Petar Andronov: The tax on interest rates will not lead to an outflow of deposits

The 10% tax on the interest rate on deposits of individuals will not lead to an outflow of deposits from banks or to their transfer into accounts abroad, manager of KBC Group for Bulgaria and CEO of CIBANK Petar Andronov commented for Klassa.bg. According to Andronov, deposit interest rates in recent years have changed very significantly from the 10 percentage points in question, but this has not led to an "outflow" of deposits.

For now, it is not clear how exactly the probable additional tax will be charged in order to assess whether it will increase costs for banks, said Andronov for Klassa.bg.

According to him, if for example the interest rates on deposits of individuals decrease significantly, then depositors could, in the long term, find other alternatives for their money to a certain extent. These could be investments in gold, real estate, securities, etc. Their attraction in Bulgaria, however, at least in the short term, is low and a 10% tax cannot constitute an independent argument for an alternative solution.

The introduction of the tax on interest income from bank deposits may have some logic and may be positive in the short term but in the long term it is not a good solution, Chairman of the Supervisory Board of the Bulgarian-American Credit Bank (BACB) and its majority owner Tsvetelina Borislavova said. Borislavova commented for BNR that the budget will be filled with a certain amount, which is foreseeable for the government. This is a guaranteed revenue in the budget. On the other hand, it will not affect the economy and people's confidence in a positive manner, said Borislavova.

BNB does not expect the scheduled 10% tax on interest income from citizens' deposits to influence directly the performance of Bulgarian banks and the stability of the system as a whole, a statement by BNB read. The bank clarified that they have not been informed in advance about the government's proposal, nor have they been involved in discussions on the topic.

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