ADDITIONAL GUARANTEES FOR THE SAPARD CREDITS REQUESTED BY THE BANKS
Bulgarian authorities still hope to receive EUR52MN from the European Commission till the end of the year on the pre-accession programme SAPARD. That was announced on November 21 by the Minister of Agriculture and Forestry Ventceslav Varbanov at the second meeting of the executive directors of commercial banks and insurance companies. The topic of the discussion was whether commercial banks are prepared to use pre-accession fund resources to finance private agribusiness projects.
Minister Varbanov could not guarantee that SAPARD funds will be granted, but he announced his confidence in the banks' adequate response. The number of seminars on this topic, held with the support of his institution, encouraged farmers for possible reliefs in obtaining bank credits. The Ministry would like to see the problems with financing settled before EC funds are submitted to Bulgaria. Ventceslav Varbanov requested signing of agreement between the Ministry and the banks to provide credit facilities to private agribusines.
The credit institutions representatives were typically cautious about agribusiness and food industry. Banks would submit credits, but they would request at least 10-year experience of the farmers, which will be a kind of guarantee for repayment of the credits.
Tencho Tenev, Chief Executive Director of the Central Cooperative Bank suggested the establishment of a special fund, which will guarantee the credit risk. Resources for this fund should be raised proportionally from the state through its Zemedelie Fund, the banks and the insurance companies. The purpose for this fund will be to compensate bad debts. Actually, the risk for the banks is not too high, as 50% of the credit amount is covered by SAPARD. The credit recipient's liabilities are confined only to the remaining 50%. Even in case of unfavourable market development, it is almost impossible food prices to drop two times. Banks will just have to effectively control credit recipients whether money are used as intended. Otherwise SAPARD may refuse to reimburse the due amount. Insurance companies announced that they would rather insure the existing production, and not the credit risk.