Bulgaria Banks Urged to Bring Down Lending Rates by 3%

Bulgaria's finance minister has renewed his calls on banks to lower lending rates by at least 3% due to the decreasing financial risk in the country.

Talking in the Black Sea town of Varna, Djankov said one option for achieving this is issuing Eurobonds on international markets or unblocking payments to the businesses in the construction and infrastructure sectors.

The minister said he expects to hear a dozen proposals for ways to lower lending rates at his upcoming meeting with bankers on Wednesday.

“Since the time the new government came into office, roughly one hundred days, the country's foreign risk has decreased by 3,5 percentage points, which should translate into a 3% decrease in lending rates in about four months,” Djankov said.

At their previous meeting with the finance minister at the beginning of November, the Bulgarian bankers said they will put forward a set of measures, designed to improve market conditions and prepare the ground for a long-anticipated cut in lending rates.

According to the bankers loan interest rates will fall when the deposit market flattens. Bulgarian banks now pay an average interest of 7 to 8% for euro-denominated deposits and 9 to 10% for deposits in leva.