GOVERNMENT MEASURES TO COMBAT ECONOMIC IMPACT OF COVID-19

GOVERNMENT MEASURES TO COMBAT ECONOMIC IMPACT OF COVID-19

Compared to other states infected in Western Europe, COVID-19 is relatively less spread in Bulgaria with 359 confirmed cases and 8 deaths as of 31st March 2020. The government has implemented series of measures, which are mainly focused on containing the spread of coronavirus, including social distancing and travel restrictions. Economic policies to ease the negative impact of the COVID-19 by increasing liquidity supply, employment support, and rescheduling of various tax and utility payment deadlines.

About 12% of Bulgarian businesses have been compelled to seize operations as a result of Covid-19 outbreak in the country which forced the government to declare a state of emergency in the state.

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Needless to say, the Bulgarian government is taking radical measures to safeguard the economy of the country and reduce the impact on its population and businesses. Prime Minister, Boyko Borissov, introduced a package of financial measures worth 2.3 billion Euros towards helping businesses stay afloat.

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Some of the key measures include:

  • The capital of Bulgarian National Bank has been increased.
  • To cover 60% of salaries for employees of worst affected businesses.
  • Offer interest-free loans to workers who have been force to take unpaid leave.
  • Additional remunerations in the ministries of health, interior and defence
  • Payment of annual corporate tax has been deferred to 30th June 2020.
  • Monetary and Macro-Financial
  • Capitalization of the 2019 profit in the banking system (about 1.4% of 2019 GDP)
  • Increase in liquidity of the banking system by BGN 7 billion (6% of 2019 GDP) by reducing foreign exposures of commercial banks.
  • Cancellation of the increase of the countercyclical capital buffer planned for 2020 and 2021 with effect amounting to BGN 0.7 billion, or about 0.6 percent of 2019 GDP.
  • Capital increase of the state-owned Bulgarian Development Bank (BDB) by BGN 700 million (0.6% of 2019 GDP), of which BGN 500 million to be used for the issuance of portfolio guarantees to commercial banks for the extension of corporate loans and the remaining BGN 200 million to provide interest-free loans to employees on unpaid leave (up to BGN 1500).

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