2
Health, social work and veterinary activiti2.1-1.629.2293.9446.9
Other community, social and personal
service activities of NGO-6.725.24.917.6139.6320.25,085.7
Intermediate consumption-7.6-4.53.8578.75,466.46,755.95,308.4
Gross output-14.7-1.73.21,477.612,381.916,405.012,968.1
Memorandum items:
Gross value added per employee (thousand leva)10.6-15.82.23.4806.86,435.49,133.37,297.8
Gross output per employee (thousand leva)-11.20.03.91,326.211,522.415,528.112,355.5
Employment in services (1,000)-19.8-3.5-1.7-0.71,114.11,074.61,056.51,049.6
Sources: National Statistical Institute.

Classification system changed in 1996

Preliminary data.

Sources: National Statistical Institute.

Classification system changed in 1996

Preliminary data.

Table A8.Bulgaria: Total and Private Agricultural Production, 1991-99
199119921993199419951996199719981999

Q1-Q3
(In millions of leva)
Total agriculture
Gross output37.251.169.8132.8236.3561.78,316.88,258.35,279.9
Crops17.624.231.360.9108.2231.83,602.62,908.6
Livestock14.922.133.762.9113.0196.02,858.23,307.9
Services and other4.74.84.89.015.148.1623.7525.2
Secondary activities of households85.81,232.31,516.5
Intermediate consumption16.628.441.273.8127.4321.04,308.54,277.92,774.3
Gross value added20.622.728.759.0108.9240.74,008.33,980.42,505.6
Private agriculture
Gross output10.325.644.5101.1178.1534.68,111.58,121.25,205.8
Intermediate consumption3.012.223.151.189.0299.64,161.14,163.92,713.9
Gross value added7.313.421.449.989.1235.03,950.33,957.32,491.9
(Growth rate in prices of previous year, in percent)
Total agriculture
Gross output-6.3-19.47.116.0-11.514.20.03.4
Crops0.2-26.321.721.9-22.635.7-2.2
Livestock-2.78.0-6.510.7-3.00.34.9
Services and other-41.5-37.27.913.34.42.9
Secondary activities of households-6.43.2
Intermediate consumption5.4-9.95.217.3-14.8-2.9-1.1-0.2
Gross value added-15.7-31.310.014.4-7.737.11.27.2
Private agriculture
Gross output55.2-5.722.511.8-9.81630.73.7
Intermediate consumption251.813.528.716.4-13.2-0.5-0.60.3
Gross value added15.0-23.215.87.0-6.437.72.172
Sources: National Statistical Institute; and staff estimates.

According to National Classification of Economic Activities.

Sources: National Statistical Institute; and staff estimates.

According to National Classification of Economic Activities.

Table A9.Bulgaria. Production and Average Yields of Selected Agricultural Crops, 1988-99
198819891990199119921993199419951996199719981999 1/
(Production in thousand of tons)
Wheat4,7435,4255,2924,4973,4433,6183,7543,4351,8023,5753,2032,637
Maize1,5572,2651,2212,7751,7429831,3841,8171,0421,6591,3031,719
Barley1,3131,5721,3871,5021,1959331,1431,173457810717652
Sunflower seeds374458389434595432602767526438524610
Sugar beets6269665848563049511215787796253
Tobacco906557575336261231493934
Tomatoes775837813610413325461515306227469428
Green peppers226175197206199153218252206174233198
Potatoes358554433498566357497649319463478566
Apples3354584111452211107614920416112992
Peaches639980727654577269504239
Cherries738372546632487557363432
Grapes922743731748787482516699661636396371
(Average yield - tons/hectare)
Wheat4.014.774.553.743.111.842.842.911.882.952.812.73
Maize3.174.002.874.922.811.862.723.762.183.582.733.78
Barley3.804.363.853.903.052.572.922.951.752.782.472.56
Sunflower seeds1.571.901.391.611.250.921.211.271.050.970.971.03
Sugar beets16.0824.5816.6723.3617.789.3013.9017.1010.4015.5814.9216.77
Tobacco1.241.081.341.311.271.141.151.411.341.501.151.32
Tomatoes25.4127.1829.1424.8323.8418.8018.4016.8016.9011.3816.6414.47
Green peppers14.4112.4314.3612.7112.8010.8911.4011.7012.109.9911.39.83
Potatoes9.7313.6810.4711.6611.809.0110.1011.507.5210.3793710.83
Apples11.2016.6915.393.787.714.152.394.479.026.766.564.41
Peaches7.0610.617.516.345.994.803.553.004.703.363.623.45
Cherries3.313.913.062.192.871.661.752.662.521.692.182.16
Grapes5.804.614.464.684.953.693.715.235.525.323.183.08
Source: National Statistical Institute.

Preliminary

Source: National Statistical Institute.

Preliminary

Table A10.Bulgaria: Production and Yields of Selected Livestock Products, 1988-98
19881989199019911992199319941995199619971998
Milk, total (million liters)2,4932,4382,3852,0051,8061,5311,4201,40413901,4361,589
Cows2,1232,0902,0601,7281,5601,3161,1761,1421,1401,1721,298
Sheep294277263219180144129119111107106
Goats767162586671115143139157185
Eggs, total (million)2,8742,7262,4601,8661,6391,6241,7511,9551,7341,5831,690
Wool, greasy (thousand tons)312928231914129978
Meat in carcase, total (thousand tons)800820791659650565445469498448467
Of which:
Cattle1301301261151541229666805756
Sheep and goats9187737884655650605053
Pigs394413408362319277207256252227248
Poultry1831881821008997829299101105
Other222444457135
Milk yield per cow (liters)3,3973,3543,3672,9682,8332,7832,9853,1353,0743,1023,149
Eggs per hen170173170157161164185181177175184
Wool clip per sheep (grams)4,1924,0974,1253,6283,4853,3923,1793,2323,1873,2533,236
Source: National Statistical Institute.
Source: National Statistical Institute.
Table A11.Bulgaria: Acquisition of Tangible Fixed Assets, 1990-98 1/
1990199119921993199419951996 2/19971998
(In current prices, in millions of leva)
Total9.79324.77843.62743.54784.208125.876268.2072363.9183388.147
Agriculture 3/0.961.8261.9781.1641.5432.8897.07766.535106.966
Forestry0.0050.0060.010.0080.010.092
Mining and quarrying 4/9.23873.105109.636
Manufacturing4.73513.89522.43820.00630.93238.36758.392469.049919.002
Construction0.4430.6461.3741.9251.7174.9056.587267.301241.622
Electricity, gas, and water supply36.105164.991259.950
Transport 5/0.7921.1973.2793.0247.849.29337.658685.137735.027
Trade0.3761.7785.7255.90119.03310.05820.065147.098403.785
Hotels and restaurants4.65950.11875.527
Communications0.2330.5710.6740.8992.9776.78
Financial intermediation32.874213.002118.822
Other in material sphere0.0650.1240.2810.5460.4210.714
Agriculture 3/37.54044.65276.689
Public administration; compulsory social security6.76576.781194.906
Housing, municipal, and consumer services1.6063.4974.8475.2896.12619.185
Of which:
Housing0.9262.1462.892.542.80913.461
Science0.060.0820.2560.1520.1660.25
Health/sport/leisure0.1640.3850.6871.2321.5863.1013.35128.18636.031
Education0.1110.3650.7770.8761.4872.3263.02038.84251.311
Culture and arts0.0350.0290.0670.1890.3960.659
Other in non-material sphere0.2080.3771.1342.3369.97427.257
Other community, social, and personal Service activities4.87739.12158.872
(In percent of GDP)
Total21.618.321.714.616.014.315.313.915.7
Agriculture 3/2.11.31.00.40.30.30.40.40.5
Forestry0.00.00.00.00.00.0
Mining and quarrying 4/0.50.40.5
Manufacturing10.410.211.26.75.94.43.32.84.3
Construction1.00.50.70.60.30.60.41.61.1
Electricity, gas, and water supply2.11.01.2
Transport 5/1.70.91.61.01.51.12.24.03.4
Trade0.81.32.92.03.61.11.10.91.9
Hotels and restaurants0.30.30.4
Communications0.50.40.30.30.60.8
Financial intermediation1.91.20.6
Other in material sphere0.10.10.10.20.10.1
Real estate, reating, and business activities 6/2.10.30.4
Public administration; compulsory0.40.50.9
social security0.00.00.00.00.00.00.00.00.0
Housing, municipal, and0.00.00.00.00.00.00.00.00.0
consumer services3.52.62.41.81.22.2
Of which:
Housing2.01.61.40.80.51.5
Science0.10.10.10.10.00.0
Health/sport/leisure0.40.30.30.40.30.40.20.20.2
Education0.20.30.40.30.30.30.20.20.2
Culture and arts0.10.00.00.10.10.1
Other in non-material sphere0.50.30.60.81.93.1#VALUE!
Other community, social, and personal Service activities0.30.20.3
Memorandum item:
GDP in millions of leva451362012995268801,7491,05521,577
Source: National Statistical Institute.

