불가리아 주요 경제뉴스(11 - 18 JANUARY 2008)

BULGARIAN ECONOMIC TOP NEWS DIGEST

WEEKLY REPORT (11 - 18 JANUARY 2008)

 

 

Sections/headline briefs:

 

MACROECONOMY:

 

·        Commercial attaches to protect Bulgaria's business abroad

·        New agency to encourage Bulgarian exports

·        Bulgarian export faces big change

·        Bulgaria to restrict temporarily the electricity export

·        Bulgaria and Russia will sign a nearly �4 B deal for new NPP Belene

·        Bulgarian MEPs seek compensations for NPP Kozloduy

·        Burgas-Alexandroupolis is not among Brussels' priorities

·        USA: Don't Give Your Pipelines

·        USA: South Stream gas line is too expensive for Bulgaria

·        Oil supplies for Burgas-Alexandroupolis pipeline to be contracted by Junе 2008

·        New container port terminal construction in Varna to start by end 2008

·        Chinese delegation on offical visit to Bulgaria

·        Russia - Bulgaria trade turnover is worth USD 400 M

·        244,000 new vehicles sold in Bulgaria in the past ten years

·        Bulgaria new vehicle sales up in 2007

·        Used car import doubled in 2007

·        WB to approve � 88.3M infrastructure loan

·        1.1% inflation for December

·        Record-breaking price hike of 12,5% in Bulgaria

·        Bulgaria finalises Trakia Highway deal

·        Transport Ministry plans modernisation and expansion of Plovdiv airport

·        45% of Bulgarians smoke cigarettes

·        Reuters: EU to allow poorest members to raise CO2 emissions

·        Highest salaries paid in IT, marketing sectors

·        Agro sector rumored to gain extreme popularity

 

 

 

INVESTMENTS:

 

·        Austria's Voestalpine mulls �5 bln investment in Bulgaria

·        British to built center for steel profiles in Bulgaria

·        Economy minister gives press conference about Belene NPP

·        Bulgaria among most attractive for foreign chains' investments

·        New Expo complex to be Built in Sofia

·        Parliament expands investment opportunities of pension funds

·        �45 M to be invested in Collieries 'Maritsa-Iztok'

·        Spanish to build housing estate near NP 'Strandja'

·        Advance Equity to invest �18.6M in clean energy this year

·        Emka co to invest �2 M in new machinery

 

 

COMPANIES:

 

• Kia Motors opens Gabrovo dealership

·        English companies want Kozloduy nuke

·        Companies bid for the right to pollute

·        Greek companies aspire after motorways and pipelines

·        Ten candidates for completing Sofia subway extension

·        Mittal wants � 500 M for Kremikovtsi

·        Kremikovtzi Needs Additional Investments of at Least �120 – 140 M

·        Kremikovtzi management says steel mill sale reports are manipulation of public opinion

·        BSE-Sofia loses a Billion in a day

 

 

ANALYSIS:

 

·        Asian tigers lag behind Eastern Europe

·        Bulgaria's economic freedom

·        UniCredit: Bulgaria escapes the crisis

 

 

 

 

 

 

 

 

 

 

 

 

Articles:

 

 

MACROECONOMY:

 

Commercial attaches to protect Bulgaria's business abroad

Bulgaria's private business will finally have representatives abroad, The Standart was told. This will become possible with the launching of a new export agency."The agency is to start working by the end of the year," said Yavor Kuyumdzhiev, Deputy Minister of Economy and Energy."To some extend, the duties of the agency's officials will overlap with those of Bulgaria's commercial attaches, however, they will mostly cater for the interests of our private business abroad," Deputy Minister Kuyumdzhiev added.
Currently, Bulgarian private firms abroad are often left without information about the tendencies on the foreign markets and without representatives on these markets. The Bulgarian firms that trade internationally now use our commercial offices in Vienna, Barcelona and Brussels, but the resources of these offices are barely enough to represent Bulgaria's business abroad.  It is still unclear whether the new agency will be state-run, private or public-private." The Export Insurance Agency will continue its work in the future," Kuyumdzhiev said.There is an idea for the establishment of an export credit bank, based on the now functioning Encouragement Bank, experts said.Yesterday, Minister Kuyumdzhiev presented Bulgaria's export program until 2013, according to which the Government will highlight three or five priority sectors of the economy, into which serious investments should be drawn. "Thus, in five years Bulgaria is expected to have a positive trade balance of US $10 billion," Kuyumdzhiev said.Over the first ten months of last year, Bulgaria's export rate went up by nine percent and the export - by eighteen percent. This led to a negative trade balance for the period of 5.4 billion euro. The direct foreign investments during the same period grossed 5.6 billion euro.

New agency to encourage Bulgarian exports

A new export promotion agency could be set up by the end of 2008 if the local business community and the economy ministry come to an agreement on a package of incentives, deputy economy minister Yavor Kuyumdjiev said on Monday. According to the government official, Bulgaria will take cue form the Czech Republic which managed to reverse a 6 bln euro trade deficit in 1997 and move into a 5 bln euro trade surplus at present. Kuyumdjiev said the lynch-pin of the Czech success story was a selective system of investment incentives that targeted profitable sectors of the economy. The Bulgarian experts will also zero down on 6-7 profitable industries whose accelerated development would generate export demand for their output. The creation of industrial parks will be encouraged in an attempt to lure fresh investment in industrial manufacture, said Kuyumdjiev. At this point, the economy ministry refused to specify the countries that will be in the focus of Bulgarian exporters. These will likely be either countries with which Bulgaria is running up a trade surplus or countries that offer opportunities for a boost in exchange trade.

 

Bulgarian export faces big change

Bulgarian Ministry of Economy suggests a Conception for export policy of Bulgaria until 2013. ‘Vision 2013' foresees: selective support by export orientated investors; active going out of Bulgarian Agency for Investments into the foreign market; improvement of local business - climate; marketing support in export actions.It is also planned the establishment of an Export Agency. The Ministry expects to be applied additional measures for encouraging of the export and directly pro-export actions of politicians.The realization of ‘Vision 2013' will lead to solid positive change of Bulgaria's trade balance.For the last 10 months local export policy is walking in negative direction with 5,4 billion EUR, in spite of the export's growth of 9%. The import increase is much bigger - 15%.There are two ways for a change - one is focusing over cheap goods, but this is unacceptable due to the strong east competitiveness, commented deputy Economy Minister Yavor Kuyumdjiev.The other way is producing goods with added value and the strategy offers exactly this idea based on analysis.Priority markets and sectors are expected to be determined.In elaborating of the export conception was used the experience of countries like the Czech republic, Costa Rica, Guatemala and others.

