Sofia dampens credit

SOFIA (Reuters) – Bulgaria’s central bank took new steps yesterday to slow an explosion in bank loans that the International Monetary Fund has warned could cause the EU candidate’s economy to overheat. The central bank said it had doubled minimum reserve requirements on all deposits to 8 percent and fully disallowed banks from using cash in vaults as reserves, it said in a statement. The measures will take effect on December 6. Lending from commercial banks has spiked by 50 percent since last year, driving a boom in imports that are expected to keep the current account deficit above 8 percent of gross domestic product in 2004. «Recent data show that high levels of credit growth are continuing… Lending to the private sector has grown by 40 percent on an annual basis in the last 27 months and by 50 percent since the second quarter of 2003,» the central bank said.