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Credit grew modestly in from end-May to mid-July, reflecting the impact of BNB restrictive measures.
submited on 28.07.2005 in category Political stability | Fiscal affairs | Monetary policy | Macroeconomic developments
submited on 28.07.2005 in category Political stability | Fiscal affairs | Monetary policy | Macroeconomic developments
Credit to private sector by mid-July was BGN 16,524, or a growth of 0.7% for six weeks since our last survey.
The M3 aggregate grew by 5.3% to BGN 23,676 million – quite faster than the expansion of the monetary base. The latter grew by BGN 163 million in June and first half of July or 2.3% up from end-May. The other reason was the appreciation of the USD-based component in the money supply due to recent exchange rate trends. The fiscal policy continued to be restrictive, by piling up another BGN 487 million to the fiscal reserve held at the BNB due to record-high budget surplus of BGN 1 billion for the first 5 month of the year. Due to the expansion of M3, the monetary multiplier, or the ratio of M3 to monetary base, grew slightly to 3.30, up from 3.21 in end-May.
Fiscal reserve held in the BNB grew by 10% by mid-July to reach BGN 5,357 million. On 28th July however it will fall down by USD 608 after the government repaid the last remaining of the Bulgarian Brady bonds. The coverage ratio of broad money (M3) with BNB external assets (or the assets of the ‘currency board’) fell by -1.2% to reach 0.611, reflecting the mismatch of the Euro-denominated assets of the BNB and the USD component in M3 (i.e. foreign currency deposits).
The M3 aggregate grew by 5.3% to BGN 23,676 million – quite faster than the expansion of the monetary base. The latter grew by BGN 163 million in June and first half of July or 2.3% up from end-May. The other reason was the appreciation of the USD-based component in the money supply due to recent exchange rate trends. The fiscal policy continued to be restrictive, by piling up another BGN 487 million to the fiscal reserve held at the BNB due to record-high budget surplus of BGN 1 billion for the first 5 month of the year. Due to the expansion of M3, the monetary multiplier, or the ratio of M3 to monetary base, grew slightly to 3.30, up from 3.21 in end-May.
Fiscal reserve held in the BNB grew by 10% by mid-July to reach BGN 5,357 million. On 28th July however it will fall down by USD 608 after the government repaid the last remaining of the Bulgarian Brady bonds. The coverage ratio of broad money (M3) with BNB external assets (or the assets of the ‘currency board’) fell by -1.2% to reach 0.611, reflecting the mismatch of the Euro-denominated assets of the BNB and the USD component in M3 (i.e. foreign currency deposits).
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