Bulgaria to restrict temporarily the electricity export

The export of electricity will be temporarily restricted, so can be covered the needs of the internal market, stated Bulgaria's Minister of Economy and Energetic Peter Dimitrov. The Minister informed that he already issued the order, after getting aware that this is in his rights and after receiving a statement by the State Commission for Energy and Water Regulation that in extreme situations the state could limits the electricity export.For the moment there is no threat for the stability of Bulgaria's energy system.I am acting more cautious, stated Peter Dimitrov, adding that the restriction will enter in force on March 31.The reasons for imposing the limit are two. The first one is the high communal consumption - now it is with 20% more compared to the same period last year. The second reason is a consequence from the first one, which lays activation of the ‘cold reserve' (reserve power).

Bulgaria and Russia will sign a nearly �4 billion ($5.95 billion) deal for new NPP Belene

Economy and Energy Minister Peter Dimitrov said construction of the plant at Belene, some 250 kilometers (155 miles) northeast of Sofia, would start in the second half of this year. He said the two 1000-megawatt reactors are expected to come into operation by 2014.The Belene project is considered an important test as other central and eastern European countries consider plans to build new nuclear plants or to rebuild old ones from the Communist era.The �3.99 billion ($5.94 billion) deal will be signed Friday with officials from Russia's Atomstroyexport, during a visit to Sofia, Bulgaria's capital, by Russian President Vladimir Putin, Dimitrov said.Atomstroyexport will by the main contractor, with France's Areva and Germany's Siemens as primary subcontractors.Bulgaria already operates a nuclear plant at Kozlodui, two of whose aging Russian reactors were closed down in 2006 because of security concerns. Malfunctions at the remaining two units have prompted emergency shutdowns twice in the past six months, but no radioactivity is said to have leaked.Belene Enterprise CEO Yordan Georgiev said Belene would be "the best European project in terms of safety."Compared to the VVER 1000 Russian reactors at Kozlodui, the two AES92 reactors in Belene will include advanced safety systems and comply with EU standards.Estimates by Bulgaria's state-owned NEK electricity company put the cost of the electricity to be generated by the new plant at �0.036-0.037 per kilowatt-hour."The opportunity to generate cheap electricity is in accordance with Bulgaria's economic interests," said Dimitrov. "The electricity deficit in the region is expected to reach 50 percent in coming years.""It is in Bulgaria's interests to ensure that the region has enough electricity and develops well economically," said Dimitrov.NEK is selling up to a 49 percent stake in the Belene Power Company, which will own and operate the facility. NEK is expected to select shortly a strategic investor among five shortlisted companies - Belgium's Electrabel SA, Italy's Enel SpA, E.ON AG and RWE AG from Germany and CEZ a.s. from the Czech Republic.Bulgaria's government invested more than US$1 billion (�670 million) in Belene, but froze the project in 1990 after environmentalists said it could pose a safety risk.The project was revived to compensate for the closure of the two units at Kozlodui, which Bulgaria agreed to shut ahead of its entry into the European Union last year.

Bulgarian MEPs seek compensations for NPP Kozloduy

Atanas Paparizov from the Group of the Party of the European Socialists in the European Parliament proposed yesterday that the Bulgarian MEPs should claim compensations for the decommissioning of NPP Kozloduy's power units 3 and 4 during the plenary session dedicated to the EU budget for the next year. He expressed a hope that this would become a priority issue for all Bulgarian MEPs. All four our MEPs regard the reaching of a solution of the nurses' case and the adoption of the Cyrillic spelling of the common European currency, Euro, as the most important achievements for 2007. Another assets, for which our MEPs from the European People's Party-European Democrats can take merit, are Bulgaria's active participation in the debate about the Black Sea Region, the consolidation of our stand on the Trakia Highway deal and, on the whole, the active participation of our MEPs in the work of the European Parliament.This year they will focus their attention on energy issues and the efficient absorption of EU funds through the development of appropriate training programs.

Burgas-Alexandroupolis is not among Brussels' priorities

The Burgas-Alexandroupolis oil pipeline is not among the priorities of the EU. This becomes clear from the report on the Black Sea Regional Policy that will be voted in the European Parliament the next week. The report determines the role of the EU in the building of new infrastructure and reliable transport corridors that will allow to expand the network of crude supply routes through the Caspian Sea and the Black Sea. Among the EU priority energy projects are the Nabucco gas pipeline and the oil pipelines Constanta-Trieste and AMBO, but not Bugras-Alexandroupolis.Analysts say this means that Bulgaria, although a member of the EU, is still highly dependent on the Kremlin when it comes to energy supply and Burgas-Alexandroupolis project is a noose Russia tightens around the neck of the EU.

USA: Don't Give Your Pipelines

A couple of days before the Russian president Vladimir Putin's visit in Sofia, U.S. Ambassador to Bulgaria John Beyrle came out with a statement in support of Bulgaria's demands for a majority stake in the company that will control South Stream gas pipeline on local territory, the Dnevnik daily reported. The intergovernmental agreement for South Stream project is expected to be signed during Putin's visit. Bulgarian officials are acting in the best interest of Bulgaria and also are looking to guarantee compensation if the necessary gas supplies cannot be contracted, Ambassador Beyrle stated in front of Dnevnik. Sources of the daily described the situation as 'delicate'.Russia, in contrast to the Bulgarian position is in command of the International Project Company that will build Burgas-Alexandroupolis oil pipeline with 51% shareholding and 24.5% for Greece and Bulgaria.

USA: South Stream gas line is too expensive for Bulgaria

It should be looking for alternative routes for transporting of natural gas to Europe. However SouthStream gas line is too expensive, USA deputy secretary of state Matthew Brise stated for an interview for SeeNews, the Dnevnik reported.This is the first time a project with such measures is about to be completed. It will cost between $15 and 30 billion, which makes the transit and the price of the gas too high gives as an example Nabucco project estimated to $5 billion.He believes that is better for Bulgaria to invest in gas pipelines like Nabucco, which transport gas by alternative routes, rounding Russia.According to the US's deputy secretary of state, Bulgaria has all necessary technical qualities to be included in the project for constructing a gas pipeline from Turkey to Italy. The project is in its building sites in the moment and will pass through Greece.South Stream will costs round three times more than the Blue Stream, which is already functioning, because the gas is very important to Turkey, Brise stated.The total price of Blue Stream is round $3,2 billion.According to Matthew Brise Europe's main purpose is to be energy independent from Russia. Attempts for supply of natural gas by alternative routes like Azerbaijan and Turkmenistan should continue.

