Euro Set to Take Over from Lev as Main Bulgarian Loan Currency

The lev is fast being replaced as Bulgaria's main loan currency by the euro as Bulgaria prepares for Eurozone entry. Photo by Sofia Photo Agency

The euro has started taking over from the lev, as the main currency preferred by Bulgarian businesses and property owners, data shows.

Bulgarian National Bank (BNB) figures released for January 2009 showed a huge rise in euro denominated loan portfolios.

Euro denominated housing mortgages in January totaled BGN 22.9 M in comparison with BGN 106 M in December 2008. At the same time, households borrowed BGN 21.6 M less lev denominated credits, following a drop of BGN 4.9 M in December.

In October and November, euro loans grew by BGN 9.8 M and BGN 111.3 M respectively. Euro loans totaled BGN 9.9 M and BGN 153.1 M. Over the past five months, the share of euro denominated household mortgages expanded from 45.6% to 48.1% of the total mortgages in Bulgaria.

The trend is mirrored in the consumer credit market, where euro denominated loans account for only 12% but rose for a third month in a row as BGN denominated credits dwindled, the Bulgarian daily newspaper Dnevnik reported Tuesday.

BNB sources added that the Bulgarian credit market has been losing momentum in the recent months as banks give fewer loans and demand weakens, with homebuyers awaiting the predicted drop in property prices but also worrying about their income.

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