Bulgarian National Bank (BNB) Governor Ivan Iskrov told a news conference on Friday that for all countries of Southeastern Europe (SEE) the consequences of the financial crisis in the US have been limited so far and do not have a direct impact on the countries' banking systems. Iskrov was speaking after the end of the third regular meeting of governors and banking supervision leaders of the central banks in SEE.

According to him, the indirect effect is manifested in the increased price of bank financing and the expected growth of credit interest, as well as the slowdown of the countries' exports.

The effect on exports of the countries in the region is regarded as potential. It would be manifested if in countries which are main partners to the countries in the region, mostly EU countries, there is recession or a slowdown of economic growth, which would affect the export of SEE countries and, subsequently, their growth.

Until now, economic growth in Bulgaria is 7.1 per cent and it is expected to remain at this level until the year's end thanks to the good harvest, Iskrov said, adding that growth in the region is also at a very good level.

Due to the indirect effect of the crisis, the managements of the central banks in the region are unanimous that the countries of SEE should continue to follow a strict policy of fiscal consolidation and fiscal discipline and should be careful about income increase, which should take into account the increase in productivity, Iskrov said. He noted that structural reforms in the region should continue.

During the meeting it was reported that the banks in the region have clean balances. "Our banks are traditional commercial banks which operate within their countries and do not have expositions towards institutions across the Atlantic," Iskrov said. In the banks in all countries of the region there is a good increase in profit, which allows the availability of strong capitalization of the banks. Iskrov said that in Bulgaria the growth of bank profit is over 30 per cent.

The economies of SEE continue to demonstrate stability, high economic growth and sustainability in relation to the worsening global financial and economic situation, SEE central bank governors said after their meeting in Sofia, as quoted in a BNB press release.

According to the central bank governors, quoted in the press release, the consequences of the crisis on international financial markets, which began in 2007 and gained momentum over the last few months, are limited and indirect for the economies of SEE. The banks with strong presence in the region do not have direct expositions to the markets which are currently subjected to strong pressure.

The governors underscored the significance of prudent financial and economic policy in the region in view of preserving financial stability.