Background information

The government approved capital increase of the state-owned Bulgarian Development Bank (BDB) by BGN 700 million (approx. €350 million; 0.6 percent of 2019 GDP). The bank can therefore provide BGN 200 million (approx. €100 million) for the issuance of portfolio guarantees to commercial banks that shall provide interest-free loans to citizens deprived of the opportunity to work due to the COVID-19 pandemic.

The measure targets short-term funding for individuals employed or self-employed in sectors that suffer economic loses due to the pandemic.

The measure aims to prevent social hardship and back up household ( e.g. food, childcare, electricity) and other necessary expenses.

Content of measure

The measure is part of the country's economic measures to assist those affected by the coronavirus.

The interest-free loans of up to BGN 4,500 (approx. €2,250) guaranteed by the state are available to:

• Workers on unpaid leave due to restrictions imposed by the spread of the coronavirus.
• Self-employed, suffering a 20% profit decline during the first quarter of 2020 compared to the first quarter of 2019 as a result of the pandemic.

The main requirements for applicants for interest-free loan are:

1. To have an employment relationship at least six months back from the date of application;
2. The applicants should not have obligations in the Central Credit Register with a delay of more than 90 days;
3. Do not receive remuneration for other employment relationships;
4. Have at least five business days worked in March 2020, if this is the month in which they are placed on unpaid leave.

Credit Terms:

• The loans are interest-free (the regular interest rate is 0%) and the borrowers do not owe fees, commissions and penalties to lending institutions.
• Applicants do not provide a collateral as a condition of the loan.
• The maximum repayment period is five years, with a minimum of six months and a maximum of 24 months grace period.

Use of measure

As of 15 September 2020, 29,000 requests for interest-free credits have been submitted to partnering institutions from private persons since the programme's beginning. Some 17,907 requests for nearly BGN 75 million (€32,5 million) have been approved.

Partners of the programme are Allianz Bank, DSK Bank, Investbank, International Asset Bank, UBB, Municipal Bank, First Investment Bank, Postbank, Raiffeisenbank, D Commerce Bank, Central Cooperative Bank and UniCredit Bulbank.

BDB concluded guarantee agreements with the programming partners for nearly BGN 145 million (€73 million). The remaining funds will be available for the implementation of guarantee agreements until the end of the year, when it is the official deadline for applications.

By January 2021, more than 40,000 individuals have applied for interest-free loans, according to commercial banks, with just over 1,240 currently under consideration. The total value of the approved loans is over €55 million, and the average amount is €2,115.

Target groups

Workers	Businesses	Citizens
Applies to all workers	Does not apply to businesses	Does not apply to citizens

Actors and funding

Actors	Funding
National government Other social actors (e.g. NGOs)	National funds

Social partners

Social partners' role in designing the measure and form of involvement:

	Trade unions	Employers' organisations
Role	Informed	Informed
Form	Not applicable	Not applicable

Social partners' role in the implementation, monitoring and assessment phase:

• Unknown
• Main level of involvement: Unknown

Involvement

The measure was notified to the representatives of the social partners, but it was not discussed in detail with them.

Views and reactions

Social partners agree that it is important to have the programme for interest-free credits during the pandemic, but hope for more grant funding for workers and citizens.

Sources

• 06 April 2020: ЗИД на ЗДБРБ (parliament.bg)
• 08 April 2020: Държавен безлихвен кредит до 1500 л (izbiram.bg)
• 14 April 2020: Българска банка за развитие - изисквания (bbr.bg)
• 19 June 2020: The scope of BDB's program for interest-free lending to individuals is expanding (bbr.bg)
• 20 January 2021: ББР одобри кредити за над 268 млн. лв. по двете антикризисни програми (www.investor.bg)