Hampartzoumian: Bulgaria Stock Exchange Fluctuations End-2007 Came Just in Time

People | March 10, 2008, Monday // 00:00
Bulgaria: Hampartzoumian: Bulgaria Stock Exchange Fluctuations End-2007 Came Just in Time Photo by Yuliana Nikolova (Sofia Photo Agency)

Levon Hampartzoumian, UniCredit Bulbank CEO and chair of the Association of Commercial Banks, talked to DarikFinance about the recent fluctuations of the currency, commodity and stock markets, and their impact on Bulgaria's economy.



Q: The sharp fluctuations of the currency and the commodity markets were expected by the analyzers but they seem to have surprised them with the scope of the fluctuations. How expected were they for you, and what their effect will be like in Bulgaria?

A: Of course, no one could predict the scope and the duration of the crisis. Meanwhile, however, there were indications at the beginning of the last year that such events might occur. As facts, they were not surprising for the professionals. Rather, if there was anything surprising, this was the scope and the depth of the crisis, and, to a certain extent, its duration. Meanwhile, there is no direct effect upon Bulgaria, because Bulgaria is too small an economy to participate in these large-scale processes. On the other hand, the indirect effect of course could be felt. Because even though Bulgaria is a small country, it is an open economy.

Q: What does the fact that EUR 1 equals USD 1,5459, and that a barrel of petrol costs USD 106 mean for Bulgaria?

A: This shows that the dollar continues to be weak because the US Federal Reserve wants to keep it this way. At the same time, this is also good news, because Bulgaria is very dependent on energy imports, and they are denominated in US dollars. So this alleviates the situation for us to a certain extent.

Q: In other words, the rising value of the euro partly compensates the rising petrol price?

A: Partly, and the key thing here is that we should arrange our state and economy in such a way that we can produce goods and services efficiently. It should be attracting investments, it should be making the local economy efficient, and apart from this what takes place in the international markets that we cannot influence. That is why I believe we should increase our efficiency and resistibility to such shocks, and not to complain and find excuses in the events that occur independently from us.

Q: Does this refer to the fluctuations on the Bulgarian Stock Exchange in view of the global processes?

A: Yes, it is the same. I think that the events that we witnessed at the end of last year in the Bulgarian Stock Exchange paradoxically were very "timely". Because if they had taken place a year or two years later, we would have had much harsher consequences for the investors in the Stock Exchange.

Q: What has happened with the mortgage crediting since the beginning of 2008 in view of the various data that has been published?

A: If there is any change, it will have to do with the fact that we no longer work in such an optimistic environment with respect to the real estate. At the same time there is the fundamental need for growth in the real estate market, because we experience a dramatic shortage of commercial space, of modern logistic facilities, and of industrial spaces and capacities. So from this point of view, there will be growth, and there are prerequisites for growth. The thing that we are not going to witness is bad projects that bring returns to the people that came up with them and financed them. The good projects will be successful, and the unsuccessful projects will just bring losses to the people that invested their own capital as well as to the financial institutions that funded them.

Q: The other question that is of interest for credit recipients, and people with have deposits, concerns the interest rates. What is your forecast about them?

A: Currently we are in a phase in which the interest increases have a tendency for growth. The interest base depends on the processes in the global economy. Depending on whether the respective regulator wants to be pro-, or anti-inflation, or whether it is trying to prevent some sort of recession, as in the USA, the base can go in one direction or the other. This is the interest base. There are too many prerequisites which make us think that the interest increases will stabilize or will go higher slightly.

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