Bulgaria

Bulgaria has committed to strengthening its banking sector, European Union officials said Tuesday, two days before a eurozone finance ministers meeting that could shed light on the Balkan country's progress toward joining the euro. Bulgaria meets the nominal criteria to adopt the European common currency, with its lev currency pegged to the euro, low inflation and healthy public finances. But it is also the EU's poorest country, and widespread graft and troubles at some of its banks have cast a shadow over its prospects of joining, VOA reported.

Bowing to pressure from the European Central Bank and the European Union, Bulgaria will seek to join the bloc’s banking union and the precursor for euro-area membership simultaneously within the next year, its finance minister said. The government in the EU’s poorest member appeared to yield to recommendations from the European Central Bank and the European Commission, which have said Sofia needs to improve governance, the economy and banks, Bloomberg News reported. Finance Minister Vladislav Goranov had insisted earlier this month on joining the bank union only after accession to ERM-2.

Bulgaria’s Constitutional Court will rule on whether amendments to Bulgaria’s bank insolvency law, passed by Parliament earlier this year, breach constitutional provisions, the Sofia Globe reported. The controversial amendments, tabled by the opposition Movement for Rights and Freedoms (MRF) but backed by the government coalition, have been criticised by legal experts for introducing a retroactive effect.

Bulgaria’s hopes of becoming the next member of the eurozone have been dealt a blow by the European Central Bank which has warned the EU’s poorest country has made minimal progress in joining the euro club, the Financial Times reported. In its latest biennial “convergence report” assessing non-euro economies, the ECB raised concerns over Bulgaria’s central bank independence, inflation dynamics and urged for “wide-ranging structural reforms”. Bulgaria has been considered the most likely 20th member of the single currency area.

Bulgarian MPs voted on March 7 to overturn President Roumen Radev’s veto on the bill of amendments to the Bank Insolvency Act, The Sofia Globe reported. The motion carried with 129 MPs in favour, 40 opposed and no abstentions. Radev vetoed the bill on February 21, arguing that some of the provisions had retroactive effect, which breached the principle of the rule of law. “The president supports the efforts of the National Assembly for greater efficiency in defending the public interest in bank insolvency, but that must be achieved using constitutional means.

The European Commission recommended on Wednesday that Bulgaria take action to address several areas of macroeconomic imbalances in 2016 and 2017, the Sofia News Agency reported. The proposal is part of the Commission’s 2016 country-specific recommendations which set out its economic policy guidance for the EU Member States for the next 12 to 18 months. More specifically, the Commission recommended that Bulgaria achieve an annual fiscal adjustment of 0.5% of GDP towards the medium-term budgetary objective in 2016 and in 2017.

Bank Insolvency Act amendments aimed at allowing easier access of creditors to information related to the insolvency proceedings passed second reading in Parliament on Wednesday, the Sofia News Agency reported. Under the newly adopted provisions, the list of creditors who have submitted claims against a bank undergoing insolvency proceedings will be published in the Business Register. The amendments to the Bank Insolvency Act were backed by 91 MPs, with no votes against and two abstentions.

A Bulgarian court of appeals ruled on Friday that the initial date of insolvency for Corporate Commercial Bank (Corpbank) was June 20 last year, increasing the chances of the bank's receivers to recover more of its assets, Reuters reported. The central bank closed Corpbank's operations and took control over the Balkan country's fourth-largest lender on June 20, 2014 after a bank run triggered the biggest banking crisis in the country since the 1990s. A court declared Corpbank bankrupt in April, setting the date of its insolvency at Nov. 6, when the central bank revoked the bank's licence.

Bulgaria’s central bank governor resigned on Tuesday, as the poorest country in the European Union slowly recovers from a banking crisis and remains vulnerable to developments in neighboring Greece, The Wall Street Journal reported. Ivan Iskrov, who spent 12 years at the helm of the Bulgarian National Bank, said in a letter to Parliament that he will step down on July 10, three months before his term expires in October. Mr. Iskrov has been under pressure from political forces to resign in the wake of what turned out to be the worst banking crisis since the 1990s.