Bulgarian National Bank Warns Against Proposed Excess Profits Tax on Banks

The Bulgarian National Bank (BNB) has voiced strong opposition to a proposed 10% tax on banks' excess profits, citing concerns that it would destabilize the financial sector. Governor Dimitar Radev argued that implementing such a measure to address next year’s budget deficit would result in higher credit costs and negatively impact the stability of Bulgaria’s financial system. He warned that the banking sector, currently the most stable in the country, would face significant challenges under this policy.

Radev highlighted that banks have already contributed 1.2 billion leva to the state budget this year, and the proposed tax would extract an additional 1 billion leva. Speaking at the annual celebration of Banker’s Day, organized by the Association of Commercial Banks, he underscored the sector’s critical role in maintaining the country's financial health. He also noted that Bulgaria is on track to meet the price stability criterion for eurozone accession as early as December or January.

Vice President Iliana Yotova, also speaking at the event, praised the Bulgarian banking system as one of the most stable in the region, attributing its resilience to the expertise of its professionals. Despite economic challenges in Bulgaria, Europe, and globally, she emphasized that the sector’s adherence to laws and regulations has been instrumental in its success. Yotova described banking stability as a cornerstone of national security and commended the BNB for its efforts to prepare Bulgaria for eurozone membership.

Yotova also pointed out the BNB’s close cooperation with the European Central Bank, a unique achievement for a non-eurozone country. She applauded Bulgarian higher education institutions for producing highly skilled professionals who meet the demands of the banking industry. These individuals, she said, are innovative and competitive on the international stage, contributing to the sector’s strong performance.

Additionally, Yotova acknowledged the public’s need for stability and predictability in banking services, urging banks and institutions to continue providing these qualities. She extended her gratitude to the media for highlighting the achievements of the banking sector, which she said fosters trust among customers and enhances the industry’s reputation.

Source: Bulgarian National Radio (BNR)