These data do not equal gross fixed investment, as they include purchases of existing assets.

Based on new National Classification of Economic Activities; sectoral data are not directly comparable to earlier periods.

Starting 1996, agriculture includes forestry.

Until 1996, mining & quarrying was included in manufacturing.

Includes communications Starting 1996.

The classifications “housing” used prior to 1996 and “real estate, renting, and business activities” used there after do not match exactly.

Source: National Statistical Institute.

These data do not equal gross fixed investment, as they include purchases of existing assets.

Based on new National Classification of Economic Activities; sectoral data are not directly comparable to earlier periods.

Starting 1996, agriculture includes forestry.

Until 1996, mining & quarrying was included in manufacturing.

Includes communications Starting 1996.

The classifications “housing” used prior to 1996 and “real estate, renting, and business activities” used there after do not match exactly.

Table A12.Bulgaria: Income Accounts, 1991-99
1991 1/1992 1/1993 1/1994 1/199419951996199719981999 Q3 2/1991 1/1992 1/1993 1/1994 1/199419951996199719981999 Q3 2/
(In million of leva)(In percent of GDP)
GDP1362012995515268001,74917,05521,57716,121100.0100.0100.0100.0100.0100.0100.0100.0100.0100.0
Gross vales added1562103065425178591,65015,29419,20314,184
Compensation of employees561061562392393696465,8851,4746.59441.353.052.243.445.441.936.934.539.340.9
Wages and salaries43751121711712674654,2166,0054,66031.337.337.531.132.630.426.624.727.424.9
Social contributions14324467671011811,6692,4691,93410.015.714.712.212.011.510.39.811.512.0
Net taxes on product91419212114141401901546.86.76.33.73.91.6-0.8-0.6-4.9-0.9
Turnover taxes and excises 3/1217282828258.88.59.25.03.1
subsides3497711131091901542.01.82.91.31.31.20.80.60.90.9
Gross operating surplus90901312832504761,0199,51710,9197,74466.645.044.051.449.154.158.355.850.648.0
Consumption of fixed capital1926405454771431.15814.012.913.39.710.38.78.26.8
Net operating surplus6042901421172436565,85044.021.016.925.721227.437329.6
Mixed income, net12224198981562203,3098.611.113.815.916.617.712.619.4
Adjustments201079921981.7612,3741.937-14.7-4.7-141.51.62.45.610.311.012.0
Import duties149151320383683902330.72.03.0172.9131212141.4
Less Financial international 4/211416383866137362367330-15.5-6.7-5.3-6.8-7.1-7.5-7.9-2.1-1.7-2.0
VAT3131471361.1991.7442.0355.65.97.67.87.01112.6
(In million of leva)(Private share of total income generation, in period)
Of Which:
Private sector
GVA at basic prices25511062872874238569,64112,2429.33316.224434338.240.149.251.963.063.765.8
Compensation of employees27204141751381,8753,1522,7823.211.311517.017.020.321.331.937.241
Wages and salaries25153131541041,3752,2761,9623.86.313.018.118.12.421432.637.942.1
Social contributions259920334998767411.57.011.214.014.020.118.529.933.5313
Net taxes as production001865-8.70.716.43.13.4
Tax on increase of salary
Subsidies8819650.90.917.73.13.4
Gross operating surplus2343861671673487197,7859,8966,63625.949.265.658.964.673.170.681.883.385.7
Consumption of fixed capital2591717304588910.019.223.731.931.938.745.669.9
Net operating surplus10173662621624343,66616.440.970.443.853.166.766.272.6
Mixed income, net12224188881562203309100.0100.0100.0100100.0100.0100.0100.0100.0100.0
(Structure of state GVA, in percent)(Structure of private GVA, in percent)
Gross value added at basic prices100.0100.0100.0100.0100.0100.0100.0100.0100.0100.0100.0100.0100.0100.0100.0100.0100.0100.0100.0100.0
Compensation of employees45.669.971764.470.071.364.170.976.440.27.113.418.419.619.617.716.119.525.729
Wages and salaries34.349.256.245449.651.745.550.253.555.66.39.113.815.015.012.912.214.318.621
Social contributions11.320.722.418.820.519.718.620.722.924.60.84.34.64.5434.83.95.27.18
Net taxes on production-1.8-2.1-4.7-2.1-2.3-2.4-1.8-1.6-2.6-3.0
Tax on increase of salary0.40.40.30.20.20.10.1
Subsidies2.32.55.02.32.52.61.81.62.63.0
Gross operating surplus56.332.226.137.732.331.137.730.726.222.092.986.681.680.480.482.33.980.774.371.1
Consumption of fixed capital14.414.717.511.912.911.49.87.59.78.98.38.37.07.614
Net operating surplus41.917.38.625.919.419.727.938.933.533.629.939.931350.738.0
Mixed income, net46443.439.142.342.337.025.634.3
Source: NSI

Including holding gains/losses

Preliminary data

Data are available for the total economy only.

Indirectly measured value of financial intermediation services, which is calculated as interest receivables by financial intermediations, less interest payable.

Source: NSI

Including holding gains/losses

Preliminary data

Data are available for the total economy only.

Indirectly measured value of financial intermediation services, which is calculated as interest receivables by financial intermediations, less interest payable.

Table A13.Bulgaria: Average Monthly Earnings in the State Sector, 1996-99
1996199719981999199719981999199719981999
(In leva)(In 1995 prices, deflated by CPI)(In 1995 prices, deflated by PPI)
(Percentage change)(Percentage change)
Total1413619S221-15.717.613.7-6.62298.8
Agriculture11110156166-11.615.66.4-2.020.81.9
Forestry811315216723.710.59.737.015.45.0
Mining coal, petroleum, gas20229132217.410.722.76.0
Mining of ferrous metals216240311-9.029.3-4.923.8
Mining other and quarrying19526326710.01.415.0-3.0
Food, beverage, tobacco17724227111.512.216.57.4
Textiles1071311340.12.24.6-2.2
Wearing apparel, except leather91110119-1.17.73.33.1
Leather100122164-0.634.33.928.8
Wood and wood products8699122-6.123.81.818.5
Paper and publishing15523726325.210.930.86.2
Coke, petroleum, nuclear fuel410490513-234.7210.2
Chemicals and products243277294-6.96.2-271.6
Rubber and plastic157185225-4.222.10.216.8
Other non-metallic mineral products15521619913.7-7.918.811.9
Basic Metals3003663880.05.94.41.4
Machinery and Equipment13418919815.44.720.60.2
Electrical and optical equipment1301721778.33.113.2-1.3
Transport equipment18324823010.5-7.115.5-11.0
Manufacturing. n.e.i.981271416.011.410.76.6
Electricity, gas, water1121134240156.532.517.173.438.412.1
Construction13124197229-17.530.616.1-8.636.511.1
Trade13155234269-2.023.115.38.628.610.3
Hotels and restaurants12316918412.78.717.84.1
Transportation and storage16723325514.59.219.74.6
Communication1315923228S3.719.723.914.925.118.6
Financial services22201299369-22.621.923.4-14.227.418.1
Real estate11217119925.715.931.410.9
Research and development11106159190-19.023.019.6-10.328.514.5
Business activities13721724730.313.736.18.8
Public administration and defense11111183227-11.635.423.7-2.041.518.4
Education9(6133166-17.026.324.94.032.019.6
Health979126149-21.730.518.5-13.236.313.4
Veterinary12326330874.617.182.412.1
NGOs n.e.i.6813515863.616.671.011.6
Miscellaneous services619310823.916.829.411.8
Cultural991142186-11.128330.6-1.534.025.0
Recreation and sport8615619847827.054.421.6
Sources: National Statistical Institute and Fund staff calculations.
Sources: National Statistical Institute and Fund staff calculations.
Table A14.Bulgaria: Labor Force, Employment, and Unemployment, 1990-99
1990199119921993199419951996199719981999 Q3 1/
(In thousands)
Population8,718.38,632.38,540.18,472.38,427.48,384.78,340.98,283.28,230.4
Of working age 2/4,822.24,793.34,756.84,735.74,741.24,745.44,749.24,749.54,750.3
Pensioners2,273.42,374.42,443.32,439.82,423.72,409.22,381.12,391.82,387.32,377.7
Total labor force4,161.93,983.13,850.63,847.93,730.03,706.03,764.73,680.93,617.8
Participation rate (in percent) 3/86.383.180.981.378.778.179.377.676.2
Employment4,096.83,564.03,273.73,221.83,241.63,282.23,285.93,157.43,152.6
Public3,855.23,204.22,693.72,309.72,066.21,949.41,728.41,412.11,230.4
Private241.6359.8580.0912.11,175.41,332.81,557.51,745.31,922.2
Share of total employment
(in percent)
Public94.189.982.371.763.759.452.644.739.0
Private5.910.117.728.336.340.647.455.361.0
Registered unemployed65.1419.1576.9626.1488.4423.8478.8523.5465.2520.3
Official unemployment rate (in percent) 4/1.711.115.316.412.811.112.513.712.213.2
Calculated unemployment rate (in percent) 5/1.610.515.016.313.111.412.714.212.9
Unemployment beneficiaries35.0171.0198.5195.4167.3138.9178.0157.7136.3
(in percent)0.84.35.25.14.53.74.74.33.8
(Percent change)
Population-1.8-1.0-1.1-0.8-0.5-0.5-0.5-0.7-0.6
Labor force-4.7-4.3-3.3-0.1-3.1-0.61.6-2.2-1.7
Employment-6.1-13.0-8.1-1.60.61.30.1-3.9-0.2
Of which:
Private1.348.961.257.328.913.416.912.110.1
Sources: National Statistical Institute; and staff estimates.