 

Oil supplies for Burgas-Alexandroupolis pipeline to be contracted by Junе 2008

By June this year, Russia's Transneft should present to the shareholders in the company that will build the Burgas-Alexandroupolis pipeline the contracts with the oil companies that will provide the supplies for the operation of the facility. An agreement to this was reportedly reached at a meeting last week between the companies specially set up to represent each of the three participant countries: Burgas-Alexandroupolis Bulgaria, Pipeline Consortium of Russia and Greece's Hellenic Petroleum and DEP Thraki. The officials from the three companies also approved the company agreement for the creation of the International Project Company (IPC) that is expected to be signed during Russian president Vladimir Putin's January 17-18 visit to Bulgaria. 'The agreement that has been initialed paves the way for the project's implementation, in particular, for technical surveys and the solution of financial issues related to the construction of the oil pipeline,' a source close to the negotiations was quoted as saying by Russian English-language news outlet RIA Novosti. Under the trilateral intergovernmental agreement signed in 2007, Transneft will act as project co-ordinator and will be in charge of securing the necessary oil supplies. Russia has 51% of the pipeline while Greece and Bulgaria share the remaining 49%. The IPC agreement also requires that the Russian corporations guarantee the oil volumes necessary to raise project funding or 18-20 mln tons annually (half of the pipeline capacity). With that capacity in place, the banks will have sufficient grounds to release financing for the project. The Burgas-Alexandroupolis pipeline will carry Russian oil via the Bulgarian Black Sea port of Burgas and Greece's Alexandroupolis on the Aegean. Once completed, the pipeline will pump 35 mln metric tons of oil a year, a volume that could eventually be increased to 50 mln metric tons. The European parliament is expected to approve later this week a report on regional Black Sea policy and its priority projects laying on the energy corridor from the Caspian to the Black Sea. The Burgas-Alexandroupolis pipeline, however, is not among the priority projects. The roster comprises the Nabucco gas pipeline and the Burgas-Vlore and Constanta-Triest oil pipelines.

New container port terminal construction in Varna to start by end 2008

The Japan Bank for International Co-operation (JBIC) will take a final decision on the disbursement of funding for containerised cargo terminals at Bulgarian Black Sea ports Varna and Burgas by the end of March 2008, Varna municipal council chairman Borislav Gutsanov said on Tuesday. The JBIC feasibility studies indicate that the projects will absorb around 214 mln euro. The bulk will be spent on the Burgas terminal with up to 90 mln euro going for the Varna terminal, said Gutsanov. The Varna terminal will be built on a 15.7 ha site on the banks of the Varna lake. If the JBIC funding is made available, the construction of the Varna terminal will begin by the end of 2008, said the municipal official. In related news, Gutsanov said the 15.4 ha of land in the area of the Varna-East port vacated when the cargo terminal project was moved to the Varna lake will be developed into an amusement park. The amusement park project will be managed by a joint venture created by the Varna municipality (35%), the transport ministry (35%) and private companies. The park will comprise a yacht marina, passenger terminal and hotel facilities. The memorandum on the joint participation in the project of all three parties should be signed by the end of January.

Chinese delegation on offical visit to Bulgaria

Bulgaria’s Deputy Prime Minister and Minister of Foreign Affairs Ivaylo Kalfin will receive today a Chinese delegation led by the Hua Jianmin, Secretary-General of China's State council, informed BTA.The two officials are expected to make a general overview of the development of the bilateral relations during the meeting.Yesterday, Hua Jianmin met Bulgarian Prime Minister Sergei Stanishev. The both pledged to strengthen bilateral ties.Stanishev claimed that the Bulgarian government adheres to the one-China policy and opposes the "Taiwan Independence" and the "UN membership referendum." on his side, Hua pointed out that the Chinese government attached great importance to the development of the Sino-Bulgarian relations and would continue to deepen the mutual understanding and promote the bilateral friendship and cooperation to push forward the development of bilateral ties.

Russia - Bulgaria trade turnover is worth USD 400 M

It is expected that during the visit of President Putin the issue of the Russian debt to Bulgaria will be finally resolved. Moscow is inclined to pay in cash about 15-20 million USD, well-informed sources told The Standart. According to them, the sum is insignificant for the Russians. Economy and power engineering will be the top agenda during the visit, said Minister of Foreign Affairs Ivailo Kalfin on the bTV private commercial channel yesterday."The lions share of foreign trade deficit of Bulgaria has a direct bearing on our trade relations with Russia and we have to seek all possible options to mend this situation," Bulgaria's No.1 Diplomat added. Kalfin also reminded that Bulgaria is now a member of NATO and EC, so everything we would negotiate with Russia is bound by the restrictions connected with our membership in these two alliances.Putin's visit is expected to shed light on the opening of a new ferry line, which is of crucial importance for the Bulgarian business and will let us boost exports. Currently Bulgaria is using only one air link that serves Bulgarian Russian commodities turnover. In 2006, Bulgaria exported to Russia goods worth slightly over USD 200 million, while in 2007 it has almost doubled reaching USD 400 million. The Foreign Minister hopes that in the near future the Bulgarian companies will have an easier access to the Russian markets. Within a week or two the negotiations on the construction of the Belene Nuke will be completed. He also expects to finalize the talks on the Russo-Italian gas pipe project South Stream.Kalfin is assured that the energy sector of Bulgaria would hardly change after the new agreements with Moscow. According to him, Bulgaria has no energy parity with Russia and is highly dependent on its power supplies.The most debatable issue on the agenda is, however, the Bourgas Alexandroupolis oil pipe project. If the International Project Company that will run the construction of the pipeline is approved, tourism sector in Bulgaria may suffer severe losses or be totally ruined. The Bay of Bourgas faces a high risk on an environmental disaster, environmentalists maintain. 

 

244,000 new vehicles sold in Bulgaria in the past ten years

A total of 243,697 new vehicles were sold in Bulgaria between 1998-2007, the national Union of Automobile Importers said. Sales hit the record 55,336 last year, of which 52,009 (93.99%) new cars. The year-on-year hike is by more than 10,000 units, or 22.15%. Last year was the ninth in a row, in which sales of new vehicles rose. The highest increases were recorded in 2004 (49.7%) and in 2005 (35.5%). Toyota continued to be the most popular brand in Bulgaria last year with a market share of 11.18%, followed by Peugeut, Ford and Opel, which hold more than 8% of the market each. Peugeut, Piaggio and Yamaha are the leaders on the market of motorcycles, while Mercedes, Iveco, and Man are the top 3 brands among buses.

