Nine-tenths of the short-term loan balances at the end of 1971 were owed by state enterprises, and one-tenth was due from collective enterprises. Wholesale and retail trade accounted for 36 percent of the outstanding loans; industry and construction were each liable for 28 percent. Short-term loan balances of agriculture amounted to less than 8 percent of the total sum, and balances of the services sector constituted less than 0.2 percent. The largest part of short-term loans was granted for working capital purposes, including the procurement of farm products. A balance of almost 1 billion leva, however, was outstanding on loans for the completion of building construction, including a small amount for housing.

A very small, though increasing, volume of consumer loans for the purchase of durable goods and clothing has been granted by the State Savings Bank. The volume of such loans—36.5 million leva in 1966, 48.2 million leva in 1967, and 45.4 million leva in 1968—was equivalent to slightly more than 1 percent of retail sales in the commercial trade network. The outstanding balances of consumer loans at the end of the year rose from 49.1 million leva in 1968 to 102.1 million leva in 1971. Consumer loans may not exceed the sum of 500 leva and may be used only for the purchase of designated goods. In 1969 the authorized list included twenty-three categories. A sample survey in 1969 indicated that about two-thirds of the loan volume was used to acquire television sets, furniture, and motorcycles; another 20 percent was spent on radios, sewing machines, and scooters.

Apart from consumer loans, the State Savings Bank grants small loans to licensed private craftsmen for working capital and to collective and state farmworkers and other qualified applicants for the purchase of productive livestock, seeds, fertilizers, small tools, and other farm perquisites. The bank also makes loans for adapting premises to the needs of tourism; for current building repairs; and for meeting personal emergencies, including loans to newlyweds for the acquisition of furnishings. Depending upon the purpose of the loans, loan ceilings range from 150 to 800 leva, and maturities extend from ten months to eight years.

The volume of consumer loans was reported to have reached 116 million leva in 1972. Under the economic plan for 1973, the State Savings Bank was scheduled to make loans to individuals for the purchase of consumer goods and other needs in the amount of 203 million leva and for home construction in the amount of 180 million leva. The bank was also expected to lend 141 million leva to people's councils.

Loan funds of the State Savings Bank have been derived from personal savings deposits and, presumably, from interest payments. The bank also conducts state lotteries for the benefit of the state budget. There is no evidence as to whether the bank retains a portion of the lottery proceeds for its own operations. Savings deposits increased almost fivefold in the 1960-71 period to a level of about 3.6 billion leva—a sum equivalent to 64 percent of total retail sales or 150 percent of food sales through commercial and institutional channels in 1970. According to preliminary data, savings deposits rose by 630 million leva in 1972, and they were scheduled to increase further by 870 million leva under the economic plan for 1973. The bulk of savings deposits has been channeled into the budget.

The repayment record on loans by the State Savings Bank was excellent, at least through 1969. The proportion of delinquent loans was reduced from 3.1 percent in 1966 to 0.01 percent in 1969. This result was achieved by a regulation that provided for penalties to be imposed on paymasters throughout the economy who failed to withhold or to report to the bank monthly loan payments. According to a bank official, there had been no need to impose any penalties because the regulation itself proved to be an adequate deterrent.

The loan repayment record of enterprises, trusts, and other economic organizations has not been nearly so good and led to a tightening of credit provisions in 1971. The proportion of overdue short-term loans in the production sector increased from 10.7 percent in 1966 to 11.8 percent in 1971. Similar information on long-term loans has not been published.

The penalty interest rate on delinquent loans is 10 percent (it was 8 percent through 1970), compared to a normal range of 1 to 5 percent on loans for working capital. Whenever a bank loan or supplier credit is delinquent for more than three months and the delinquent amount exceeds 20 percent of the borrower's working capital, the borrower becomes subject to a special credit and repayment regime, the specific conditions of which are not known. The ultimate sanction is the refusal of credit and, at times, even the replacement of the trust or enterprise director. The special credit regime is also applied whenever a trust or its branch (enterprise) stockpiles unneeded inventories; procures materials for production without guaranteed outlets for the output; undertakes a construction program without adequate financial provisions; increases its obligations; or suffers a worsening of its financial condition for any other reason.

Interest costs in excess of those planned lower the economic organization's income and, under the prevailing incentives system, also reduce the funds available for the payment of wages, salaries, and bonuses. Loan delinquency and the associated penalty interest rate, therefore, often bring about the reduction or elimination of bonus payments and, in extreme cases, the withholding of a portion of regular pay. Application of the more severe sanctions entails a serious deterioration of the economic organization's finances that adversely affects its production program. Through close contact with borrowers and detailed supervision of their operations the bank endeavors to forestall delinquencies and the attendant losses to the economy. In December 1972 the Council of Ministers adopted a decision to enhance the role of the banking system in administering the economy by intensifying its participation in the formulation of economic plans and by expanding its authority in monitoring plan fulfillment.

Currency