promote the improvement in the economic environment. on the other hand, banks will be faced with greater dynamics of the risks associated with the balance - sheet value of assets and liabilities and of returns. this dynamics will primarily depend on the development of the macroeconomic processes in europe and, in a more global aspect, on the anticipated changes in the actions of the leading central banks. the withdrawal of the accommodative monetary policy, typical of recent years, will be visible in the reversal of the interest - rate cycle. these processes, which will be running globally with varying intensity and supported by different instruments of central banks, will largely determine the financial conditions in our country. in the context of the ongoing global macroeconomic processes, inflation will continue to receive special attention. we expect that the rate at which the prices in bulgaria will be rising in 2022 will reach its peak, on an annual basis, within the first half of the year, and at the end of the year, again on an annual basis, it will fall below that reported as of december 2021. the concrete nominal levels of the general price index will depend on the combined effect of the antiinflationary and pro - inflationary factors, including on the dynamics of the energy prices in the international market and the prices of foodstuffs. we believe that the coming discussions on the adoption of the 2022 budget will give additional indications of the development of the macroeconomic processes in bulgaria. in this regard, the topics important for the banking sector are : the annual and medium - term macroeconomic framework ; the level and management of the debt ; the incomes policy ; and the level and management of the so - called ‘ contingent liabilities ’ in the energy, transport and social security sectors. in the context of the ongoing global and local macroeconomic processes and the still open issues, in 2022 the banking sector will have to find a balance between the possibilities of expanding the lending, as a result of the anticipated improvement in the economic environment, and the areas of economic uncertainty coming mainly from the evolution of inflation and the still unresolved risks caused by the pandemic. a major criterion for reaching an optimum balance for each bank will be the preservation of, and even improvement in, the quality of assets. for its part, the bnb is ready, as it has been thus far, to implement the full range of measures, within its mandate, to mitigate and neutralise the manifestation of risks in relation to banks

dimitar radev : the bulgarian banking sector – opportunities and challenges publication by mr dimitar radev, governor of the bulgarian national bank, in the bulletin of the association of banks in bulgaria, issue 69, january 2022. * * * it is a tradition to start a calendar year by reviewing the achievements of the banking sector in the previous year and outlining the opportunities and challenges in the new one. in 2021 the covid crisis continued to put the banking sector to a serious test. unlike the stress tests in 2016 and 2019, the results of this test were not hypothetical, but provided a real assessment of the state of the sector and its capacity to operate under highly adverse conditions. this assessment can be summarised as follows : not only were bulgarian banks not weakened during the pandemic, but they enter 2022 with performance better than, or at worst consistent with, that at the start of the pandemic, including in terms of capital, liquidity, asset quality and profitability. according to the latest data for 2021, the overall capital adequacy ratio is 22. 4 % and the liquidity coverage ratio is 325. 4 %, i. e. above the eu average. at the same time, the gross amount of non - performing loans and advances continued to decline, and profits approached their historically high levels of 2019. the short explanation for these results is that the banking sector was well prepared to operate in a complex and challenging macroeconomic environment, as has been the environment over the past two years. this has allowed the banking sector to have a different focus from the one it had during the global financial crisis in 2008 or during the local problems in the sector in 2014. in these previous episodes, the banking sector was mainly engaged in solving problems within the sector. in the covid crisis over the recent two years, the banking sector was not concerned with its own problems, but mainly with alleviating the effects of the crisis on businesses and households and subsequently with the recovery and speed - up of the economy. in this sense, the covid crisis legitimised an important qualitative change in the position of the banking sector – from a source of problems in the past to an important factor in their resolution in recent years. significantly, the banking sector absorbed and implemented successfully and without shocks the anti - crisis package of measures approved by the bnb, amounting to about 9 % of the gdp, as well as a private moratorium