 

Year	Number of Vehicles Sold
1998	12362
1999	11958
2000	13069
2001	13365
2002	14361
2003	17220
2004	25786
2005	34940
2006	45300
2007	55336
Total	243697

 

 

Bulgaria new vehicle sales up in 2007

Bulgarian sales of new motor vehicles rose 22.15% year-on-year to 55,336 units in 2007, up from 45,300 units in 2006, shows data of the Union of Automobile Importers. Truck sales increased by just over 28% year-on-year while automobile sales added 22%. Automobiles and light trucks accounted for 52,000 of total sales. Compact city cars and mid-size models generated 44.2% of overall auto sales. Small and mid-size vans generated a further 21% of sales while all-wheel-drives contributed 16.6%. The Dacia Logan Sedan is the nation's top-selling car model for 2007 with 2,529 units.Sofia France Auto is relegated from no.1 in 2006 to no.3 last year, slipping behind Toyota Balkans and runner-up Ford. The Bulgarian market for new motor vehicles is among the EU's pace-setters, according to preliminary data of European Automobile Manufacturers' Association. January-November data ranks Bulgaria as the fifth fastest-growing market behind Lithuania (45.7%), Latvia (32.6%), Romania (26.2%) and Poland (22.8%). However, in terms of volume, Bulgaria still lags considerably other EU states with similar population. In Austria and Sweden, for instance, the dealers moved over 270,000 units in January-November 2007 while Portugal recorded 186,563 sales.

Used car import doubled in 2007

The import of used cars grew much faster than the import of new cars in 2007.Import of used cars doubled on-the-year to 349 000 units, registration data from the road police showed.Used cars make up for about 85 per cent of the total import of cars in Bulgaria, Intellinews said.The association of automobile dealers had reported that import of new vehicles in 2007 grew by 22 per cent to 62 000 units, of which 52 000 were registered as passenger cars, Intellinews said.

WB to approve � 88.3M infrastructure loan

The WB is expected to approve a EUR 88.3mn loan for municipal infrastructure development by end-May, the regional ministry announced. The project is estimated at EUR 117mn (VAT included), 75.5% of which would be financed by the WB. The state co-financing will amount to 18.2mn. The six participating water management companies in Dobrich, Razgrad, Sliven , Smolian, Stara Zagora and Targovishte have to provide additional EUR 12.5mn. A memorandum for understanding has been already signed by the state and the water companies while field works are to start by the end of this year.

1.1% inflation for December

Inflation for December 2007 is 1.1%, announced from National Statistic Institute (NSI). Average increase of customer's prices from the beginning of the year to December 2007 is 12.5%.Inflation for the same period compared to the period January-December 2006 is 8.4%.In December the prices of food and drinks have raised with 1.9% compared to November, transport prices raised with1.3%, hotels and restaurants with 1.3%, housing expends (rents, repairs, electricity and water supplies) with 0.6%.

 

 

Record-breaking price hike of 12,5% in Bulgaria

A record-breaking price hike has eaten away the bank savings of the Bulgarian nationals; the prices in Bulgaria increased by 12,5% in 2007. This have been the highest inflation rates registered in Bulgaria since the crisis in 1997. The price of sunflower-oil increased by 78%, the cost of cheese - by 45%, this of bread - by 43%. In budget 2007, the cabinet envisaged four-time lower inflation - 3.1%.The bank savings' interest which is only 5-6% has been swallowed by the high prices. This means that in 2007, the Bulgarians with bank deposits lost 6 levs out of every 100 levs. The inflation in 2007 ate away the interests on the money invested in universal private pension funds, too.According to the Financial Supervision Commission, the profit from these funds in 2007 amounted to 9.56% up to 16,06%. only those who have invested their savings in shares on the stock-exchange haven't suffered any losses as a result of the price increase.Despite the fall of the stock-exchange indices in the last two months of 2007, the profit from the mutual funds varies from 6% up to 80%.

Bulgaria finalises Trakia Highway deal

Bulgaria and a Portuguese consortium have finalised the concession of Trakia highway after years of legal and political quarrels, Bulgaria's Ministry of Transport announced. The deal on the amount of 715 million EUR was granted without a tender by Bulgaria's previous cabinet in 2005 to the Portuguese companies MSF, Somague and Lena Engenharia e Construcoes.Since then their Bulgarian partners has been blocked. The new conditions promise to keep the price unchanged but will scrap state aid and oblige the investors to take the construction risk. Under the 30-year deal, the consortium is about to build and upgrade a 443 km highway from Sofia to the Black Sea city of Burgas.The highway should be ready in three years.

Transport Ministry plans modernisation and expansion of Plovdiv airport

Bulgarian Government decided to transfer the decommissioned Krumovo airport near Plovdiv from the Defence Ministry to the Transport Ministry, Dnevnik a.m. reported. The transferred assets include the runway, taxiways and other properties in the area. The transfer makes possible the modernisation and expansion of Plovdiv airport.The Transport Ministry foresees to allocate 5,4 million BGN (2,7 million EUR) from the 2008 - 2009 budgets for the construction of a new runway and a new taxiway. The Dnevnik also reports data of the Transport Ministry that shows passenger traffic via Plovdiv airport has tripled over the past couple of years. Plovdiv airport which is the back-up landing site of the Sofia Airport made a profit of 159,000 BGN (80,000 EUR) in 2007. The daily remind also that major auctioneer of the airport is Alfa Finance Holding with 58% stake. Local government now should agree with the private investor for the development strategy of the airport.

45% of Bulgarians smoke cigarettes

Almost 45% of Bulgarians smoke cigarettes, says preliminary data of national research, leaded in November 2007. Last similar inquiry was hold in 2001and the data from it is quite bothering, said in front of Darik Masha Gavrilova, director of department ‘Protection of public health' in the Health Ministry.Gavrilova is anxious about the increase of the number of women smokers - from 30 to 32% in a period of 5 years.Twenty years ago only 16% of Bulgarian ladies were smoking cigarettes.By the end of 2007, 46% of men smoke. The poll shows that Bulgarian men who live in villages smoke more that the ‘city men'.In the other European countries the smokers are round 25-30% of the population.