Preliminary data. Data on labor force and employment are available only annually.

National classification: includes women aged 16-55 and men aged 16-60.

Labor force as a proportion of the working age population.

End of period.

End-of-period rate of unemployed in the total labor force.

Sources: National Statistical Institute; and staff estimates.

Preliminary data. Data on labor force and employment are available only annually.

National classification: includes women aged 16-55 and men aged 16-60.

Labor force as a proportion of the working age population.

End of period.

End-of-period rate of unemployed in the total labor force.

Table A15.Bulgaria: Price Indices of Food, Non-Food, and Services, 1995–99(1995=100)
Food Price IndexMonthly Changes

(In percent)
Non-Food

Price index
Monthly Change

(In percent)
Services

Price Index
Monthly Change

(In percent)
1995January93.73.885.83.077.75.6
February97.74.388.73.379.11.9
March97.4-0.391.63.394.819.9
April97.3-0.193.42.096.11.4
May98.71.496.02.797.11.0
June96.7-2.098.82.999.12.1
July97.10.4101.62.9100.81.7
August96.7-0.5103.21.5101.70.9
September101.24.7106.73.4111.69.7
October104.119109.12.2112.50.8
November107.73.5111.42.1113.91.2
December111.53.5113.72.1115.51.5
1996January114.93.0114.50.7119.63.5
February116.01.0116.01.3128.07.0
March117.31.1118.92.5129.81.5
April119.31.8122.22.8139.97.7
May132.611.1141.315.7154.210.2
June163.323.2172.522.1165.87.7
July195.619.8207.720.5244.847.7
August237.821.5234.312.8281.214.9
September290.021.9273.816.8316.712.6
October346.719.6311.113.6359.213.4
November368.96.4354.714.0398.611.0
December453.422.9485.5369470.017.9
1997January661.445.9703.544.9627.533.5
February2,495.5277.32,585.2267.51,072.470.9
March2,645.26.02,661.22.92,149.1100.4
April2,542.3-3.92,512.9-5.62,680.524.7
May2,772.69.12,501.7-0.42,834.55.7
June2,742.5-1.12,550.8202,958.94.4
July2,876.24.92,609.62.33,017.22.0
August3,103.17.92,682.62.83,093.32.5
September3,166.12.02,802.74.53,292.16.4
October3,145.7-0.62,837.31.23,370.71.4
November3,148.50.12,861.40.83,407.31.1
December3,222.42.32,866.00.13,438.30.9
1998January3,325.53.22,857.6-0.33,497.31.7
February3,400.52.32,859.40.13,591.017
March3,410.80.32,108.9-1.83,644.61.5
April3,397.3-0.42,821.90.53,686.51.1
May3,414.30.52,820.70.03,731.31.2
June3,301.1-3.32,801.6-0.73,775.91.2
July3,197.2-3.12,792.1-0.33,857.52.2
August3,107.6-2.82,811.60.73,953.92.5
September3,051.7-1.82,859.41.74,091.33.5
October3,020.0-1.02,850.6-0.34,154.81.5
November2,963.9-1.92,845.5-0.24,177.30.5
December2,922.3-1.42,842.7-0.14,187.30.2
1999January2,913.0-0.31,859.40.6447967.0
February2,865.1-1.62,844.3-0.54,520.40.9
March2,798.5-2.32,828.3-0.64,554.90.1
April2,739.5-2.12,843.40.54,583.60.6
May2,690.9-1.82,847.20.14,591.00.2
June2,662.0-1.12,842.7-0.24,606.20.3
July2,730.32.62,911.92.44,866.45.6
August2,752.00.82,947.31.24,909.10.9
September2,807.92.02,971.30.84,974.41.3
October2,845.11.32,970.70.05,063.31.8
November2,876.81.12,982.10.45,073.90.2
December2,902.70.92,992.40.35,119.40.9
Source: National Statistical Institute.
Source: National Statistical Institute.
Table A16.Bulgaria: Producer and Consumer Price Indices, 1996-2000(1995=100)
Consumer

Price Index
Monthly Change

in Percent
12-month Change

in Percent
Producer

Price Index 1/
Monthly Change

in Percent
12-month Change

in Percent
1996
January115.52.330.9114.2n.a.
February117.71.928.5117.93.2
March119.71.726.4120.82.5
April123.22.928.812342.2
May138.612.542.2144.116.7
June166.620.370.2175.822.0
July205.523.3106.7219.224.7
August240.617.1140.7262.0193
September285.718.8172.9299.514.3
October333.316.7210.5348.716.4
November365.59.7232.0385.810.7
December464.026.9310.8506.931.4
1997
January666.043.5476.6767.751.4572.5
February2,282.4242.71,839.12,039.1165.61,629.9
March2,562.412.32,040.42,416.018.51,900.0
April2,544.5-0.71,965.12,471.3231,902.5
May2,688.25.71840.12,521.62.01,650.3
June2,710.30.81,526.62,604.4331,381.7
July2,809.53.71,267.22,730.54.91,145.8
August2,964.35.51,132.22,852.84.5988.7
September3,070.43.6974.62,900.21.7868.3
October3,086.10.5825.82,932.21.1740.9
November3,102.40.5748.82,932.30.0660.0
December3,148.01.5578.52,902.7-1.0472.6
1998
January3,210.42.0382.12,881.1-0.7275.4
February3,266.21.743.12,954.62.544.9
March3,264.6-0.127.42,913.1-1.420.6
April3,268.20.128.42,920.70.318.2
May32,830.20.522.12,949.81.017.0
June3,221.8-1.918.92,946.7-0.113.1
July3,174.5-1.513.02,916.5-1.06.8
August3,145.6-0.96.12,948.71.13.4
September3,240.73.05.52,953.60.21.8
October3,230.9-0.34.72,946.2-0.30.5
November3,200.5-0.93.22,941.5-0.20.3
December3,178.0-0.71.02,916.8-0.80.5
1999
January3,225.41.50.52,932.50.51.7
February3,205.3-0.6-1.92,926.6-0.2-0.9
March3,172.4-1.0-2.82,924.3-0.10.4
April3,152.2-0.6-3.52,913.5-0.4-0.2
May3,130.5-0.7-4.72,902.7-0.4-1.6
June3,115.9-0.5-3.32,820.0-2.9-4.3
July3,215.23.21.32,870.21.8-1.6
August3,247.51.03.22,990.74.21.4
September3,295.71.51.73,307.710.612.0
October3,330.21.03.13,324.30.512.8
November3,351.50.64.73,392.42.115.3
December3,373.60.76.23,458.92.018.6
2000
January3,454.6147.13,497.01.119.2
Source: National Statistical Institute

Since January 1998 National Statistical Institute has changed the PPI methodology. A Laspeyres formula is used where: (1) the base price in the average price in 1995; and (2) price changes are weighted with the annual sales structure in 1995. Indexes for 1996 and 1997 have been recalculated according to the new methodology.

