The Bulgarian banking system is stable, liquid and there is no danger to the deposits of individuals or companies, Prime Minister Sergei Stanishev told Parliament during Question Time on October 10 2008.

This was his second set of reassurances after a news conference on the same theme the previous day. Stanishev held the October 9 news conference against a backdrop of the Bulgarian Stock Exchange taking substantial hits along with its European counterparts, as a consquence of the global financial crisis unleashed by turbulence on Wall Street.

According to a report from Parliament by Bulgarian news agency BTA, Stanishev told Parliament that "we are not in a usual economic and financial situation globally and the crash of financial markets in many countries cannot but generate a sensitive environment in Bulgaria".

Stanishev repeated the message, given at his October 9 news conference, that the Government was prepared to guarantee deposits up to 50 000 euro.

Speaking to Bulgarian National Television (BNT), the country's Deputy Prime Minister and Foreign Minister Ivailo Kalfin said that the possible consequences of the global crisis would be a slowing down of the economies of Bulgaria's partners, and consequently, difficulties in exports and a reduction in foreign investments because of investor caution.

Finance Minister Plamen Oresharski, interviewed by BNT, said that a US-style financial crisis could not arise because Bulgaria's banking markets were not that developed and did not include features such as derivatives and speculative deals on capital markets.

Bulgarian news agency Focus quoted Bulgaria's former deputy finance minister Georgi Kadiev as saying in an interview on October 10 that Bulgaria should postpone any debate on what to do with its Budget surplus for a month to allow for further time for contemplation about what to do with it.

"I do not want to say the budget surplus distribution should be halted right now, but I fear for the range of the crisis. If the Government has to intervene in the banking system, it would need a sufficient source of funding," Kadiev told Focus.

On October 9, Stanishev told a news conference at the Cabinet office that Bulgaria's Government was monitoring financial processes with the greatest care, Bulgarian National Radio (BNR) reported.

Bank deposits of individuals were well-guaranteed, BNR quoted Stanishev as saying.

Stanishev said that the Government would propose that deposits be guaranteed up to 50 000 euro, above the current level of 20 000 euro, Stanishev said.

Stanishev told the October 9 news conference that there were no risks to Bulgarian banks.

This, Stanishev said, was a result of the deliberate policy of the Government and Bulgarian National Bank.

"There are clear guarantees for the status of Bulgarian banks and none of them has so far felt any difficulty; but we are ready to back up any financial institution if the need arises," Stanishev said.

There is no ground to fear that, as a result of the crisis, the economic growth of Bulgaria would collapse, he said.

There may be a certain slowdown but it would not be crucial, Stanishev said, saying that he continued to expect GDP growth of more than five per cent.

BNB deputy governor Roumen Simeonov told the news conference that Bulgaria's credit market had not ceased functioning and that this was the highest assurance of protection for indivuals.

The capital adequacy of Bulgaria's banks was 14.5 per cent, compared to 14 per cent in 2007, Simeonov said.

Stanishev said that the fiscal reserve was 11 000 million leva and this was an anchor of stability of the financial system and the deposits of Bulgarian citizens.

The online English-language version of Bulgarian daily Dnevnik said that the current deposit guarantee covers more than 90 per cent of Bulgarians' savings in local banks.

Stanishev pledged the state would come to the rescue of the banking system should any real trouble arise.

Bulgaria's gross domestic product rose by more than seven per cent in the half-year which, coupled with the 2.8 billion euro foreign direct investment, was a sign of confidence in the economy, Stanishev said.

"We are raising the limit for solidarity and not risk reasons, and this won't be at the expense of higher premiums in the Deposit Insurance Fund. Thus no interest rate hikes will be necessary," Oresharski said.

Dnevnik said that the Government said that it had mulled the option of deducing mortgage payments of up to 100 000 leva (about 50 000 euro) from taxable incomes and putting off the second gas price hike scheduled for January. Stanishev said that that no such measures needed to be taken at the moment.