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Bulgaria credit growth up 64% in 2007

Date: 31.01.2008

The volume of credits extended last year soared by 64% to BGN 37 B, Bulgaria's central bank said.

The figures come after the Bulgarian National Bank lifted at the beginning of 2007 the restrictions imposed in 2004 to slow credit growth.

The measures were implemented at the demand of the International Monetary Fund (IMF) in a bid to slow down credit expansion from the unsustainably high rates reached at the end of 2003 and hold back the raising current account deficit.

The lending restrictions moderated credit growth on annual base down to 32% at the end of 2005 and 24% a year later, but it accelerated again in 2007 after the central bank said it would relax its punitive constraints on lending growth.

This forced BNB to raise the mandatory reserves requirement for commercial banks, which is the amount of cash banks have to put aside to cover the risks of bad loans, to 12% from 8%, starting from September last year, but that appears to have had little impact on the market.

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