Source: National Statistical Institute

Since January 1998 National Statistical Institute has changed the PPI methodology. A Laspeyres formula is used where: (1) the base price in the average price in 1995; and (2) price changes are weighted with the annual sales structure in 1995. Indexes for 1996 and 1997 have been recalculated according to the new methodology.

Table A17.Bulgaria: Estimated Private Sector Share in GDP and Employment in Related Transition Economies, 1991-99
199119921993199419951996199719981999199119921993199419951996199719981999
(In GDP)(In employment)
Private sector share
(in percent)
Bulgaria 1/1926353948535965621018283641475559
Croatia 2/253541565149504822273747485151
Czech Republic 3/17284556646262601940797979797979
Hungary3040505560707585
Poland42454846535559615054575962646871
Romania24263539455558616234414449515258
Slovak Republic 4/153045556070757513182232
Slovenia 5/1520253045455050551216192248
Sources: EBRD Transition Report 1999; National Statistical Institute, Bulgaria; State Institute of Macroeconomic Analysis and Forecasting. Croatia; Czech Statistical Office; Hungarian Statistical Office; Polish Statistical Office; National Bank of Romania, and Slovak Statistical Office.

According to Revised National Classification of Economic Activities from 1996. The change in definition resulted in a step increase of 3.5 percentage points in the share in GDP in that year.

End-of-year data; employment data for the period before 1993 include only 100 percent privately owned firms; from 1993-94 mixed firms with more than 50 percent private ownership and transformed firms are also included. Data for 1996-97 is according to the revised definition of the labor force. Tentative estimates.

Shares in GDP estimates are for the “non-state sector”, private sector employment includes enterprises with mixed ownership.

Share in GDP estimates are for the “non state” sector. Before 1994, firms with mixed ownership were excluded from the definition of the private sector. Since 1994, such firms were included in the definition of the private sector.

Excluding socially managed enterprises.

Sources: EBRD Transition Report 1999; National Statistical Institute, Bulgaria; State Institute of Macroeconomic Analysis and Forecasting. Croatia; Czech Statistical Office; Hungarian Statistical Office; Polish Statistical Office; National Bank of Romania, and Slovak Statistical Office.

According to Revised National Classification of Economic Activities from 1996. The change in definition resulted in a step increase of 3.5 percentage points in the share in GDP in that year.

End-of-year data; employment data for the period before 1993 include only 100 percent privately owned firms; from 1993-94 mixed firms with more than 50 percent private ownership and transformed firms are also included. Data for 1996-97 is according to the revised definition of the labor force. Tentative estimates.

Shares in GDP estimates are for the “non-state sector”, private sector employment includes enterprises with mixed ownership.

Share in GDP estimates are for the “non state” sector. Before 1994, firms with mixed ownership were excluded from the definition of the private sector. Since 1994, such firms were included in the definition of the private sector.

Excluding socially managed enterprises.

Table A18.Bulgaria: Financial Performance of State-Owned Enterprises, 1991-98
19911992199319941995199619971998
(In millions of leva)
Revenues309.6306.4360.2643.0912.12,199.116,269.615,103.3
Operational297.7288.6339.1596.0867.41,979.214,510.913,759.4
Financial6.98.28.526.221.4176.91,422.9809.4
Extraordinary5.09.612.720.823.343.0335.8534.5
Expenditures289.8314.7391.3644.1914.52,106.714,917.114,765.5
Operational263.8269.9335.7538.7809.21,761.311,975.913,047.6
Financial20.735.943.380.565.9274.42,248.5940.2
Interest paid on credits17.029.936.944.748.781.8279.0242.8
Extraordinary5.38.912.225.039.471.0692.7777.7
Operational surplus33.918.73.357.358.2217.92,535.0711.8
Net financial revenues-13.8-27.6-34.8-54.2-44.5-97.5-825.6-130.8
Net extraordinary-0.30.70.4-4.1-16.1-28.0-356.8-243.1
Net revenues19.8-8.3-31.1-1.1-2.492.41,352.5337.9
Total losses-5.8-24.7-40.9-38.9-49.4-123.6-488.9-753.7
Total profits25.716.49.837.847.0215.91,841.41,091.5
(In percent of GDP)
Revenue228.2152.6120.5123.1103.6125.895.170.0
Operational219.4143.7113.4114.198.5113.284.863.8
Financial5.14.12.85.02.410.18.33.8
Extraordinary3.74.84.24.02.62.52.02.5
Expenditures213.6156.7130.9123.3103.9120.587.268.4
Operational194.4134.4112.3103.291.9100.770.060.5
Financial15.317.914.515.47.515.713.14.4
Extraordinary3.94.44.14.84.54.14.03.6
Operational surplus25.09.31.111.06.612.514.83.3
Net financial revenues-10.2-13.8-11.7-10.4-5.1-5.6-4.8-0.6
Net extraordinary revenues-0.20.30.1-0.8-1.8-1.6-2.1-1.1
Net revenues14.6-4.1-10.4-0.2-0.35.37.91.6
Total losses-4.3-12.3-13.7-7.4-5.6-7.1-2.9-3.5
Total profits18.98.23.37.25.312.310.85.1
Memorandum item:
GDP (million leva)135.7200.8298.9522.2880.31,748.717,10321,577
Sources: National Statistical Institute and Ministry of Finance.
Sources: National Statistical Institute and Ministry of Finance.
Table A19.Bulgaria: Bank and Nonbank Liabilities of State-Owned Enterprises, 1991-1998
1991199219931994199519961997 1/1998 1/
(Change from previous year, in millions of leva)
Total change in liabilities90.867.260.6131.8134.51,118.95,601.6147.5
(in percent of GDP)66.933.520.325.115.364.032.80.7
Changes in bank credit35.321.931.748.835.2411.72,173.0-104.2
(in percent of GDP)26.010.910.69.34.023.512.7-0.5
(in percent of bank liabilities)50.223.825.628.316.966.477.8-3.9
Short-term loans13.214.414.617.611.1104.1494.0-141.1
Of which: Arrears1.06.17.1-2.418.053.444.9-14.1
Long-term loans22.27.517.08.8-16.5137.8750.0256.0
Of which: Arrears11.72.17.2-11.7-0.131.5125.7204.1
Other loans22.440.6169.8928.9-219.1
Total change in arrears to banks12.68.314.3-14.117.898.4170.6190.0
(in percent of bank credit)17.99.011.5-8.28.615.96.17.1
Total change in nonbank liabilities55.545.328.883.099.3822.03,428.7251.7
(in percent of GDP)40.922.69.615.811.347.020.01.2
(in percent of nonbank liabilities)78.539.119.936.430.479.576.85.3
Suppliers25.99.94.927.529.6335.01,161.087.7
Personnel3.11.63.73.41.729.2151.02.6
Taxes5.5856.827.724.7133.4748.1386.5
Pensions1.33.32.93.46.925.288.483.9
Other19.622.010.621.036.5299.21,280.2-3085
(Stocks in millions of leva)
Total stocks140.9208.1268.7400.5535.01,653.97,255.57,403.1
(in percent of GDP)103.8103.689.976.260894.642.434.3
Bank credit70.392.1123.9172.7207.9619.62,792.62,688.4
(in percent of GDP)51.845.941.532.923.635.416.312.5
(in percent of total stocks)49.944.346.143.138.937.538.536.3
Short-term loans27.341.656.373.985.0189.1683.1542.0
Of which: Arrears1.88.015.012.630.684.0128.9114.8
Long-term loans43.050.567.576.359.8197.6947.61,203.6
Of which: Arrears12.014.121.49.79.641.1166.8370.9
Other loans0.122.563.1232.91,161.8942.8
Total arrears13.822.136.422.340.1125.1295.7485.7
(in percent of bank credit)19.624.029.412.919.320.210.618.1
Liabilities to non-banks70.7116.0144.7227.8327.11,034.24,462.94,714.7
(in percent of GDP)52.157.848.443.337.259.126.121.9
(in percent of total stocks)50.255.753.956.961.162.561.563.7
Suppliers30.640.545.472.9102.5406.01,567.01,654.8
Personnel4.25.89.412.814.539.5190.5193.0
Taxes7.215.722.550.274.9182.0930.11,316.6
Pensions1.75.07.811.218.137.0125.4209.3
Other27.049.059.680.7117.1369.71,649.91,341.0
Memorandum items:
Credit to SOEs106.5139.0203.3346.5329.31,077.41,254.1945.6
(in percent of GDP)78.569.268.065.937.461.67.34.4
Total lev credit60.878.0112.3149.0189.2186.5470.4324.9
Lev credit56.773.975.7111.797695.2336.2299.9
Lev bad loan bonds4.14.136.637.291.691.3134.225.0
Total FX credit45.761.091.1197.5140.1598.72,280.21,855.2
FX credit45.761.091.178.271.4429.7917.8645.7
FX bad loan bonds119.468.7169.01,362.41,209.5
Total FX credit (in US$ billion)2.12.52.83.02.03.41.41.0
GDP (In billions of leva)135.7200.8298.9525.6880.31,748.717,103.421,577.0
Sources: National Statistical Institute; Ministry of Finance; and Bulgarian National Bank.

