The funds from the capital increase of the Bulgarian Development Bank are used to implement the activities envisaged in the strategy for its activities approved by the Council of Ministers. This is stated in the bank's position regarding the decision of the Council of Ministers announced by the acting Prime Minister to reduce the capital of the state-owned bank and his statement in connection with the decision.
"The Strategy of the Bulgarian Development Bank, approved by the Council of Ministers with Decree No. 389, and the Bank's Statute provide for the financing of programs assigned to the BDB by the Government of the Republic of Bulgaria through a decision of the Council of Ministers. To date, the Bulgarian Development Bank has received 2 billion euros, which are in the account of the Ministry of Finance at the BNB, from which the BDB has used funds from the capital under the approved municipal investment program in the 2025 budget. The caretaker government has not assigned a single state program or project to be implemented by the Bulgarian Development Bank by its act, the BDB said.
"A possible procedure for reducing the capital in accordance with the requirements of the applicable banking and commercial legislation would take months and require the approval of all creditors of the Bulgarian Development Bank, including the European Investment Bank and the Council of Europe Development Bank, KfW and other development banks. During this period, the funds will in practice not be used by either the Bank or the government", BDB emphasizes.
The proposed capital reduction, without prior coordination with BDB and in the absence of an approved regular budget for 2026, limits the bank's ability to make payments under the investment program of municipalities. It limits the bank's ability to assist the state in implementing anti-crisis measures in connection with a disrupted supply chain, increased fuel prices and difficulties in various sectors such as transport, agriculture, etc. It puts at risk current financing from international institutions and limits the Bank's ability to attract funds and manage programs from international financial institutions. It puts at risk the rescued EUR 246.6 million under the Recovery and Resilience Plan, provided to the Bulgarian Development Bank for management directly by the European Commission. The funds are for the renovation of multi-family residential buildings. It puts at risk future provision of funds under direct EC programs. A current such program provides businesses with up to 1.2 billion euros with reduced requirements for co-financing or collateral in partnership with commercial banks. It limits the ability of the Bulgarian Development Bank to fulfill its commitments under the national program for energy efficiency of residential buildings, the BDB states.
They add that by a decision of the European Commission, the Bulgarian Development Bank was selected to manage EU budget funds under the InvestEU program. The BDB is the first and only financial institution in the country with such accreditation, obtained after a difficult two-year audit process, which confirmed that the processes and procedures in the Bank are in accordance with the requirements of the EU Financial Regulation. It confirms that funds from the EU budget are managed in a transparent manner, with reliable mechanisms for control, accountability and protection," the financial institution's position states.