Eurofound's COVID-19 EU PolicyWatch collates information on the responses of government and social partners to the crisis, as well as gathering examples of company practices aimed at mitigating the social and economic impacts.
Factsheet for case BG-2020-16/498 – Updated – measures in Bulgaria
Country | Bulgaria , applies nationwide |
Time period | Temporary, 13 April 2020 – 30 June 2021 |
Type | Legislations or other statutory regulations |
Category |
Measures to prevent social hardship
– Preventing over-indebtedness |
Author | Tsetomila Sabcheva and Luboslav Kostov (Citub), Eva Dimitrova |
Case created | 12 April 2020 (updated 27 January 2021) |
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.
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:
The main requirements for applicants for interest-free loan are:
Credit Terms:
The following updates to this measure have been made after it came into effect.
20 January 2021 |
Following changes in the program for interest-free lending to individuals, BDB now guarantees loans up to BGN 6,900, instead of up to BGN 4,500, as previously planned. The adopted changes provide an opportunity for lending to citizens who have been on unpaid leave due to the pandemic, and in the current period of restrictive anti-epidemic measures imposed are unemployed. The partners in the program are 12 commercial banks, ten of which continue to accept applications for interest-free loans. The application deadline for both programs has been extended until June 202 |
19 June 2020 |
Since 19 June 2020, new rules for granting interest-free loans to individuals deprived of the opportunity to work due to the COVID-19 pandemic have been placed into force. The changes are due to the new conditions in which the programme operates - the abolition of the state of emergency and the gradual normalization of the activities of employees and self-employed persons. The effect of the guarantee program of BDB is expanded and thus it is possible to support a larger circle of those in need. According to the changes adopted by the Council of Ministers on 19 June 2020, the applicants for an interest-free loan up to BGN 4,500 (€2,250) do not need to be on unpaid leave or with interrupted activity at the moment of submitting the loan application. They can also apply for a credit after returning to work. The period for which self-insured persons can refer to a decline in their income is also extended. According to the updated requirements, candidates must be employed on an employment contract for 6 months before the moment of application, and not as before - as of their placement on unpaid leave. |
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.
Workers | Businesses | Citizens |
---|---|---|
Applies to all workers | Does not apply to businesses | Does not apply to citizens |
Actors | Funding |
---|---|
National government
Other social actors (e.g. NGOs) |
National funds
|
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:
The measure was notified to the representatives of the social partners, but it was not discussed in detail with them.
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.
Citation
Eurofound (2020), COVID-19: Interest-free credit guarantee programme for individuals, case BG-2020-16/498 (measures in Bulgaria), COVID-19 EU PolicyWatch, Dublin, http://eurofound.link/covid19eupolicywatch
Disclaimer: This information has not been subject to the full Eurofound evaluation, editorial and publication process. All information is preliminary and subject to change.