/ world today news/ Financial analysts from the Royal Bank of Scotland (RBS) believe that Bulgaria and Romania are most at risk of “Greek contagion”.
Bulgarian Prime Minister Borissov had to assure that the banking system in Bulgaria is not threatened by the crisis in Greece.
And the BNB came out with an announcement that the banks in Bulgaria, including those with a Greek shareholding, have no receivables from Greek credit institutions, nor investments in securities of the Greek government. The general tone sounds like this: negative developments in the banking systems of other countries cannot have a direct impact on the stability and normal functioning of the Bulgarian banking system.
However, other assessments are also found in foreign editions. For example, the Belgian “Standard” writes: “The euro is not a market instrument that obeys only the rule of supply and demand. The common currency is an expression of the will of hundreds of millions of Europeans to unite their destinies.” The message is that when you’re in a boat, it doesn’t matter if the breach is ahead or behind, left or right – everyone in it is at risk.
“Rossiyskaya Gazeta” sees Greece’s current problems as “a symptom of a deep structural crisis in the EU”, and the Czech “Hospodarske Novy” wrote the following on the same topic: “Under other circumstances, the Greek problem would probably have been solved not by the introduction of capital controls, and with a military intervention and the establishment of occupation power in the country – until the moment Greece returns all its obligations together with the interest. But the European integration makes such a decision by force impossible. That is why the German chancellor is right when she says that they are not ready to do it compromises, the European project would lose its basic foundation”.
Central banks in Eastern European countries, whose economies are closely tied to Greece’s, are busy these days reassuring foreign investors and domestic bank customers that Greece’s problems are not “contagious”. At the same time, Bulgarian Prime Minister Borissov said that the Greek crisis could thwart Bulgaria’s entry into the Eurozone. “If we were in the euro now, we would be paying for Greece – that is, a poor country would be financing a country that is richer than it. There is no logic in this. Until the countries of the euro area become more disciplined, I see no reason let’s hurry with the introduction of the euro,” said Borisov, and his words were quoted on the website of the German television station n-tv.
“Eastern European countries are more vulnerable than Asia or Latin America, for example, because they maintain close trade ties with Greece,” Costa Vaienas, head of emerging market investments at UBS Wealth Management in Zurich, told n-tv. The expert recalls that in neighboring Bulgaria, more than 1/5 of banking assets are controlled by Greek banks, which also have strong positions in Macedonia, Romania, Albania and Serbia. On Sunday, the Macedonian Central Bank obliged banks in the country to withdraw their funds located in Greek banks or in their affiliates and subsidiaries in Greece and abroad. Shortly thereafter, the Serbian Central Bank announced that it had restricted transactions between Greek banks and their Serbian affiliates.
Financial analysts from the Royal Bank of Scotland (RBS) believe that Bulgaria and Romania are most at risk of “Greek contagion”. “Despite assurances from central banks that Greek subsidiaries are well capitalized and even insulated, we believe that these two countries are most at risk of negative economic consequences from the crisis in Greece,” said the RBS assessment, cited by n- tv.
The Bulgarian economy, which has grown by about 1 percent since the outbreak of the financial crisis until today, is closely tied to the Greek economy. Seven percent of Bulgarian exports are destined for Greece. No other country in the Balkans exports more produce to Greece. Bulgaria sells to its southern neighbor mainly clothing, metals and electricity. And vice versa – Greece is one of the largest foreign investors in Bulgaria.
“If Greece is in recession, it affects the Bulgarian economy to a much greater extent than other countries in the region,” says Costa Vaienas from UBS Wealth Management. And Laura Chakarova, an analyst for Eastern Europe at the London-based IHS, points out that if the Greek affiliates in Bulgaria run out of money, the Bulgarian authorities are unlikely to start rescuing them. Bulgaria is still suffering from the banking crisis last year, recalls Chakarova.
At the same time, analysts point out that Bulgaria’s fiscal stability can neutralize the negative effects of the crisis in Greece. Few countries in the EU can boast of lower liabilities than those of Bulgaria – 28% of the country’s GDP. For comparison: Greek debt amounts to 177% of GDP.
And one more thing: Bulgaria could even benefit from the Greek crisis. According to data from the Bulgarian Ministry of Finance, since 2009, around 11,000 Greek companies have registered in the country. / DPA
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