The European Commission warned Bulgaria about macroeconomic imbalances such as high corporate debt, low profitability of the banking sector and labour market woes in its report published on its website. According to the report debt of non-financial companies, although reduced in the 2010-2011 period, remains very high as a share of GDP and combined with continuously rising non-performing loans also testify to the on-going difficulties faced by the private sector in Bulgaria. Bulgaria’s banking sector has proved to be resilient during the global economic crisis but high provisioning has depressed profitability and the very low credit demand has left banks with excess liquidity on their balance sheets, the report added. The Commission sees no signs for future credit growth as a result of the highly-leveraged private sector. In response to the economic downturn, companies have chosen to cut jobs rather than to reduce wages. Bulgaria’s external indebtedness remains high, but expectations of future economic growth and current account developments suggest a gradual improvement. The country’s competitiveness on the foreign markets was supported by the sustained gains in export market shares, except over the 2009-2010 crisis period, but concerns over losses in cost-competitiveness remain, due to rapid growth in unit labour costs.