deputy central bank governor Dimitar Kostov said on Wednesday.
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The level of bad loans has declined gradually over the past few years, but recent reports by the International Monetary Fund and the European Commission said that they remain a problem for Bulgaria.
capital buffers and banks’ profitability meant NPLs did not pose an immediate threat to the banking system.
The guidance will aim to strengthen loan-loss provisions, boost transparency, increase NPL write-offs and encourage more realistic collateral valuation.
Non-performing exposures have fallen to 12.1 percent of all loans at the end of June, central bank data showed, down from 13.2 percent at the end of 2016. But they are still above the European Union average of about 5.5 percent.
Kostov said he expected NPLs to continue to decrease and that the central bank was strengthening its supervisory capacity to keep the lenders in check.
The economic growth for Bulgaria, which the central bank estimates at 3.6 percent for this year, will also help to reduce the level of bad loans.
The ratio of NPLs have been falling across central and eastern Europe in the past two years, a European Bank for Reconstruction and Development (EBRD) official said, and added more work has to be done to ensure sustainable resolution of bad loans.
“There is still much more to do, so we should keep momentum with improvements in areas, such as insolvency frameworks, tax regimes, supervision, and in improving restructuring skills,” said Bojan Markovic, deputy director of economics, policy and governance at EBRD.
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