The Bulgarian Development Bank has transferred 100 mln leva under the business payments shceme
40 per cent of the resources were granted to construction companies.
Bulgarian Development Bank AD (BDB) transferred almost BGN 100 mln for settlement of the government liabilities to public tenderees. As of July 1, 2010 476 applications for transfer of liabilities were submitted by 242 companies and their total amount is BGN 132 mln. This was reported during a meeting between business representatives, the Minister of Regional Development and Public Affairs Mr. Rosen Plevneliev and representatives of the Bank’s managerial staff by the Executive Director of BDB - Mr. Dimitar Dimitrov.
The subject of almost 51% of the filed applications is for performed orders in the area of construction. The applications are for BGN 57,315,212 and BGN 37,074,242 of them have already been paid off. Another 35 per cent of the filed requests are for delivery of medicines and medical equipment. BGN 23,724,943 were totally requested and BGN 20,668,273 have already been transferred to the companies’ accounts.
The majority of the applications are for settlement of liabilities from the Ministry of Defense – 229, the Ministry of Labour and Social Policy – 206, the Ministry of Regional Development and Public Affairs – 19, the Ministry of Transport, Information Technology and Communications – 9, Council of Ministers – 6, the Ministry of Interior – 4, the Ministry of Finance – 2 and the Ministry of Agriculture – 1.
The Bank is receiving about 80 applications per week but it has been reported that in the last few days the number has increased to 40 applications per day. Cessions are to be paid within 10 business days from the date when the application has been given into the Bank together with the supporting documentation. When the receivable is subject to a registered pledge and/or other burdens, the term can be extended. Payments are actually made in much shorter period – within 3 to 5 business days.
In April this year the government decided to adopt a special mechanism for settlement of receivables under tender contracts, contracts under the Beautiful Bulgaria Project as well agreement under PHARE. It is required that receivables have arisen no later than December 31, 2009 and have remained unpaid and due to March 31, 2010.
According to the agreement with the Bank, the cession price is to be formed on a discount rate of 7% per annum, calculated for the entire discount period on the nominal amount of the claim referred to in the certificate issued by the spending unit. This in fact means that all payments before July 20, 2010 have a discount period overa year long and thus their price would be over 7 per cent.
According to the Bank’s Executive Director, Mr. Dimitar Dimitrov, this 7 per cent rate is the optimum considering the price of the resource paid by BDB. BBD buys up state liabilities with both own and debt capital that are at certain price. The state will reimburse the payments made by the Bank until July 20 the next year.
BDB does not charge any additional fees and commissions apart from the standard fees for opening of a bank account and money transfer.
The Bank is not interested in the companies credit history. The only matter the Bank is concerned is whether the liabilities that are to be bought are a pledge in favour of another creditor. In these cases BDB applies different mechanism for settlement of liabilities. In most cases the Bank starts negotiations with the creditor to release the pledge against written guarantee for transfer of part or the total price of the cession to the relevant bank. Seventeen companies have already setlled their receivables under this scheme.
