Bulgaria, officially the Republic of Bulgaria, is a country in southeastern Europe. It is bordered by Romania to the north, Serbia, and Macedonia to the west, Greece, and Turkey to the south, and the Black Sea to the east. With a territory of 110,994 square kilometers (42,855 sq. mi), Bulgaria is Europe's16th-largest country. Bulgaria's population of 7.4 million people is predominantly urbanized and mainly concentrated in the administrative Centre’s of its 28 provinces. Most commercial and cultural activities are centered on the capital and largest city, Sofia. The strongest sectors of the economy are heavy industry, power engineering, and agriculture, all of which rely on local natural resources. The country's current political structure dates to the adoption of a democratic constitution in 1991. Bulgaria is a unitary parliamentary republic with a high degree of political, administrative, and economic centralization. It is a member of the European Union, NATO, and the Council of Europe; a founding state of the Organization for Security and Co-operation in Europe (OSCE); and has taken a seat at the UN Security Council three times.
Bulgarian Development Bank (BDB) is a leading Bulgarian development and commercial bank with headquarters in Sofia. It is one of the largest development institutions in Southeast Europe that provides financing and professional advising for the purposes of development. It is the largest Bulgarian financing facility provider to banks operating in the country, the sole national loan guarantee provider, and the only microfinance provider. Further to that, it’s direct lending commercial business division ranks as the 14th commercial bank in terms of assets in Bulgaria, with 850 million euro in assets as of June 2011.BDB is majority owned by the Republic of Bulgaria and has a public-interest mandate to finance projects of regional and national importance, to encourage the growth of export-oriented companies, to assist small and medium enterprises to compete internationally, and to promote sustainable development. The bank's activities are financed with credit lines from multilateral development banks, investment funds, and sovereign wealth funds. BDB has extensive industry coverage capacity in Bulgaria with a team of specialized industry sector consultants, each of whom partners with the sector's corresponding national industry organizations. As of November 2011, the bank has a long-term credit rating of "BBB-" with a positive outlook, short-term rating of "F3", individual rating "D", and support rating "2" from the Fitch Credit Rating Agency.
|Agriculture||Milk, tobacco, wheat, maize, fruits, tomatoes, barely, potatoes, peppers & cabbage.|
|Manufacture||Energy, coal, gold, copper, zinc, silver & aluminum.|
|Services (Including financial)||63% (2013 estimate)|
|First Investment Bank||Banking|
|BEH EAD||Oil & Gas|
|Bulgarian National Bank||Banking|
In late 1996 till mid-1997 Bulgaria experienced a severe currency crisis with near hyperinflation. The questions this short paper seeks to address is how the problem could develop in the first place, what solutions economic theory could offer to resolve it, what actions were taken by the Bulgarian government and the IFI (International Financial Institutions, i.e. World Bank, IMF, etc.) to deal with the situation, and what results these have achieved in light of the theoretic predictions. While the 1996/97 crisis was a Twin Crisis (bank sector crisis followed by a currency crisis) I will attempt to narrow the analysis on the currency crisis. However, it will be necessary to keep an eye on the developments in the banking sector and the economy in order to fully appreciate the CBA (Currency Board Arrangement) and its implications for Bulgaria. The depreciation of a country’s currency is associated with huge losses of value of the domestic currency, which erodes the value of savings and loans. Per capita income falls in real terms due to the underlying fundamental economic imbalances and the lagging wages as in the Bulgarian case of fast inflation. Adjustment in such a situation is costly (output and distributional costs) and can be politically difficult to implement [CF95]. The stabilization of the financial sector and the currency can therefore only be a part of a comprehensive stabilization and restructuring program as in the case of Bulgaria were the Currency Board was introduced as part of an IMF stabilization program for the country in 1997.
During the second year of Videnov's term, Bulgaria experienced a severe economic crisis and declining quality of living standard. One element of this was the grain crisis. In mid-1996, the first reports appeared that the country's grain reserves were near complete depletion due to excessive exports, and bread did actually become scarce for some time in the winter of 1996-1997. At the same time, the postponement of the payment of interest on Bulgaria's foreign debt, which had been negotiated by the Filip Dimitrov government (Union of Democratic Forces, UDF) in 1992, ran out and no further postponement was granted despite Bulgaria' continuing inability to pay. The government also failed to negotiate a loan to relieve the situation. This decreased the country's credit rating and initiated the destabilization of the finance system. In a short period of time, more than half of Bulgaria's commercial banks went bankrupt, with hundreds of thousands of people losing their savings, while the so-called " credit millionaires" profited enormously from the situation because their immense debts to the banks were reduced to nothing. Simultaneously, inflation skyrocketed, with the lev's value plummeting from 70:1 USD in early 1996 to 3,000:1 in early 1997, causing a sharp decline in purchasing power. According to the Bulgaria-based Institute for Market Economics, the hyperinflation was caused by the government's inept finance policy. Videnov himself blamed the Bulgarian National Bank's incompetent actions, and abuses committed during the previous coalition government headed by Lyuben Berov. Despite its initial refusal in order to save its reputation during the presidential elections campaign in 1996, the government was forced by the crisis to accept eventually the currency board proposed by the International Monetary Fund, a decision that was officially implemented by the next government in July 19.
