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300 000 large transactions in cash until September in Bulgaria

Date: 27.09.2007

Cash payments registered by the Financial Intelligence Agency (FIA) has grown quickly in the past year and a half and exceeded 300 000 by September 1.

On September 21, Evgeni Chachev parliament member for Democrats for Strong Bulgaria (DSB) asked Prime Minister Sergei Stanishev which measures the government intended to take in order to decrease the grey economy in Bulgaria.

According to the data Chachev quoted, in 2004 FIA had registered a total to 98 000 cash payments. FIA registers only cash payments larger than 300 000 leva.

In 2005 148 000 cash payments were registered by the FIA, and in 2006 238 000. In 2007, until September 1, 300 000 cash payments had been registered.

Chachev said in the past year over 10 billion leva has been paid in cash, compared to 3.5 billion in 2004.

Annual economic growth of six to seven per cent was accompanied by a 76 per cent growth in cash payments, he said. He added that the increase in cash payments took place against the background of a developing bank system, card services and the fact that parliament forced pensioners and workers to open a bank account in order to receive their pensions and sick-leave payments.

The figures quoted by Chachev were correct according to Stanishev, but their interpretation was politically motivated and manipulative. Stanishev said that Bulgaria had not accepted to limit cash payments as part of EU accession negotiations.

Stanishev said the increase of cash payment registered  by FIA is caused by two factors. One was the improved control by national agencies of juridical entities, which lead to an increase in the number of registered deals. He added that on the website of FIA this factor was specifically mentioned to avoid wrong conclusions.

The second reason was that one and the same sum of money would pass different deals and therefore be registered several times. As an example, he said, if a private person draws 20 000 euro from a bank account, changes that to leva and then uses that money to pay for real estate, FIA would register this as three separate transactions. If the person selling the real estate then changes the euros to dollars and puts them in a deposit account, the FIA would register another two transactions. But this doesn't mean the 20 000 euro became 100 000, Stanishev said.

“No one would go and draw money in euro, change them for leva and then to dollars and in each transaction loose 2 per cent, while the FIA registered 5 transactions instead of one”, Chachev replied.

Data from the Bulgarian National Bank (BNB) showed, according to him, that the number of 100 leva bank notes in circulation had increased relatively compared to those of 2, 5 and 10 leva. This way we help the suitcase economy, Chachev said.

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