 

Reuters: EU to allow poorest members to raise CO2 emissions

The European Commission will propose allowing the poorest new central European member states to increase greenhouse gas emissions by up to 20 percent by 2020 over 2005 levels under a major energy and climate change plan to be unveiled next week, EU sources were quoted as saying by news agency Reuters on Monday. The sources said the 15 old member states would bear the brunt of cuts required to meet the 27-nation European Union's goal of an overall reduction of 20% by 2020 from 1990 levels, with national targets set according to GDP per capita. A draft document from the EU executive says the effort - the Commission has excised the term 'burden', should be shared 'based on the principle of solidarity among member states'. Under the proposals, which could still be changed before the January 23 announcement, the richest old member states will have to cut emissions of carbon dioxide (CO2), the main gas blamed for global warming, by up to 20% from 2005 levels. The sources said Romania and Bulgaria, the poorest newcomers who joined in January 2007, would be given the most leeway to increase their CO2 output since they had the greatest need to catch up in economic development. Luxembourg and Ireland were among the countries that would be expected to make the deepest cuts. An EU official said 2005 was set as the reference year because it was the first and only year for which the EU had full data on actual emissions by installations covered by the EU's Emissions Trading System. Half of the overall cut would come from sectors covered by the trading scheme, including power generation, refineries and heavy industries, while the other half would have to be achieved by a mixture of increased renewable energy use and reduced emissions from buildings and transport.

Highest salaries paid in IT, marketing sectors

The salaries for certain occupations and positions in Bulgaria have reached those in the European Union already. Information technologies and marketing are closest to the European levels, consultancy firm JobTiger said. A marketing director at a big company in Bulgaria receives between BGN 6,000 (EUR 3,000) and BGN 20,000 (EUR 10,000). In the IT sector, the starting salary for unexperienced staff is about BGN 1,000 a month; the pay rises to BGN 1,500 in six months. The highest average wage is paid in Sofia: it already exceeds BGN 700 a month, JobTiger's data show. Sofia capital is followed by Varna, where the average wage is about BGN 600.

Agro sector rumored to gain extreme popularity

The agro sector will be an absolute hit in the years to come, bringing in lots of profits, as UniCredit Group predicts in one of its latest reports on Bulgaria. Among the other economic spearheads to take the lead in the next couple of years are businesses like construction, cement production, as well as industries like metals, electricity, optic tools and woodworking, the bank group’s paper suggests.According to the survey Bulgaria will be doing well in the near future with 2.9% and 2.7% growth rate in 2008 and 2009, as the country will remain in the spotlights of foreign investors.

INVESTMENTS:

 

 

Austria's Voestalpine mulls �5 bln investment in Bulgaria

Senior executives from Austrian steel maker Voestalpine Tuesday met with Bulgarian prime minister Sergei Stanishev and economy minister Petar Dimitrov to present an investment program that may lead to the construction here of a new 5 bln euro plant. The Austrian corporation is still considering the opportunities to implement the project in Bulgaria, said the government press office. In November 2007, Voestalpine announced plans for investment in the Black Sea region and said it was sounding out the business they expect government backing if Bulgaria is chosen for the location of the new plant. The project is part of voestalpine's plans to double production through 2013.

British to built center for steel profiles in Bulgaria

British Corus Distribution & Building Systems signed an agreement for joint venture with Bulgarian company ‘Horizont-Ivanov' for construction of new center for steel profiles in Pleven (Central Northern Bulgaria). The company aims to extend its action over Bulgarian building materials market and the ones of the neighbor countries.The British chose exactly ‘Horizont-Ivanov' company because of its good market positions and reach experience in the branch.It is expected Corus to start their trade action in the second half of 2008. They will produce standard and trapezium-shaped profiles, isolations for roofs and walls.Corus is the second in extend steel producer in Europe with incomes of over 10 billion pounds and production of more than 20 million tones per year.

Economy minister gives press conference about Belene NPP

I believe the agreement on building Belene NPP will be signed on January 18th during the Russian President Vladimir Putin’s visit to Bulgaria, Bulgarian Minister of Economy and Energy Petar Dimitrov said at a press conference, cited by Focus News Agency.
Minister Dimitrov reiterated that the agreement concerns the project, supply and construction of two units in the NPP. The investment amounts to EUR 4 billion. The planned prime cost of electricity will be EUR 0,3.6-0,3.7 per KWh.

Bulgaria among most attractive for foreign chains' investments

Bulgaria is on forth position among most attractive locations for foreign trade chains, shows International Retailers Survey for 2007, done by the International real estate consult company Cushman&Wakefield, announces money.bg. The ranking is leaded by Russia and United Arab Emirates. After Bulgaria come Slovenia and Hungary.The research is worked out by questioning managers, responsible for entering new markets of 250 trade companies in 23 European countries.The focus is placed over analyzers' opinions about expansion plans and business developing abroad.In the ranking for most attractive cities, those from Central and Eastern Europe are majority. Moscow is leading, Saint Petersburg and Prague follow. The only Western European city, got into the first 10 is Amsterdam, which divides the 10^th position with Kiev.   

 

New Expo complex to be Built in Sofia

New Expo complex, costing about 200 million EUR, is planned to be built in Sofia,announced money.bg The investment intentions preview the complex to be built on boulevard ‘Lomsko Shose', in front of ‘Obelia 2' district.The expo center will include exposition buildings, multifunctional sport hall for 18,000 people, hotel, offices, congress areas, outlet shop, public places and parking. The building terrain is about 10 hectares.The project is on starting level and revisions are leaded at the moment with German, Russian and Arabic investors to finance the construction.

Parliament expands investment opportunities of pension funds

 

The parliament has approved changes to the regulation allowing broader opportunities for investments of local pension funds. The amendments, which have been published in the country’s official journal, adds Croatia and Macedonia to the list of countries where local pension funds could invest. The market has been already opened for the EU economic area. At present, pension funds have been required to allocate funds to deposits in banks, which hold long term-credit rating of Ba2 assigned by Moody’s or BB assigned by S&P and Fitch. With the latest adjustments, the state financial commission should publish a list with admissible credit rating agencies and minimal credit rating levels corresponding to Moody’s Baa3 or BBB- of S&P and Fitch. The eight pension insurance companies operating on the local market achieved double-digit return rates for all funds with voluntary savings for last year and for most of the mandatory (second-pillar) instruments. The state financial supervision commission reported weighted average annual return rates of 11.96% of professional funds, 11.29% for universal pension funds and 11.67% for voluntary pension insurers for the 24-month period ending in December 2007.

