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Understanding Bulgaria’s Debt and Credit Landscape in 2023

September 27, 2023

As we step into after summer period of 2023, we made an analysis on 4 drivers for individual in Bulgaria with fresh data for a better understanding:

1) Consumer context in Bulgaria since begin of 2023
Bulgaria’s consumer confidence indicator rose to -25.5 in Q3, from -28.7 in Q2. Consumers were less pessimistic, with an inflation at 7.7 in August compared to the peaks in beginning of year at around 16%, regarding:
– their financial situation for the next 12 months (-15.0 vs -20.3 in Q2),
– their expectation of the general economic situation in the country over the next 12 months (-27.4 vs -28.6), on
– their intentions of buying a car in the next 12 months (-79.3 vs -80.2) and building or purchasing a home in the next 12 months (-90.2 vs -92.4).
But consumers’ assessment on households’ budget has deteriorated (-3.7 vs -2.9), as well as their savings prospects for the next 12 months (-61.6 vs -59.6) and their ability to save today (-52.3 vs -46.9). source: National Statistical Institute, Bulgaria

2) Consumer loans Market Growth Rate: Since beginning of the year till August 2023, Bulgaria has witnessed a steady growth in its consumer loans market, with an approximate growth rate of 6.2% for banks, 9.2% for financial leasing, 10% for non banking (BNB, September 23). Consumer Credit in Bulgaria represented in July 2023, 35961.15 BGN Million

3) Non-Performing Loans (NPL): The level of Non-Performing Loans (NPLs) is a crucial indicator of a country’s financial stability. Bulgaria has continued to maintain a relatively low NPL ratio bellow 6% since beginning of 2023 but does it reflect the reality ?

4) Financial Literacy: Financial literacy plays a pivotal role in managing debt and credit responsibly. In Bulgaria, efforts have been made to enhance financial literacy among its citizens. However, there’s still work to be done. An Eurobarometer survey by the European Commission published on July 18. It indicate that more 54 per cent of Bulgarians had medium financial knowledge and 26 % low financial knowledge, underscoring the importance of continued education in this area. For reference, overall EU citizens are 64% a medium level, and the remaining 18 % a low level.

In this dynamic financial landscape, it’s crucial for individuals to be informed and make informed decisions about their finances.

Consider these tips:
– Create a budget and stick to it.
– Understand the terms and conditions of any credit product you use.
– Invest in your financial education to make informed choices.
– Remember, financial well-being is a journey, and with the right knowledge and responsible actions, you can navigate the debt and credit landscape effectively