Bi-Weekly Report 12-25 February 2019


A temporary improvement in the fiscal balance in January (by 0.1 pp of GDP y-o-y), due to early profit distribution by the CBRT (0.8% of GDP)

The FY:19 fiscal deficit target of 1.8% of GDP is out of reach

The current account deficit eased to a 9-year low of 3.6% of GDP in FY:18



The FY:18 budget deficit was kept within target, widening marginally to 2.9% of GDP

Tensions heighten between the President and the Government regarding the FY:19 budget

The FY:19 budget deficit could reach excessive levels



Both current spending and public investment pushed down the consolidated budget surplus to 0.1% of GDP in FY:18 from 0.8% in FY:17

Fiscal policy is set to remain expansionary in FY:19

Bulgaria's already low gross public debt is set to decline further in FY:19



FX-adjusted customer deposit growth reached a 9-year high of 15.2% y-o-y in December, on the back of a rebound in economic activity and improved confidence in the domestic economy

Credit growth (adjusted for FX movements) accelerated to an 8-year high in 2018, despite continued large write-offs


North Macedonia

The Central Bank is likely to maintain its key rate (28-day CB bill rate) on hold at a record low of 2.5% throughout the rest of the year

Tourist arrival growth slowed sharply to a still strong 12.2% in FY:18, mainly due to a decline in the number of visitors from Turkey -- the main source country -- and unfavourable base effects



Customer deposits (FX-adjusted) strengthened in 2018, underpinned by the rebound in economic activity

Credit growth, adjusted for large write-offs and FX variations, is estimated to have reached a 7-year high of c. 4.3% in 2018



Cyprus issued its first ever 15-year Eurobond, worth EUR 1.0bn (4.7% of GDP), at a yield of 2.75% (241 bps over the German benchmark and 175 bps over mid-swaps)

Banking sector stock of non-performing loans (NPLs) almost halved in the first 10 months of 2018, pushing down the NPL ratio to a low of 23.7%



The CBE cut its key policy rates by 100 bps; additional cuts in sight by end-year

Weaker support from Suez Canal receipts to Budget revenue and current account in sight this fiscal year (ending in June)


Appendix: Financial Markets

Bi-Weekly Report 12-25 February 2019

Contact Us

We are always ready to respond to your requests for information or to answer your questions about our products and services.

Request more information

Please complete the following details so we can provide you the information you need. In case of fraud, please contact our call center directly at 210 484 8484.
Optional custom content that replaces the the entire default content.