�45 M to be invested in Collieries 'Maritsa-Iztok'

91 million BGN (45 million EUR) will be invested in the three opened collieries of TPP complex ‘Maritsa-Iztok' during the next year. That was announced by the TPP association's executive director Ivan Markov.The investments are in conformity with the planned increasing of the coal output.The larger output is required because of the exploitation start of the 4^th Thermo - electric Power Plant of the complex, which is built near Gulabovo.Much more brown coal will be needed for finalizing the rehabilitation of TPP ‘Maritsa-Iztok' 2 and 3, added Markov.Only the biggest to the moment TPP in the complex-‘Maritsa-Iztok 2' remained state property among electricity producers in the region.

Spanish to build housing estate near NP 'Strandja'

Spanish company Iberdrola Inmobiliaria,  have bought a terrain in Tsarevo area (South Black sea coast) for 44,6 million EUR, announce money.bg. The company's activities are directed towards investments in housing estates, offices, industrial zones and trade objects.The lands are in immediate proximity of National Park ‘Strandja', and are located on 800 meters from the beach strip.According to the company's investment intentions the new tourist complex will have 2,500 apartments and will cover 240,000 square meters. The complex will include also trade zones, sport zones and beach club.Bulgaria is the third country, which Iberdrola Inmobiliaria invests in, after Mexico and Portugal.Tsarevo project is the biggest international investment of the company to the moment.

Advance Equity to invest �18.6M in clean energy this year

The Bulgarian-owned private equity fund Advance Equity Holding, which is part of the local financial group Karoll, is planning to invest EUR 18.6mn in the construction of solar and wind power generators by the end of this year. The project will be run by Energy Invest, part of the holding. The wind park of capacity 12 MW will be installed in the northern Black Sea municipalities of Kavarna and Balchik. It is expected to cost more than EUR 15mn and should be ready by the end of the year. The solar installation with capacity 882 KW would cost more than EUR 3mn. It will be located in the southern town of Ihtiman , some 50 kilometres away from the capital of Sofia . The facility should be operational at the beginning of the summer. Energy Invest operates already 2.4 MW wind mill in Kavarna.

Emka co to invest �2 M in new machinery

The management of Sevlievo-based cable maker Emka has approved an 11% increase in production for '08, the company said in a filing with the Bulgarian stock exchange. Over the next 2 years, investment spending - estimated at 2 mln euro, will focus on the purchase of new equipment. Emka raised its capital a couple of months ago from 1.8 mln to 5.376 mln levs, tapping into company reserves and retained earnings.

 

COMPANIES:

 

 

Kia Motors opens Gabrovo dealership

Veko Oil, the Gabrovo area dealer of Kia Bulgaria, has opened a new dealership at a cost of 1.4 mln levs. The launch of the 1,000 sq m dealership has created 15 jobs. The other auto brands with dealers in the Gabrovo area are Citroen, Ford and Toyota. Kia Bulgaria sold 1,078 units in '07, up 15% y/y.

English companies want Kozloduy nuke

Energy giants from UK and Canada have showed keen interest in renting  the decommissioned third and fourth units of Kozloduy NPP, said Bulgaria's Prime Minister Sergey Stanishev. He explained that this was one of the variants for Bulgaria to re-start the units. The foreign companies  have already made their offers for renting the units. Their names are still kept secret. If the units start functioning again, the profit will be shared between Bulgaria and the lessee, the PM said. The task of re-opening the units will be priority entirely for the foreign companies. According to unofficial information of the Standart, two of the potential tenants are the British BMFL and the Canadian AECL.
 For a year only since the units were stopped, each with the capacity of 440 MW, Bulgaria has lost about 6.5 billion kWh or at least 500 million levs.

 

 

Companies bid for the right to pollute

The EC has prepared a document proposing to the EU that licensees for polluting the atmosphere be auctioned, reported AFP. Another document is being prepared that would allow companies, which are big energy consumers, to buy and sell CO2 emissions quotas. This new system will cover other sectors of industry, such as the air transport.
 On January 23 the European Commission will announce the formula by which the institution sets up its Greenhouse Gases Emission scheme between the 27 EU countries. The scheme targets a 20-percent reduction of gases, which cause the greenhouse effect, in 1990-2020.  Countries, which do not meet the EC requirements will pay billions-worth penalties. That is why, every EU-member country is careful not to take commitments that are difficult to meet.In December last year, Bulgaria's Ministry of Environment and Water Issues held negotiations with EC representatives, concerning the amount of gases, which Bulgaria can release in the atmosphere as set in 2008 - 2012 national plan. According to AFP report, the poorest EU countries ( the new EU member-countries) will be allowed to increase the greenhouse gases emissions, depending on their economic growth. The wealthier countries in the EU will have to decrease their emissions. Those countries can emphasize on renewable sources of energy - wind, solar, thermal and bio energy.  

Greek companies aspire after motorways and pipelines

Greek companies may acquire the scandalous concession of Trakia motorway and increase their share in the oil pipeline Bourgas-Alexandroupolis at the expense of Bulgaria's interests. Greek construction companies wish to privatize the Bulgarian state-owned companies Technoexportstroy and Motorways. This has been made possible as a couple of days ago the companies that are owned by Bulgaria's Ministry of Regional Development and Public Works were taken out from the list of companies that cannot be privatized, reported the Greek Kathimerini daily. The suggestion of the Regional Ministry was endorsed by the Bulgarian Cabinet, the Standart learnt.

Ten candidates for completing Sofia subway extension

 

There were 10 candidates for completing Sofia subway extension but only nine filed offers in the USD273.6 million tender to build the second metro line. The new bidders were Spanish construction group Fomento De Construcciones Y Contratas, Italian consortium Pizrotti-Seli, Greek construction group JP Avax, a consortium between German construction group Hochtief and local outfit Glavbolgarstroy, Italian consortium Condotte-Ansaldo, Czech construction company Metrostav, Spain’s Obrascon Huarte Lain, the local Moststroy in consortium with Turkey’s Dogus, and local mining consulting and engineering company Geotechmin. Seven stations will service the new 6.5km line. The commission has to assess the offers by February 15. The contract might be signed in March. Construction is expected to start at the end of March and would continue up to 2011.