Organized prehistoric cultures began developing on Bulgarian lands during the Neolithic period. Its ancient history saw the presence of the Thracians and later the Persians, Greeks and Romans. The emergence of a unified Bulgarian state dates back to the establishment of the First Bulgarian Empire in 681 AD, which dominated most of the Balkans and functioned as a cultural hub for Slavs during the middle Ages. With the downfall of the Second Bulgarian Empire in 1396, its territories came under Ottoman rule for nearly five centuries. The Russo-Turkish War (1877–78) led to the formation of the Third Bulgarian State. The following years saw several conflicts with its neighbors, which prompted Bulgaria to align with Germany in both world wars. In 1946 it became a one-party socialist state as part of the Soviet-led Eastern Bloc. In December 1989 the ruling Communist Party allowed multi-party elections, which subsequently led to Bulgaria's transition into a democracy and a market-based economy.Organized prehistoric cultures began developing on Bulgarian lands during the Neolithic period. Its ancient history saw the presence of the Thracians and later the Persians, Greeks and Romans. The emergence of a unified Bulgarian state dates back to the establishment of the First Bulgarian Empire in 681 AD, which dominated most of the Balkans and functioned as a cultural hub for Slavs during the middle Ages. With the downfall of the Second Bulgarian Empire in 1396, its territories came under Ottoman rule for nearly five centuries. The Russo-Turkish War (1877–78) led to the formation of the Third Bulgarian State. The following years saw several conflicts with its neighbors, which prompted Bulgaria to align with Germany in both world wars. In 1946 it became a one-party socialist state as part of the Soviet-led Eastern Bloc. In December 1989 the ruling Communist Party allowed multi-party elections, which subsequently led to Bulgaria's transition into a democracy and a market-based economy.
The Lev is the currency of Bulgaria. It is divided into 100 stotinki. In archaic Bulgarian, the word "Lev" meant "lion", a word which in the modern language became l?v. The Lev was introduced as Bulgaria's currency in 1881 with a value equal to the French franc. The gold standard was suspended between 1899 and 1906 and suspended again in 1912. Until 1916, Bulgaria's silver and gold coins were issued to the same specifications as those of the Latin Monetary Union. Banknotes issued until 1928 were backed by gold or silver. In 1928, a new gold standard of 1 Lev = 10.86956 mg gold was established. During World War II, in 1940, the Lev was pegged to the German Reichsmark at a rate of 32.75 Leva = 1 Reichsmark. With the Soviet occupation in September 1944, the Lev was pegged to the Soviet ruble at 15 Leva = 1 ruble. A series of pegs to the U.S. dollar followed: 120 Leva = 1 dollar in October 1945, 286.50 Leva in December 1945 and 143.25 Leva in March 1947. No coins were issued after 1943; only banknotes were issued until the currency reform of 1952.
Since Bulgaria gained EU membership in 2007 various dates have been suggested as the expected end of the Lev: towards the end of that year 1 January 2012 was a possible date; however, the global financial crisis of 2008 and the Eurozone crisis cooled the initial enthusiasm for the euro. Nevertheless, in 2009 The Economist noted suggestions to accelerate Bulgaria's path to the euro, or even let it be adopted immediately, despite the EU institutions' unwillingness to deviate from a policy of euro adoption only after five Euro convergence criteria have been met. In 2011 the Bulgarian finance minister Simeon Djankov acknowledged his earlier eagerness for Bulgaria to join the euro but considered 2015 as a more likely date. If Bulgaria follows the standard path to euro adoption, it would use the euro two years after joining the European exchange rate mechanism (ERM II) (a formality given Lev's peg to the euro). In late 2010, given Bulgaria's improving economy, analysts thought that Bulgaria would join the ERM II the following year. However, the continued postponement of joining the mechanism has prevented Bulgaria meeting all five convergence criteria: its rebounding economy later met the four other criteria.
In 1962, aluminum-bronze 1, 2, and 5 stotinki, and nickel-brass 10, 20 and 50 stotinki and 1 Lev were introduced. The coin series strongly resembles coinage from the Soviet Union during the same period, particularly in design and size. The state emblem is depicted on the obverse of all coins, which went through several changes. The first change in 1962 with the introduction of the new coinage, and the second change in 1974, with the ribbons being the most noticeable change. A number of commemorative 2 Lev coins also circulated during this period, often released into circulation as they had relatively high production numbers and little collector's value. Higher denomination Lev coins have also been introduced into circulation at an irregular basis with varying sizes and metallic compositions, including silver. Mostly due to an overstock of numismatic coins not getting sold to collectors. Similar occurrences to this can be seen with high denomination coins from East Germany and Poland during the same period. In 1992, after the communist era, older coins were withdrawn and a new coinage was introduced in denominations of 10, 20 and 50 stotinki, 1, 2, 5 and 10 Leva. All were struck in nickel-brass except for the cupro-nickel 10 Leva. In 1997, nickel-brass 10, 20 and 50 Leva were introduced.
In 1962, the National Bank issued notes for 1, 2, 5, 10 and 20 Leva. A second series, in the same denominations, was issued in 1974. 50 Leva notes were introduced in 1990. Again, denominations 10 Leva and up featured Georgi Dimitrov, 1, 2, and 5 featured the state emblem. After the fall of the communist regime, new notes were introduced for 20, 50, 100 and 200 Leva. These were followed by 500 Leva notes in 1993, 1000 and 2000 Leva in 1994, 5000 and 10,000 Leva in 1996, and 50,000 Leva in 1997.
Currency of Bulgaria (Lev) is a public currency and can be used to purchase other currencies like USD.
|National Song||"Mila Rodino"|
|Currency||Bulgarian lev (BGN)|
|GDP / GDP Rank||144.598 Billion USD|
|GDP Growth Rate||3 Percent|
|GDP Per Captial||$20326.698 (PPP)|
< 1.0% Hindus
< 1.0% Buddhists
< 1.0% Jews
< 1.0% Other Religions
Other 0.7% (Including Macedonian
President – Rumen Radev
Prime Minister – Boyko Borisov
|Website||Go to the web|
|Public Debt||27.83 Percent|
|Unemployment Rate||8.001 Percent|
|Labor Force (Occupation)||-|