Economy and Banking Sector of Bulgaria

Bulgaria is a country in southeastern Europe, a member of the European Union since 2007.

Agriculture and tourism have been important components of Bulgarian economy. In recent years low salaries and low corporate income tax rates, attracted foreign companies into technological and research sector. However, factors like corruption, a weak judiciary, and organized crime impede the country's investment climate and economic growth.

Bulgarian banking system is characterized by relatively high concentration: competition between the major banks is making it difficult for other banks to compete. Another feature of the Bulgarian banking system is a prominent share of foreign capital.

Location Southeastern Europe
Population (2016)7 153 784 ↓ (-0.01%)
EU Status member since 2007
National Currency BGN (Bulgarian lev)
    Exchange Rate (2017-01-19) 1 EUR = 1.9558 BGN
    Nominal GDP (2015)44.2 bln EUR ↑ (+0.03%)
    Nominal GDP per Capita (2015)6 100 EUR ↑ (+0.05%)
    Real GDP Growth (2015)3.0 % ↑ (2014: 1.5 %)
Inflation Rate 
    CPI, MoM (Sep 2016)-0.7 % ↓ (Aug 2016: 0.0 %)
    CPI, YoY (Sep 2016)-1.1 % no change(unchanged)
    CPI, Year Average (2015)-1.1 % ↑ (2014: -1.6 %)
Unemployment Rate (2015)9.2 % ↓ (2014: 11.6 %)
Government Bond Yield (Sep 2016)2.15 % ↓ (Aug 2016: 2.28 %)
Credit Ratings (as of Sep 2016)
    FitchBBB- good credit quality, outlook stable
    Moody'sBaa2 lower medium grade, outlook stable
    S&PBB+ non-investment grade speculative
Double Taxation Agreements 52 signed agreements
Information Exchange 
    Automatic Exchange starts in September 2017
FATCA IGA in effect since 05 December 2014, Model 1
Banking Sector
Financial Market Development 4.1 (max 7.0) rank: 59th out of 138 countries
    Banks' Soundness 4.2 (max 7.0) rank: 107th out of 138 countries
Banking Industry Country Risk 7(1 - lowest risk, 10 - highest risk)
    Economy Risk 7
    Industry Risk 6
Deposit Guarantee Scheme 
    Maximum Protected Amount 100 000 EUR
Country Ceiling for Deposits 
    Local Currency (Bulgarian lev)A3 upper medium grade
    Foreign CurrencyBaa2 lower medium grade
Deposit Rates (Aug 2016, BGN)0.55 % no change(unchanged)
Banking Sector Structure 
    Number of Banks29
    Recent Changes (2015) new banks: 0, closed banks: 0
    Consolidated Assets (2015) 45 489.62 mln EUR ↑ (+3.53%)
Major Banks
 UniCredit Bulbank  First Investment Bank
 DSK Bank (OTP)  Eurobank EFG
 United Bulgarian Bank (NBG)  Corporate Commercial Bank
 List of Banks in Bulgaria

Bulgarian Economy

National Currency

During the last 11 years EURBGN exchange rate was within the range 1.9558 - 1.9558, reaching its maximum in Jul 2016 and falling to its minimum in Jul 2016.

Euro to Bulgarian lev (EURBGN).
Chart 1. Euro to Bulgarian lev (EURBGN). Source: ECB.


According to Eurostat, nominal GDP of Bulgaria in 2015 was 44.2 bln EUR.

Bulgaria outperforms the European Union in terms of real GDP growth with the average annual differential coming to 0.6% over the past 10 years (2005 - 2015). In 2015 real GDP growth was 3.0% which was above the Euro Area average (1.6%) and above the European Union average (1.9%). Real GDP growth in 2016 - 2021 are IMF's estimates.

Real GDP Growth in Bulgaria.
Chart 2. Real GDP Growth in Bulgaria. Source: Eurostat, International Monetary Fund.

In 2015, nominal GDP per capita in Bulgaria was 6 100 EUR.

Bulgaria has a below-average level of wealth in terms of per-capita GDP at purchasing power parity (PPP); this economic welfare indicator has, on average, fell behind that of the European Union by -45.2% over the past 10 years (2005 - 2015). GDP per capita at PPP in 2016 - 2021 are IMF's estimates.

GDP Per Capita at Purchasing Power Parity in  Bulgaria; European Union = 100.
Chart 3. GDP Per Capita at Purchasing Power Parity in Bulgaria; European Union = 100.

Inflation Rate

According to Eurostat, inflation rate in Bulgaria in 2015 expressed as annual percentages of average consumer prices was -1.1% which was below the Euro Area average (0.0%) and below the European Union average (0.0%). Inflation rates in 2016 - 2021 are IMF's estimates.

Inflation Rate in Bulgaria.
Chart 4. Inflation Rate in Bulgaria. Source: Eurostat, International Monetary Fund.

Taxation in Bulgaria

Double Taxation Agreements

Double Taxation Agreement (DTA) is an agreement between two or more countries for the avoidance of double taxation.

Bulgaria signed DTAs which already came info force with the following jurisdictions (for agreements which came into force after 01 January 2013 the date of coming into force is given in brackets):

 Czech Republic
 Korea, Republic of
 Russian Federation
 South Africa
 Switzerland (Oct 2013)
 United Arab Emirates
 United Kingdom
 United States

Information Exchange

There are 3 ways for jusrisdictions to exchange information on tax matters:

  • spontaneously;
  • on request;
  • automatically.