 

 

 

Mittal wants � 500 M for Kremikovtsi

"Pramod Mittal is selling Kremikovtsi steel-mill" the metallurgic giant's Executive Director Alexander Tomov confirmed for The Standart yesterday. He also revealed that the Indian owner and his consultants from Global Steel, the mother company, are nearing a final decision regarding the mill's price, which currently revolves around 500 million euros. Their final decision will be made official on January 24. If he manages to sell the steel plant for this amount, Mr. Mittal will have yielded a fivefold profit in just two and a half years. He bought Kremikovtsi from its former owner Valentin Zahariev for the humble 102 million in the summer of 2005. As The Standart recently wrote, there is no lack of potential buyers. A couple of Ukrainian oligarchs, business rivals in their country, have already made it known that they are interested in the purchase of Kremikovtsi. The cause of their contention is their relatedness to the two strongest political figures in Ukraine, who are also at enmity.On the one hand there is the metallurgical company "Metinvest Holding", property of Rinat Akhmetov who is close to former Ukrainian premier Viktor Yanukovych, and on the other, the owner of Finance and Credit Group, who is a man of Victor Yushchenko, The Standart learnt. This piece of information was confirmed by sources from the Ministry of Economy, who even commented that Zhevago's campaign for purchasing Kremikovtsi was far more aggressive than Metinvest's. It is quite possible that the number of candidate-buyers increases. According to Bulgarian Deputy Minister of Economy Nina Radeva, who is the representative of the state-owned 25,3-percent share of Kremikovtsi, there are rumours that a Russian company also finds Kremikovtsi an attractive deal. However, Mrs Radeva said she did not know the name, because Global Steel had not yet officially notified the ministry as to the number of candidates.

 

Kremikovtzi Needs Additional Investments of at Least �120 – 140 M

Kremikovtzi needs additional investments in the amount of at least 120-140 mln euros in order to complete the engagements it has undertaken to the European Commission (regarding the plants' individual life plan), Kremikovtzi said in a press release. The company insists that in spite of the constant hikes in the prices of transport, energy and gas, and the restructuring of its management, Kremikovzi's payments to the republican budget and the government monopoly companies are strictly on schedule. A total of 93 mln leva (47.55 mln euros) was invested in the plant in 2006. 31 mln leva (15.85 mln euros) of it has been directed to ecology and environmental sustainability projects. 2007 investments stand at 55 mln leva (28.121 mln euros), of which 17 mln leva (8.691 mln euros) was spent on ecology projects. This year's funding is projected at 160 mln leva (81.806 mln euros), 91 mln (46.52 mln euros) of which for environment sustainability. 145 shares changed hands on BSE yesterday at prices between 16.50 and 16.60 leva/share.

Kremikovtzi management says steel mill sale reports are manipulation of public opinion

 

In response to trade union declarations and reports in the media, the management of Kremikovtzi steel mill issued a press release Wednesday that the information about the sale of the mill is a speculative attempt to manipulate public opinion. No member of the management, including the company CEO Alexander Tomov, has made statements about the sale of the mill, or one concerning possible price or evaluation of the assets, the press release states.The management has repeatedly declared that many companies have shown interest in Kremikovtzi, one of the largest steel works on the Balkans. The board does share the opinion of the trade unions in respect to GSHL and its chair Pramod Mittal.On Monday, the trade unions at the Kremikovtsi steel mill insisted that the current Kremikovtzi owner, Global Steel Holdings Ltd. of Pramod K. Mittal, should be removed from the steel mill with immediate effect. In a declaration to the President, Prime Minister, Parliament Chairman and Prosecutor General released Monday, the unions accused the owner of violating the labour legislation and breaking the safety requirements on a regular basis and of systematically syphoning the company. on Wednesday, the Kremikovtzi divisions of the Confederation of Independent Trade Unions in Bulgaria (CITUB) joined in with a declaration that the deal for the sale of the mill to Finmetals Holding should be annulled. The declaration was addressed to president Georgi Purvanov, Prime Minister Sergei Stanishev, National Assembly Chairman Georgi Pirinski, Prosecutor General Boris Velchev, Economy and Energy Minister Peter Dimitrov and the Director of the Agency for Post-Privatization Control Atanaska Bozova.Built in the early 1960s as Bulgaria's largest metalworking company and privatized in 1999 for the token sum of 1.0 dollar by Finmetals Holding, Kremikovtzi was acquired by Global Steel Holdings Limited in 2005.In another development Tuesday, Sofia City Hall insisted on the extension of the time-limit for public access to the application for the issuance of an integrated permit to Kremikovtzi AD. A letter to that end was sent to the Executive Director of the Executive Environment Agency Dimiter Vergiev. The argument in support of the request is that the operation of the company has an impact on the components of the environment and concerns the territory of the entire municipality.On Wednesday, Environment and Water Minister Djevdet Chakurov commented on the request for an extension of the time-limit by saying that at this stage he is not pleased with what the Kremikovtzi management is doing. He added that the mill will receive an integrated permit from the Environment Ministry when all legal requirements are met, reiterating his words of late November when he said that Kremikovtzi will not be issued an integrated permit unless it presents a serious environmental investment programme and proof of its implementation. The company must reach EU standards by 2011.The operation of Kremikovtzi has been discussed not only with the Minister of Economy and Energy, but also on a much higher level, for besides its economic aspect the problem also has a social one, Chakurov said.

BSE-Sofia loses a Billion in a day

In merely a day the Bulgarian Stock Exchange (BSE-Sofia) lost nearly a billion levs (1 euro = 1.95 levs). There was an unprecedented slump in all the listed stock indexes. The SOFIX blue-chip index dropped by 78.95 points to 1482.39, or, in other words, by 5.6 percent. It's been five years now since the last similarly massive collapse. The BG40 broad index got 6.32 percent lower causing the common market price of all securities that were being traded decrease by nearly a billion to 25.7 billion levs. This new major fall came as a continuation of the negative trend that began in November last year. The market capitalization back then surpassed 29.1 billion, and just two and a half months later the stock exchange has lost 3.4 billion levs. "BSE-Sofia has taken quite a plunge recently, but the situation is the same across the entire Balkan region, Konstantin Abrashev from BenchMark Finance commented for investor.bg.  

