Non-Performing Loans in Bulgaria and Alleviations for Debtors in Times of Covid-19 Pandemic

  • Violeta Todorova University of National and World Economy, Bulgaria
Keywords: Bulgarian banking system, capital adequacy, non-performing loans, Covid-19 pandemic, moratoria on loan payments


Objective: This paper is focused on examining the condition of non-performing loans (NPLs) in Bulgaria in the light of the COVID-19 pandemic. Its purpose is to present the serious threat that NPLs can be for economic and financial stability and to prove that adequate measures are taken in Bulgaria for reducing the share of  bad loans during the pandemic.

Methodology: The study presents the dynamics in lending and share of non-performing loans (NPLs) in Bulgaria by examining monetary statistics data for the period 2016-2021. Тhe statement presents basic measures and policies taken in Bulgaria for alleviation of borrowers in times of crisis and impaired economic stability. The empirical study is based on econometric model - a multiple linear regression model is performed for checking the correlation between NPLs and three key macroeconomic indices which are very tangible in times of crisis: government deficit/surplus, unemployment, GDP growth. For illustration of essential tendencies and results are used tables and graphs based on observations, comparative analysis and systematization.

Results: The results show that up to the middle of 2021 the amount of NPLs in Bulgaria has not increased considerably as a result of the pandemic. It is due to the adequate measures taken by the government and the financial authorities which give the obligors the possibility to postpone their payments in future. Suspension of the payment moratoria and increase of unemployment may lead to higher amount of NPLs in Bulgarian banking system.