Data for 1997 and 1998 exclude agriculture.

Sources: National Statistical Institute; Ministry of Finance; and Bulgarian National Bank.

Data for 1997 and 1998 exclude agriculture.

Table A20.Bulgaria: State-Owned Enterprises Profitability and Profit Categories, 1992-98
1992199319941995199619971998
Total number of enterprises /15,7365,1195,4905,6305,4924,0343,090
Group I
Number1,2431171,065897412771
Share in Total, in percent21.72.319.41.61.33.12.3
Group II
Number1,9732,1082,2471,5251,3841,376969
Share in Total, in percent34.441.240.927.125.234.131.4
Group III
Number8677668942,7542,2761,4481,031
Share in Total, in percent15.115.016.348.941.435.933.4
Subtotal: Groups I-III
Number4,0832,9914,2064,3683,7342,9512,071
Share in Total, in percent71.258.476.677.668.073.267.0
Group IV
Number41032939435350556230
Share in Total, in percent7.16.47.26.39.21.47.4
Group V
Number1,2437998909091,2531,027789
Share in Total, in percent21.715.616.216.222.825.525.5
Sources: National Statistical Institute and Ministry of Finance.

Excluding agriculture.

Group I: Enterprise whose current revenues do not meet current expenditures on material inputs.

Group II: Enterprises that meet the cost of material inputs but nothing else.

Group III: Enterprises that meet the costs of material inputs and wages, but are unable to cover non-operational expenditure.

Group IV: Enterprises that meet all costs excluding depreciation.

Group V: Enterprises that meet all costs.

Sources: National Statistical Institute and Ministry of Finance.

Excluding agriculture.

Group I: Enterprise whose current revenues do not meet current expenditures on material inputs.

Group II: Enterprises that meet the cost of material inputs but nothing else.

Group III: Enterprises that meet the costs of material inputs and wages, but are unable to cover non-operational expenditure.

Group IV: Enterprises that meet all costs excluding depreciation.

Group V: Enterprises that meet all costs.

Table A21.Bulgaria: Share of the 100 Largest Loss-Making State-Owned Enterprises in all State-Owned Enterprises, 1997-98
19971998
100 Largest

loss making SOEs

in millions of leva
All other SOEs

in millions of leva
Largest loss-making

SOEs as percentage

of all SOEs
100 Largest

loss-making SOEs

in millions of leva
All Other

SOEs

in millions of leva
Largest less making,

SOEs as percentage

of all SOEs
Revenue4,35316,269.626.03,863.515,103.325.6
Operational4,034.314,510.927.83,546.311,759.425.8
Financial262.61,422.918.5256.4809.431.7
Extraordinary57.0355.817.060.8534.511.4
Expenditures4,832.114,917.132.44,547.614,765.530.8
Operational3,608.511,975.930.83,871.313,047.629.7
Financial881.82,248.539.2348.9940.237.1
Extraordinary261.8692.737.8327.4777.742.1
Operational surplus345.82,535.013.6-325.0711.8-45.7
Net financial revenues-619.2-825.675.0-92.5-130.870.7
Net extraordinary revenues-204.8-356.957.4-266.6-243.2109.6
Net profits-478.21,352.5-684.1337.8
Total nonbank liabilities1,707.84,462.938.31,747.44,714.737.1
Suppliers668.81,567.042.7749.01,654.845.3
Personal29.7190.515.648.4193.025.1
Budget 2/449.6930.148.3305.71,316.623.2
Other 3/559.71,775.331.5644.31,550.341.6
Sources: National Statistical Institute and Ministry of Finances.

The 100 largest loss-making SOEs include enterprises under Isolation Program.

Excludes ZUNK credits transferred from banks to the budget.

This represents a composite grouping of several categories including money received from customers in advance but not recognized as revenue for the year under review, and interest accrued but not actually paid to deposit money banks.

Sources: National Statistical Institute and Ministry of Finances.

The 100 largest loss-making SOEs include enterprises under Isolation Program.

Excludes ZUNK credits transferred from banks to the budget.

This represents a composite grouping of several categories including money received from customers in advance but not recognized as revenue for the year under review, and interest accrued but not actually paid to deposit money banks.

Table A22.Bulgaria: Privatization of State-Owned Enterprises, 1993-99
1993199419951996199719981999Total
Number of Privatization transactions 1/1165491,5213,0919121,383
In the state sector631653085165881,1021,2253,967
Of which: Privatization agency11366914683176231752
Ministries/committees511292403695067699943,038
In the Municipal sector333841,2132,5753242814,830
Privatization proceeds (US$ million) 2/722331824176086141,1563,281
Of which: Payments contracted441441141855725696362,284
Corporate Liabilities paid1333582183545499901
Corporate Liabilities assumed1556111410197
Long-term assets privatized (billion leva) 3/296241072699273
By privatization agency29320141081139
By Ministries/committees01338161749
By Center for Mass Privatization 4/0000850085
Long-term assets privatized (percent of total) 5/02141841747
By privatization agency0114221424
By Ministries/committees00111338
By Center for Mass Privatization0000150015
Source: Privatization Agency.

Includes privatization of whole enterprices and of parts of enterprises.

Includes cash payments contracted and contracted.

At end-1995 according valuation.

Voucher privatization.

Percent of total state owned assets of 580 billion leva at and-1995 accounting valuation.

Source: Privatization Agency.

Includes privatization of whole enterprices and of parts of enterprises.

Includes cash payments contracted and contracted.

At end-1995 according valuation.

Voucher privatization.

Percent of total state owned assets of 580 billion leva at and-1995 accounting valuation.

Table A23.Bulgaria: General Government, 1993-99 1/
19921993199419951996199719981999
(In millions of lava)
Total revenue771112103145585,3527,9359,065
Of which: Tax revenue66861672584644,5466,7676,923
BNB transfers3102072234090
Total expenditure881442403647405,7087,7329,279
Of which: Current non-interest691101612303833,9676,0017,048
Interest1328711243441,355952896
External3372548419688688
Domestic102564100297936264208
Primary balance2-541751629991,154683
Primary balance excluding BNB transfers-1-1421681399651,154593
Overall balance-11-33-30-50-183-356203-213
Financing11333050183356-203213
External financing (net)-2-4-3-12-50-130-20442
Domestic financing (net)12363361233-54-314-331
Banking System12332943213-67-545-331
Nonbank0441819116730
Privatization00000539335503
(In percent of GDP)
Total revenue38.437.239.935.731.931.436.840.3
Of which: Tax revenue33.128.931.829.326.526.731.430.8
Total expenditure43.648.145.741.342.333.535.841.2
Of which: Current non-interest34.436.930.726.121.923.327.831.3
Interest6$9.313.514.119.77.94.44.0
External1.61.01.32.82.72.53.23.1
Domestic4.88.312.211.317.05.51.20.9
Primary balance1.2-1.57.78.5935.95.33.0
Primary balance excluding BNB transform-0.4-4.73.97.78.05.75.32.6
Overall balance-5.2-10.9-5.8-5.6-10.4-2.10.9-0.9
Financing5.210.95.85.610.42.1-0.90.9
External financing (net)-0.7-1.2-0.5-1.3-2.9-0.8-1.00.2
Domestic financing (net)6.012.16.37.013.3-0.3-1.5-1.5
Banking system6.011.0554.912.2-0.4-2.5-1.5
Nonbank-0.11.20.72.11.10.70.30.0
Privatization0.00.00.00.00.03.21.62.2
Memorandum items
Government social insurance contributions 2/
(in millions of leva)37111623249385564
(in percent of GDP)2.22.22.01.81.31.51.82.5
Nominal GDP (in millions of leva)2012995268801,74917,05521,57722,515
Source: Bulgarian Ministry of Finance.

