Japan Bank for International Cooperation (JBIC) has signed a bank-to-bank loan agreement totalling up to €10mn with Encouragement Bank in Bulgaria. The loan is cofinanced with Mizuho Corporate Bank.

This loan is provided as a credit line to Encouragement Bank, the only official financial institution in Bulgaria, in order to enable it to finance medium and long-term funds for Bulgarian firms as they import machinery and equipment from Japanese exporters.

In Bulgaria, the primary market of which is the European Union (EU), domestic firms usually conduct business transactions using the euro.
The first euro-denominated credit line for Bulgaria was offered to meet such needs.

The loan is thus expected to facilitate Bulgarian firms in procuring machinery and services from Japan and to help expand Japanese exports.

Since adopting a comprehensive set of policies for financial stabilisation in July 1997 Bulgaria has posted robust economic growth of about 5% annually in a stable macroeconomic environment.

In gaining accession to the EU in 2007, the country has to comply with the EU’s environmental standards and therefore takes a strong interest in advanced Japanese technologies for modernizing industrial technology and harnessing renewable energy to reduce greenhouse gas (GHG) emissions.

It is thus expected that there will be further expansion of business transactions between Japan and Bulgaria.  JBIC pledged cooperation regarding the Kyoto Mechanisms with the government of Bulgaria in December 2004 to promote GHG emission reduction projects in Bulgaria, which is eager to press ahead with environmental business, and support for Japanese firms in acquiring GHG emission reduction credits generated from such projects.

Under these circumstances, the loan will support increased business transactions between the two countries.  JBIC is committed to further expanding Japanese firms’ activities in Bulgaria, including the area of environmental business, thereby strengthening economic relations between Japan and Bulgaria.