site.btaFinance Ministry: Credit to Private Sector Slows by Nearly 15% in March, Y/Y

Credit to the private sector slowed down in March to 14.8% year-on-year, down from 15.3% a month earlier, the Ministry of Finance said in its monthly review of the Bulgarian economy, published on Friday. The analysis presents the dynamics of the main macroeconomic indicators with data published up to May 16 2025.

The analysis said the decline in credit growth was entirely due to the lower growth rate of credit to non-financial corporates, which slowed to 9.9%t in March down from 11.9% at the end of February. Overdrafts and regular loans to firms posted slower increases, and bad and restructured loans accelerated their declines, all contributing to weaker corporate credit growth.

Credit to the private sector also increased by 14.8% in the first quarter.

Credit to households maintained its annual growth rate in March at 20.7%. Consumer credit slowed marginally to 11.7% from 11.8% in the previous month, which was offset by a marginal acceleration in housing credit from 29& to 29.1%, the Ministry said.

The weighted average interest rates on consumer loans and non-financial pre-enterprise loans rose in March - by 24 and 7 basis points to 8.90% and 4.38%, respectively. The average rate on home loans fell 1 basis point to 2.48%, reaching a new historic low, the analysis noted.

The weighted average return on term deposits of non-financial corporates and households fell by 4 basis points to 1.77% as the average interest rate on corporate deposits declined and offset the slight increase in the average rate on household deposits.

The analysis also noted that the deficit under the Consolidated Fiscal Programme (CFP) for the first three months of the year amounted to BGN 1.9 billion (0.9% of projected GDP), with a small surplus at end-March 2024. Overall, CFP receipts increase by 6.8%, led mainly by higher tax revenues and, to a lesser extent, by non-tax revenues. Receipts from indirect taxes and social contributions were the highest contributors, growing by 12.9% and 11.1%, respectively, as of March, compared to the same month in 2024. In the indirect tax group, VAT receipts from domestic transactions were the leading contributor (with growth of 22.5%), while excise receipts contracted (by 2.5%). The CFP expenditure grew by 22.2% compared to the first quarter of 2024. There were increases in social and personnel expenditures. Capital expenditure is also above the levels recorded in this period of previous years, the analysis said.

In terms of consumer prices, a deflation of 1.2% was recorded in April compared to a month earlier according to the HICP (Harmonised Index of Consumer Prices). This was due to a fall in the prices of services and energy goods, by 2.6% and 4% respectively compared to March. Decreases in the month were recorded in the prices of package holidays and accommodation services as well as communication services. Energy commodity prices continued to decline in line with the decline in prices of major energy commodities in international markets. Fuels for personal transport fell by 5% and central gas supply by 9.6%. At the same time, food prices rose by an average of 0.4% from a month earlier, driven by seasonal fluctuations in unprocessed food and fruit in particular. Industrial goods also saw higher prices, by an average of 0.7%, which was associated with seasonality in clothing and footwear, which rose by an average of 7.6%.

The annual rate of inflation according to the HICP slowed to 2.8%. There was a significant contraction in the contribution of services, while energy commodities recorded a year-on-year decline in prices and their contribution turned negative. Underlying inflation also declined to 2.3%, the analysis noted.