Consolidated government through 1997.

Social insurance contributions paid by central government to the social insurance fund.

Source: Bulgarian Ministry of Finance.

Consolidated government through 1997.

Social insurance contributions paid by central government to the social insurance fund.

Table A24.Bulgaria: General Government Revenue, 1992-99 1/
19921993199419951996199719981999
(In millions of leva)
Total revenue771112103145585,3527,9359,065
Tax revenue66861672584644,5466,7676,923
Profit taxes147193374849873735
Nonfinancial enterprises96193062755692637
Financial enterprises5113129418297
Income taxes11152336706801,0221,056
VAT/turnover taxes71039591171,0491,8331,927
Excise duties511182326362674688
Customs duties49152138363435259
Social insurance contributions223047701211,1761,6551,793
Pension fund192640591081,0591,4971,538
Unemployment fund3471013117158152
Health Insurance fund0000000104
Other taxes446151767275466
Nontax revenues11194050867451,1521,968
BNB transfers31020162234090
Other792034647111,1521,878
Extrabudgetary funds06368016174
(In percent of GDP)
Total revenue38.437.239.935.731.931.436.840.3
Tax revenue33.128.931.829.326.526.731.430.8
Profit taxes6.52.23.73.84.25.04.03.3
Nonfinancial enterprises4.52.03.63.43.64.43.22.8
Financial enterprises2.30.30.10.40.70.60.80.4
Income taxes5.45.04.44.14.04.04.74.7
VAT/turnover taxes3.63.57.36.76.76.18.58.6
Excise duties2.63.83.42.61.52.13.13.1
Customs duties2.03.02.82.42.22.1201.1
Social insurance contributions10.710.18.97.96.96.97.78.0
Pension fund9.28.67.66.86.16.26.96.8
Unemployment fund1.51.51.31.20.10.70.70.7
Health Insurance fund0.00.00.00.00.00.00.00.5
Other taxes211.31.21.71.00.41.32.1
Nontax revenues5.36.37.65.74.94.45.38.7
BNB transfers1.63.23.81.81.30.20.00.4
Other3.73.13.83.93.74.25.38.3
Extrabudgetary funds0.02.1050.70.40.00.10.8
Source: Bulgarian Ministry of Finance.

Consolidated government through 1997.

Source: Bulgarian Ministry of Finance.

Consolidated government through 1997.

Table A25.Bulgaria; General Government Expenditure, 1992-99 1/
19921993199419951996199719981999
(In millions of leva)
Total expenditure581442403647405,7087,7329,279
Total non-internet expenditure751161692403964,3546,7808,382
Current non-internet expenditure691101612303833,9676,0017,048
Compansation 2/12192840616291,0201,216
Wages and salaries12182740596149971,191
Scholarships11112122325
Maintanance/operating16203448861,0711,2871,823
Defense/security812193253619904981
Subsidies467914125442334
Social expenditure294569951391,4532,3482,681
Pensions203351711231,0771,7871,954
Assistance710141827267425448
EU financed assistance0000044490
Unemployment234695986190
Severance payments00002700
Health Insurance Fund000000090
Extrabudgetary Funds08559354414
Capital expenditure6681013175605980
Interest1328711243441,355952896
External3372548419618688
Domestic102564100297936264208
(In percent of GDP)
Total expenditure43.648.145.741.342.333.535.841.2
Total noninterest expenditure37.238.832.227.222.625.531.437.2
Current noninterest expenditure34.436.930.726.121.923.327.831.3
Compensation 2/6.16.45.34.63.53.74.75.4
Wages and salaries5.86.15.04.53.43.64.65.3
Scholarships0.30.30.20.10.10.10.10.1
Maintenance/operating8.06.56.45.54.96.36.08.1
Defense/security4.24.03.63.63.03.64.24.4
Subsidies1.82.21.41.10.80.72.01.5
Social expenditure14.215.213.010.89.18.510.911.9
Pensions10.011.09.88.07.06.38.38.7
Assistance3.53.22.62.11.51.62.02.0
EU financed assistance0.00.00.00.00.00.30.20.0
Unemployment0.81.00.70.70.50.30.40.8
Severance payments0.00.00.00.00.10.00.00.0
Health Insurance fund0.00.00.00.00.00.00.00.4
Extrabudgetary funds0.02.61.00.60.50.20.20.1
Capital expenditure2.81.91.51.10.71.02.84.4
Interest6.59.313.514.119.77.94.44.0
External1.61.01.32.82.72.53.23.1
Domestic4.88.312.211.317.05.51.20.9
Source: Bulgarian Ministry of Finance.

Consolidated government through 1997.

Excluding social insurance paid by the government on behalf of its employees.

Source: Bulgarian Ministry of Finance.

Consolidated government through 1997.

Excluding social insurance paid by the government on behalf of its employees.

Table A26.Bulgaria: Summary of General Government Operations (GFS Definition), 1988-99
19881989199019911992199319941995199619971998 1/1999 1/
(In millions of leva)
Total revenue and grants2426276187119235354646630.585359510
Total revenue2426276187119235353643621084089309
Current revenue2425266187118230350641611583309185
Tax revenue192120536991178272484488167387150
Nontax revenue456818275278156123415922035
Capital revenue0010015329677124
Grants00000001495127201
Total expenditure and net lending2526316798154260400916594079529170
Total expenditure2425296598152262399913636382489462
Current expenditures2122286292146251380885583573898258
Of which: interest expenses11291429771293531440953898
Capital expenditure2213671119295288591204
Net lending211202-213-423-296-292
Primary balance-11-132-7528384180415361238
Overall balance-20-4-6-12-36-25-46-270365583340
Financing204612362546270-365-583-340
Net external financing-1-1043-38-7-3357-148258
Domestic financing21429391753303-421-435-597
(In percent of GDP)
Total revenue and grants61.664.559.944.943.339.744.740.237.036.939.642.2
Total revenue61.664.559.944.843.239.744.740.136.836.339.041.3
Current revenue61.464.458.044.743.239.443.739.836.635.838.640.8
Tax revenue49.851.944.539.134.330.533.830.927.728.531.231.8
Nontax revenue11.512513.55.68.98.99.98.98.97.27.49.0
Capital revenue0.20.21.90.10.00.21.00.30.10.60.40.6
Grants0.00.00.00.10.00.00.00.10.20.60.60.9
Total expenditure and net lending65.765.467.649.049.051.749.445.452.434.736.940.7
Total expenditure61.462.364.447.949.050.949.845.352.237.238.242.0
Current expenditure56.056.761.245.945.848.747.843.250.634.134.236.7
Of which: Interest expenses2.23.75.36.56.99.814.614.620.28.44.44.0
Capital expenditure5.45.63.22.03.12.22.02.11.63.14.05.3
Net lending4.33.13.21.10.00.7-0.40.10.2-2.5-1.4-1.3
Primary balance-1.92.8-2.52.31.2-2.29.89.44.810.57.15.5
Overall balance-4.1-0.9-7.7-4.2-5.7-12.0-4.8-5.2-15.42.12.71.5
Financing4.10.97.74.25.712.04.85.215.4-2.1-2.7-1.5
Net external financing-1.3-1.3-0.82.81.4-0.91.6-0.8-1.90.3-0.71.1
Domestic financing5.52.28.61.44.313.03.16.017.3-2.5-2.0-2.7
Source: Government Finance Statistics; and Bulgaria Ministry of Finance.