Spontaneous exchange of information is provision of information that is forseeably relevant to another party without a request being previously sent.

Tax Information Exchange Agreements (TIEAs) enable exchange of information on request relating to a specific tax investigation, either criminal or civil.

Automatic information exchange allows jurisdictions to exchange information automatically, without having a specific tax investigation.

Bulgaria signed the automatic information exchange agreement on 29 October 2015 and committed to start the automatic information exchange in September 2017.

Further Information:
Automatic Exchange of Information on Financial Accounts
Countries Which Will Not Automatically Exchange Account Information



Foreign Account Tax Compliance Act (FATCA) which became law in the United States in March 2010, focuses on reporting made by foreign financial institutions about financial accounts held by US taxpayers or foreign entities in which US taxpayers hold a substantial ownership interest. The FATCA-reporting is facilitated by Intergovernmental Agreements (IGAs).

Bulgaria has FATCA agreement with the U.S. in effect since 05 December 2014 (Intergovernmental Agreement Model 1). Financial institutions operating in Bulgaria are required to identify U.S. taxpayers by January 1, 2017 and to report the information for 2017 and the subsequent years. The agreement is non-reciprocal: Bulgarian financial accounts hold in U.S. financial institutions will not be reported to Bulgarian authorities.

Further Information:
FATCA and European countries


Bulgarian Banking Sector

Financial Market Development

According to World Economic Forum's Global Competitiveness Report 2016-2017, financial market development in Bulgaria is scored 4.1 out of maximum 7.0 and ranked 59th out of 138 analysed economies. Soundness of banks is scored 4.2 bringing Bulgaria into the 107th place, trustworthiness and confidence of financial market is scored 4.5 (49th place).

Financial Market Development in Bulgaria.
Chart 5. Financial Market Development in Bulgaria. Source: WEF.

Banking Industry Country Risk

Banking Industry Country Risk Assessment (BICRA) is a methodology designed by Standard&Poor's "to evaluate and compare global banking systems". A BICRA is scored on a scale from 1 to 10, ranging from the lowest-risk banking systems (group 1) to the highest-risk (group 10). The BICRA methodology has two main analytical components: "economic risk" and "industry risk". Each of the components is then further divided into 3 "factors" that result in an economic and industry risk score for each country.

Bulgaria is included into group '7' with economic risk scored '7' and industry risk scored '6'.

BICRA Group 7
Economic risk 7
    Economic resilience high
     Economic imbalances high
    Credit risk in economy very high
Industry risk 6
    Institutional framework high
    Competitive dynamics intermediate
    Systemwide funding high
Government support assessment supportive

Table 1. BICRA for Bulgaria. Source: S&P's.


Deposit Guarantee Scheme

Deposit Guarantee Schemes compensate certain deposits held by depositors of a bank that becomes unable to meet its obligations.

From a depositor's point of view it is important to know:

  • if the depositor is eligible within the terms of the deposit guarantee scheme;
  • if the depositor's bank is a participant in the deposit guarantee scheme;
  • if the depositor's type of deposit is covered by the deposit guarantee scheme.

All these details about deposit guarantee scheme in Bulgaria are summarised in Table 2.

Scheme Participantsall credit institutions operating in Bulgaria, branches of non-EU banks, branches of Bulgarian banks abroad
Scheme Exemptionsbranches of EU-banks (covered by their home countries)
Eligible Depositorsnatural persons, legal entities
Covered Accountsall funds on a bank account (term deposit, demand deposit, savings or current account, etc)
Covered Currenciesall
Maximum Protected Amount100 000 EUR
Paid In CurrencyBGN

Table 2. Deposit guarantee scheme in Bulgaria.

Further Information:
Deposit Guarantee Schemes in Europe


Country Ceiling for Deposits

Moody's country ceilings for deposits specify the highest rating that can be assigned to local- or foreign- currency denominated deposit obligations of a bank or other deposit taking institution domiciled within that country.

Local currency (Bulgarian lev) deposit ceiling for Bulgaria is set to A3 (upper medium grade), foreign currency deposit ceiling is Baa2 (lower medium grade).


Deposit Rates

In Aug 2016, an agreed annualised deposit rate in local currency (Bulgarian lev) of new contracts with agreed maturity up to 1 year between credit institutions and households was 0.55% .

Deposit Rates in Bulgaria.
Chart 6. Deposit Rates in Bulgaria. Source: ECB.

Further Information:
Compare Bank Deposits in Bulgaria


Banking Sector Structure

Currently there are 29 credit institutions operating in Bulgaria.

Recent structural changes (2013 - 2015) of the banking sector of Bulgaria are summarised in Table 3.

Number of Opened Banks000
Number of Closed Banks020

Table 3. Recent structural changes in the banking sector of Bulgaria.

All the credit institutions operating in Bulgaria can be classified into several categories. Table 4 summarises the number of banks in each category.

CategoryNumber of Banks
Branches of foreign banks6
Central banks1

Table 4. Number of banks by category in Bulgaria.

There are 6 branches of foreign banks from 6 different countries in Bulgaria. Table 5 shows the number of branches grouped by the country of origin.

Country of OriginNumber of Branches

Table 5. Number of branches of foreign banks in Bulgaria grouped by country of origin.


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