The number of non-performing loans in Bulgaria since the beginning of the year remains similar compared to 2020 and even slightly decreases. The general levels of payment for consumers are also relatively stable, according to data from the Receivables Management Association on the trends in the receivables market from the beginning of 2021. This, against the background of the unstable economic situation and negative forecasts, paints a seemingly optimistic picture. According to experts, however, it is only apparent.

According to the Association of Commercial Banks, the volume of non-performing loans in Bulgaria at the end of June was BGN 3.273 billion, with a minimal decrease compared to March. Loans for just over BGN 9.4 billion have been deferred in accordance with the procedure set for clients in difficulty due to COVID-19. The share of non-performing loans is 4.58% of all. “We are seeing an increased risk of people between the ages of 40 and 50, who are traditionally the most conscientious payers. These people have more sustainable incomes, often take care of both their children and elderly relatives, have the most responsible behavior, and are the backbone of the economy. However, it is with them that the first signals of difficulties in covering the monthly installments are felt,” said Raina Mitkova, chairwoman of the association, quoted in a press release.

According to the organization, changes in people between the ages of 40 and 50 do not affect overall pay levels, as at this stage the decline is offset by other age groups. But the phenomenon is indicative of what is happening now.

“It is not yet possible to identify clear reasons for the fluctuations in the most resilient group. Most of these consumers actually have the opportunity to cover their contributions, but forecasts of an increasingly complex economic situation and a difficult winter are forcing them to limit their costs.” Mitkova thinks. She reminds us that non-repayment will have the exact opposite effect on financial stability.

According to her, the coming difficult months unlock other patterns of consumer behavior.

The association analyzes that there are many people who spend unreasonably for goods and services that are far from being essential.

“They live on a pay-as-you-go basis and see no point in saving to be more resilient in times of inflation and rising prices. And while it is true that money is losing some of its value, the phenomenon is temporary and now is the time to be more careful about our purchases,” says Mitkova.

She advises consumers to always set aside a buffer amount sufficient to cover their costs for at least the next 3 months. However, in conditions of rising inflation, the funds set aside should be sufficient even for 6-9 months.

If we are not in good financial health, we must realize what is really important and deprive ourselves of a trip or new appliances, for example. Instead, we could set aside basic necessities, whose prices are currently rising sharply – electricity, heating and fuel, food, household goods, other basic services we use, she gives an example.

According to the association’s observations, the cost of computers and peripherals has also increased in addition to teleworking. The changes related to the pandemic are also a reason for some consumers to invest in repairs and furniture, as well as in the renovation of household appliances.

The pandemic stands out as a major factor in the reasons for non-payment cited by consumers. Over 20% of all customers cite COVID-19 and the economic consequences as a reason for delaying their contributions. Difficulties include reduced wages or redundancies due to the pandemic, limited access to a cash register or bank as a result of illness or quarantine.

In the big cities, the payment on debts is more regular compared to the smaller settlements, the data of the association also show. Burgas, Stara Zagora, and Blagoevgrad report the improvement of this indicator on an annual basis. At the same time, in Ruse, Veliko Tarnovo, and Vratsa there is a greater difficulty in repaying the installments compared to 2020. The association expects that this trend will continue, as traditionally poorer regions are the first to suffer from negative changes in the macro-environment.

“The long-term forecast of when the economy will take off is extremely difficult at the moment. However, the short-term forecast is clear – a difficult winter is coming and maintaining financial stability – from general to that of each household, depends a lot on consumer behavior and discipline,” said Mitkova.