Includes central government, social security, 279 municipalities and 3,381 communes, 16 extrabudgetary funds, and 64 extrabudgetary accounts and agencies on a gross basis.

Includes the central government, social security, 279 municipalities and 3,881 communes, and 12 extrabudgetary funds on a net basis.

Source: Government Finance Statistics; and Bulgaria Ministry of Finance.

Includes central government, social security, 279 municipalities and 3,381 communes, 16 extrabudgetary funds, and 64 extrabudgetary accounts and agencies on a gross basis.

Includes the central government, social security, 279 municipalities and 3,881 communes, and 12 extrabudgetary funds on a net basis.

Table A27.Bulgaria: General Government Revenue (GFS Definition), 1988-99
198819891990199119921993199419951996199719981999
(In percent of GDP)
Total revenue and grants61.664.539.944.943.339.744.740.237.036.939.642.2
Total revenue61.664.559.944.843.239.744.740.136.836.339.041.3
Current revenue61.464.458.044.743.239.443.739.836.635.838.640.8
Tax revenue49.851.944.539.134.330.533.830.927.728.531.231.8
Taxes on Income and profits24.728.223.120.913.07.88.88.99.210.48.77.9
Individuals3.83.94.23.75.45.04.44.14.04.04.74.7
Corporate17.018.414.013.95.92.13.43.94.25.22.72.1
Other4.05.94.93.31.60.70.90.81.11.31.21.1
Social security contributions10.410.510.78.710.69.98.67.66.86.87.78.3
Employers10.310.510.68.510.09.27.56.76.26.77.17.0
Self-employed0.00.00.00.10.40.40.60.50.20.10.20.4
Other0.10.10.10.10.20.30.50.40.30.00.00.6
Payroll taxes0.10.20.10.71.51.41.21.10.70.70.00.7
Property taxes0.40.40.30.10.20.30.40.30.20.10.60.4
Taxes On goods and services11.911.59.17.26.37.611.410.08.58.311.711.7
Turnover taxes, VAT5.14.53.62.72.62.37.37.16.86.18.58.6
Excises6.16.25.03.52.53.83.51.71.62.23.13.1
Other taxes on goods and services0.80.80.51.01.21.50.40.20.10.00.00.0
Taxes on international trade1.00.90.91.12.23.03.12.92.22.12.11.1
Import duties0.80.90.90.81.82.62.42.21.72.12.01.1
Export duties0.00.00.00.00.00.00.00.00.00.10.00.0
Other taxes on international trade0.20.00.00.40.40.50.70.70.50.00.00.0
Other taxes1.30.30.30.40.70.40.30.10.10.00.41.5
Nontax revenue11.512.513.35.68.98.99.98.98.97.27.49.0
Capital revenue0.20.21.90.10.00.21.00.30.10.60.40.6
Grants0.00.00.00.10.00.00.00.10.20.60.60.9
Source: Government Finance Statistics; and Bulgarian Ministry of Finance.
Source: Government Finance Statistics; and Bulgarian Ministry of Finance.
Table A28.Bulgaria: General Government Expenditure (GFS Definition), 1988-98
19881989199019911992199319941995199619971998
(In percent of GDP)
Total expenditure by functions (exc. net lending)64.365.567.551.153.756.154.148.654.439.441.3
General public services3.42.81.91.32.02.42.21.91.52.33.0
Defense5.04.84.13.33.22.92.72.62.42.72.7
Public order and safety1.21.21.11.41.91.81.81.81.41.72.1
Education4.54.95.15.25.85.54.54.13.63.83.8
Health3.63.43.94.05.24.74.03.73.23.63.6
Social security and welfare11.712.012.814.314.815.913.511.19.59.611.6
Housing and other services5.55.65.12.72.81.92.01.51.30.91.7
Recreational and Cultural services1.71.81.31.00.90.80.70.70.50.50.7
Fuel and energy0.10.10.73.01.01.30.60.40.41.11.3
Agriculture, forestry, fishing, hunting9.59.79.21.01.10.81.00.80.60.90.7
Nonfuels mining and mineral6.95.84.90.20.80.60.50.30.20.10.1
Transport and communications2.22.42.20.62.02.01.31.31.01.22.1
Other economic activities3.64.06.83.30.40.40.30.35.52.51.0
Other (including natural disaster and interest)5.47.08.59.811.715.118.918.023.48.57.0
Total expenditure and net lending
by economic classifications65.765.467.649.049.051.749.445.452.434.736.9
Total expenditure61.462.364.447.949.050.949.845.352.237.238.2
Current expenditure56.056.761.245.945.848.747.843.250.634.134.2
Wage and salaries5.05.16.46.07.67.96.86.24.64.78.7
Operations and maintenance20.320.522.215.714.712.511.310.010.110.37.8
Interest payments2.23.75.36.56.99.814.614.620.28.44.4
Subsidies and other current transfers28.427.527.317.816.618.515.112.315.710.713.3
Subsidies17.115.915.14.32.83.62.31.76.71.92.6
Transfers to other levels of government0.00.00.00.00.00.00.00.00.00.00.0
Transfers to non profit organization11.311.612.313.513.814.712.810.69.08.710.6
Capital expenditure5.45.63.22.03.12.22.02.11.63.14.0
Net lending4.33.13.21.10.00.7-0.40.10.2-2.5-1.4
Source: Government Finance Statistics; and Bulgarian Ministry of Finance.
Source: Government Finance Statistics; and Bulgarian Ministry of Finance.
Table A29.Bulgaria: Summary of Central Government Operations (GFS Definition), 1988-99 1/
198819891990199119921993199419951996199719981999
(In millions of leva)
Total revenues and grants1515153238561341993523,2384,6185,401
Total revenue1414143238561341993513,2284,5945,381
Current revenue14141332385613319835134234,5885,270
Tax revenue1112102930411021602872,7293,9954,022
Nontax revenue33338153238644945931,248
Capital revenue00100011057111
Grants010000001102421
1515183246821502355143,0993,7114,536
Total expenditure1515173247821502365173,5033,9084,842
Current expenditure1414163145791462315103,3473,5624,395
Of which: interest payments11291328711243261428843890
Capital expenditures111122456155345447
Net lending000-1-100-1-2-404-197-306
Primary balance110105355881631,4671,7501,755
Overall balance00-31-8-25-16-36-163139908865
Financing003411343457191151-480-1,023
Net external financing-1-10-3-2-4-3-12-50-206-45156
Domestic financing013714383769241356-29-1,080
(In percent of GDP)
Total revenue and grants37.937.632.523.819.118.825.522.620.118.921.424.0
Total revenue37.236.331.523.619.118.825.522.620.118.921.323.9
Current revenue37.036.129.623.519.118.725.422.520.118.821.323.4
Tax revenue29.529.323.021.115.113.719.418.216.416.018.517.9
Nontax revenue7.66.86.62.44.05.06.04.33.72.92.75.5
Capital revenue0.20.21.90.10.00.10.10.10.00.00.00.5
Grants0.71.31.00.30.10.00.00.00.00.10.10.1
Total expenditure and net lending38.137.738.623.222.927.328.426.729.418.117.220.1
Total expenditure38.437.437.723.923.527.428.526.829.620.518.121.5
Current expenditure35.334.636.223.122.426.627.826.229.219.616.519.5
Of which: Interest payments2.23.75.36.46.59.313.414.118.67.83.94.0
Capital expenditure3.12.81.50.71.10.80.70.60.40.91.62.0
Net lending-0.30.20.9-0.7-0.6-0.10.0-0.1-0.1-2.4-0.9-1.4
Primary balance2.03.6-0.97.02.70.810.510.09.38.68.17.8
Overall balance-0.20.0-6.10.6-3.8-8.5-3.0-4.1-9.30.84.23.8
Financing-0.10.96.33.35.711.56.36.510.90.9-2.2-4.5
Net external financing-1.3-1.3-0.8-2.2-1.1-1.3-0.5-1.3-2.9-14-2.10.3
Domestic financing1.22.27.15.56.812.87.07.913.82.1-0.1-4.8
Source: Government Finance Statistics; and Bulgarian Ministry of Finance.

Includes the National Assembly, the Office of the Council of the misters, the Office of the President, five ministries and 9 committee, and the budgets of the Judicial authorities.

Source: Government Finance Statistics; and Bulgarian Ministry of Finance.

