Financial Sector Assessment : Bulgaria

Abstract

This Financial Sector Assessment (FSA)
 summarizes the Financial Sector Assessment Program (FSAP)
 findings for Bulgaria, and reports on the actions of the
 government and the Bulgarian National Bank (BNB) to date in
 response to the FSAP recommendations. The FSAP mission
 visited Sofia during the period October 29 to November 14,
 2001. The Bulgaria FSAP took place after five years of
 aggressive financial reforms in response to the deep
 economic and financial crisis of 1996-97. After the collapse
 of the banking system and establishment of the Currency
 Board Arrangement (CBA) in July 1997, the government and the
 BNB pursued structural and institutional reforms in both the
 enterprise and banking sectors, including the privatization
 of about 85 percent of the banking system assets, mainly to
 foreign financial institutions, and the upgrading of banking
 supervision capabilities at the BNB. The FSAP mission
 occurred at a time when the banking system had stabilized,
 but financial intermediation remained low compared to the
 more advanced transition economies. In addition to the
 assessments of compliance with standards and codes, the
 Bulgaria mission focused on addressing the constraints to
 lending and advising the BNB on how to ensure that an
 expansion of bank lending does not jeopardize the gains in
 financial stabilization. The FSAP findings were major inputs
 to the medium term program to be supported by the
 Programmatic Adjustment Loans (PALS).