The official reserve assets of the Bulgarian National Bank (BNB) rose by 6.6% m/m to EUR23.7bn at end-December, the central bank reported. The international reserves represented 46.5% of the forecast GDP, up by 2.9pps m/m. The reserve coverage of the imports rose m/m to 10.2x months and the reserve coverage of short-term external debt increased to 3.2x at end-December.
The significant m/m growth of the foreign reserves seemed most related to the 34.5% m/m increase of BNB liabilities towards banks, the data showed. The increase is likely due to foreign banks’ subsidiaries in Bulgaria receiving funding from their parent banks, in our view. The amount of banknotes in circulation also increased m/m.
Pre-determined reserve drains for the next twelve months were estimated at EUR534.7m, while estimated contingent liabilities were EUR114.9m for the same period.