Includes the National Assembly, the Office of the Council of the misters, the Office of the President, five ministries and 9 committee, and the budgets of the Judicial authorities.

Table A30.Bulgaria: Summary of Social Security Institutions (GFS Definition), 1988-99
198819891990199119921993199419951996199719981999
(In millions of leva)
Total revenue and grants4451221304567120119318922092
Total revenue4451221304567120119318922092
Current revenue4451221304567120119318922092
Tax revenue4451221304567118116716582029
Of which: Contributions4431221304567118116716581861
Employers4451120273959109114215271560
Self-employed000011354224280
Nontax revenue0000000022623463
Capital revenue000000000000
Grants000000000000
Total expenditure and net lending4451625396082138128722172578
Total expenditure4451625396082138128722382578
Current expenditure4451625396082138128422282480
Of which: Goods and services000000001103356
Transfers4451625395981137127421952424
Capital expenditure00000000031098
Net lending0000000000-210
Overall balance000-5-4-9-14-15-18-93-326-486
(In percent of GDP)
Total revenue and grants10.410.510.78.710.69.98.67.66.87.08.89.3
Total revenue10.410.510.78.710.69.98.67.66.87.08.89.3
Current revenue10.410.810.78.710.69.98.67.66.87.08.89.3
Tax revenue10.410.510.78.710.69.98.67.66.86.87.79.0
Nontax revenue0.00.00.00.00.00.00.00.00.10.21.10.3
Capital revenue0.00.00.00.00.00.00.00.00.00.00.00.0
Grants0.00.00.00.00.00.00.00.00.00.00.00.0
Total expenditure and net lending10.210.411.012.112.413.011.39.37.97.510.311.5
Total expenditure10.210.411.012.112.413.011.39.37.97.510.411.5
Current expenditure10.210.411.012.112.413.011.39.37.97.510.311.0
Capital expenditure0.00.00.00.00.00.00.00.00.00.00.00.4
Net lending0.00.00.00.00.00.00.00.00.00.0-0.10.0
Overall balance0.20.1-0.4-3.5-1.8-3.1-2.7-1.7-1.0-0.5-1.5-2.2
Source: Government Finance Statistics; and Bulgarian Ministry of Finance.
Source: Government Finance Statistics; and Bulgarian Ministry of Finance.
Table A31.Bulgaria: Summary of Municipalities’ Operations (GFS Definition), 1988-99
198819891990199119921993199419951996199719981999
(In millions of leva)
Total revenue and grants5561525344867111101116661974
Total revenue45511151925387365210271215
Current revenue43511151823387264110121215
Tax revenue445111416212960577910848
Nontax revenue000012491364101367
Capital revenue00000011111160
Grants from other levels of government1114915222938358638759
Total expenditure and net lending536152634486711199916822011
Total expenditure556152634486711199816822028
Current expenditure445132330446210491914701756
Capital expenditure11123345679212272
Net lending00000000010-17
Overall balance0000-20-10011-17-38
Financing000020100-111738
Net external financing0000000000080
Domestic financing000020100-1117-43
From other levels of government000010000030
Banking system000010000-11140
Nonbanking system00000000000-43
(In percent of GDP)
Total revenue and grants11.913.412.911.212.211.49.17.66.35.97.78.8
Total revenue9.711.510.88.37.66.24.84.44.23.84.85.4
Current revenue9.711.510.88.37.66.14.7434.13.84.75.4
Tax revenue9.211.19.98.16.85.43.93.33.43.44.23.8
Nontax revenue0.50.40.90.20.70.70.81.00.70.40.51.6
Capital revenue0.00.00.00.00.00.10.10.10.10.10.10.0
Grants from other levels of government2.21.92.02.94.75.14.23.32.12.13.03.4
Total expenditure and net lending11.813.212.311.013.011.39.27.66.35.87.88.9
Total expenditure11.813.212.311.013.011.39.27.66.35.87.89.0
Current expenditure9.610.610.89.711.310.28.37.16.05.46.87.8
Capital expenditure2.22.71.61.21.71.10.80.60.40.51.01.2
Net lending0.00.00.00.00.00.00.00.00.00.00.0-0.1
Overall balance0.00.20.60.3-0.80.1-0.10.00.00.1-0.1-0.2
Financing0.0-0.2-0.6-0.30.8-0.10.10.00.0-0.10.10.2
Net external financing0.00.00.00.00.00.00.00.00.00.00.00.4
Domestic financing0.0-0.2-0.6-0.30.8-0.10.10.00.0-0.10.1-0.2
From other levels of government0.00.1-0.10.00.40.00.00.00.00.00.00.0
Banking system-0.1-0.3-0.4-0.30.4-0.10.10.00.0-0.10.10.0
Nonbanking system0.00.00.00.00.00.00.00.00.00.00.0-0.2
Source: Government Finance Statistics; and Bulgarian Ministry of Finance.
Source: Government Finance Statistics; and Bulgarian Ministry of Finance.
Table A32.Bulgaria: Monetary Survey, 1991-99
199119921993199419951996199719981999
(In millions of leva)
Broad money1031592344185841,3106,0196,5977,351
Lev money691181872824256493,3954,0134,475
Deposits57991612433635232,0802,2712,518
Notes and coins12182539621271,3141,7421,957
Foreign currency3541481361596612,6242,5842,876
Net foreign assets-1-12-2349711584,8515,2726,049
Of which: BNB17-1-1812-2352,7193,2513,839
DMB 1/-1-19-2266593932,1322,0212,210
Net domestic assets1041712573695131,1521,1671,3251,303
Lev credit841222042694116511,0361,3591,076
Government1430103120207417104-222-844
Non-government70921011492042359321,5811,920
Public enterprise 2/5774761129895336300216
Private sector 2/131825381061395951,2811,703
FX credit781201922792171,4224,1012,8683,162
Government325990157624851,5387321,000
Non-government46611021221559372,5632,1362,162
Public enterprise (SOE)4661917871430918646497
Private sectorn.a.n.a.1144845071,6461,4901,665
Other items net-58-72139-179-116-921-3,969-2,902-2,935
(Percent change from previous year)
Broad money110.053.647.678.639.6124.5359.39.611.4
Lev money58.971.158.651.050.952.7423.018.211.5
Foreign currency deposits485.218.816.2186.516.4316.4296.8-1.511.3
Real broad money-52.1-14.4-9.9-19.55.1-45.4-32.38.65.0
Real lev money-63.8-4.6-3.2-32.013.5-62.8-22.917.15.1
Real lev credit-66.7-18.62.1-40.614.9-61.4-76.630.0-25.4
(In millions of U.S. dollars)
Foreign currency deposits1,5291,6731,4552,0662,2451,3571,4771,5431,477
(In percent of broad money)332620332751443939
Net foreign assets-33-491-7137401,0013252,7313,1483,107
Of which: BNB21299-28-265171-4811,5311,9411,972
DMB 1/-54-790-6851,0048308061,2001,2071,135
Foreign exchange credit3,5694,9155,8714,2243,0751,7542,3081,7121,624
Government1,4782,4242,7652,375881832865437513
Non-government2,0912,4903,1061,8492,1941,9221,4431,2751,110
Public enterprise (SOE)2,7841,1841,011882517385255
Private sector3236651,1841,040926890855
Source: Bulgarian National Bank.

Foreign liabilities of DMBs are adjusted to exclude debt of the government, using estimates prior to 1995.

Introduction of a new Chart of Accounts in June 1995 reclassified credit from state enterprise to the private sector.

Source: Bulgarian National Bank.

Foreign liabilities of DMBs are adjusted to exclude debt of the government, using estimates prior to 1995.

Introduction of a new Chart of Accounts in June 1995 reclassified credit from state enterprise to the private sector.

Table A33.Bulgaria: Foreign Assets of the Banking System, 1991-1999
BNB International ReservesDeposit Money BanksBanking System
Gross reserves 1/IMF purchaseNet reservesGross liabilitiesNet foreign assetsReserve less goldForeign assets 2/Foreign currency deposits 3/Foreign assetsBroad money
(In millions of U.S. dollars)
1991:March4551862701862701501,3521,6741,8074,446
June4592482112482111541,4281,5681,8874,131
Sep.6453273185121333401,6641,5292,3094,308
Dec.636414222614213311,4771,5822,1124,732
1992:March918461457822966131,4341,6192,3514,893
June1,118