 

ANALYSIS:

 

Asian tigers lag behind Eastern Europe

Author: Nevena Mircheva, reporter of The Standart, Vienna

 

In terms of economic growth, Bulgaria and its neighbors have already surpassed the Asian economies. The average level of economic growth in our region is about seven percent, which is by two times higher than that in the Eurozone and it is also the highest in the world. Last year was the most successful for the developing countries, as they finally reached their economic indices of the years before 1989. "Currently, the common GDP of the Central And Eastern European Countries is by 150% higher than that in the first year after the 'democratic changes'," said Richard Ensor, Managing Director of Euromoney Institutional Investor PLC, at the magazine's annual conference in Vienna.
 "The CEE region is the most attractive to foreign investors. The region attracted one fourth of all foreign investments for 2007," Ensor said. With an eighteen-percent running account deficit and debts of the households and the business in foreign currency totaling about 48 percent of the common debts, Bulgaria faces serious economic challenges. According to Mr. Ensor, not a single sector of the economies in the CEE region will remain unaffected by the world liquidity crisis. To his words, the challenges before the CEE countries, including Bulgaria, are the credit boom and the soaring inflation, which it might trigger off, as well as the deficit of the countries' running accounts."The worst thing that could happen to Bulgaria on its way out of the crisis would be a decreased economic growth rates," BNB Deputy Governor Dimitar Kostov, in charge of the Banking Department, said. According to him, the influx of foreign investments to this country will remain the primary driving force for the country's economic growth. He recommended speeding up of the structural reforms by improving the business atmosphere, paving the way to success for fresh companies and easing the procedures for insolvency and liquidation. "Then we should concentrate efforts on the reforms in healthcare and education, " Kostov pointed out further. "The strict fiscal policy, the accumulation of budget surplus and foreign currency reserve will secure Bulgaria against potential risks," he added. Mr. Kostov prognosticates that in 2008 that the economic growth will preserve its six-percent rate. Bulgaria is in the process of entering the so-called "antechamber" of the euro, or joining the exchange rate mechanism ERM II. This is expected to happen this year. According to prognoses this country will be able to introduce the euro in 2011-2012. "We hope to join the ERM II in 2010 and introduce the euro a bit later than Bulgaria, in 2014," Romanian Minister of Economy and Finance Varujan Vosganian said.

 

 

 

 

 

 

 

 

 

 

 

 

Bulgaria's economic freedom

Author: www.news.bg; www.heritage.org

 

For 14^th time in a row The Heritage Foundation and The Wall Street Journal publish the Index of World Economic Freedom. A total of 162 countries participate in the 2008 classification.Bulgaria marks a slide raise in the classification of economic freedom with rating of 62.9 points, 0.9 points more compared to the previous year. Bulgaria takes 28^th position on economic freedom from 41 European countries. on world level ranks 59^th. The average economic freedom for the world is 60.3 points, for Europe is 66.8 points.Bulgaria gets into the category ‘moderately free'. Last year in Europe's list the country was between Italy and Albania.Now the position is the same but Albania is before Bulgaria and Italy ranked one position after Bulgaria. Licensing, opening, and closing a business are all relatively efficient. Bulgaria still needs a more independent judicial system. Weak property rights, corruption, and inefficient bureaucracy affect other areas of economic freedom. The overall size of government spending is far worse than those of other countries and can crowd out private-sector activity. For 14th time Hong Kong has the biggest level of economy freedom in the world. Singapore is second.Half of the most free economically countries are European. Leading states are Ireland, Switzerland, UK and Denmark.In the two continents of America leading are USA, Canada and Chile.

Business Freedom - 67.5%

The overall freedom to start, operate, and close a business is relatively well protected by Bulgaria's national regulatory environment. Starting a business takes an average of 32 days, compared to the world average of 43 days. Obtaining a business license takes about half the world average of 234 days. However, regulations are interpreted and enforced arbitrarily. Closing a business is relatively easy.

Trade Freedom - 86%

Bulgaria's trade policy is the same as those of other members of the European Union. The common EU weighted average tariff rate was 2 percent in 2005. Non-tariff barriers reflected in EU policy include agricultural and manufacturing subsidies, import restrictions for some goods and services, market access restrictions in some service sectors, non-transparent and restrictive regulations and standards, and inconsistent customs administration across EU members. Enforcement of intellectual property rights also remains problematic. Consequently, an additional 10 percentage points is deducted from Bulgaria's trade freedom score.

Fiscal Freedom - 82.7%

Bulgaria has low tax rates. The top income tax rate is 24 percent (a flat 10 percent as of January 2008), and the flat corporate tax rate was reduced to 10 percent from 15 percent as of January 1, 2007. Other taxes include a value-added tax (VAT), a road tax, and a vehicle tax. In the most recent year, overall tax revenue as a percentage of GDP was 32.4 percent.

 

Freedom from Government - 56%

Total government expenditures, including consumption and transfer payments, are high. In the most recent year, government spending equaled 38.3 percent of GDP. About 60 percent of state enterprise assets had been sold by the end of November 2006.

Monetary Freedom - 73.7%

Inflation is high, averaging 6.6 percent between 2004 and 2006. Relatively unstable prices explain most of the monetary freedom score. Privatization of state-owned firms has progressed, and the market determines most prices, but the regulatory regime affects the prices of electricity, water, natural gas, and pharmaceuticals. As a participant in the EU's Common Agricultural Policy, the government subsidizes agricultural production, distorting the prices of agricultural products. An additional 10 percentage points is deducted from Bulgaria's monetary freedom score to adjust for measures that distort domestic prices.

Investment Freedom - 60%

The law mandates equal treatment for foreign and domestic investors. The government requires approval for majority foreign ownership in some sectors. Many sub-federal authorities provide investment incentives beyond those offered by the national government, but bureaucracy, frequent changes in the legal framework, and corruption impede foreign investment. Residents may hold foreign exchange accounts subject to some restrictions; non-residents may hold them without restriction. The selling of state-owned film, aerospace, tobacco, and energy assets was completed in 2006. Prior registration with the central bank is required for a few capital transactions. Foreign ownership of land is permitted if the owners are from EU countries or countries with an international agreement permitting such purchases.

Financial Freedom - 60%

Bulgaria's financial system is dominated by banking. Since introduction of the currency board and stronger supervision and tighter prudential rules in 1997, the banking system has recovered from its 1996 crisis. With the possibility of bailouts eliminated, banks must focus on sound practices. EU accession has solidified external interest in banking. There are 33 commercial banks, with about 34 percent of assets concentrated in the three largest. Foreign banks hold 72 percent of the domestic credit market. The insurance market, with foreign insurers as strong participants, is now fully private and has expanded rapidly. The stock market is small, but because of new financial instruments and streamlining, market capitalization doubled in 2005 and rose further in 2006. More transparency and legal refinements are needed to ensure growth.

Property Rights - 30%

Bulgaria's judicial system is ineffective in solving commercial disputes, registering businesses, and enforcing court judgments. The constitution provides for an independent judiciary, but ineffective rule of law limits investor confidence in the ability of the courts to enforce contracts, ownership and shareholders rights, and intellectual property rights.

Freedom from Corruption - 40%

Corruption is perceived as significant. Bulgaria ranks 57th out of 163 countries in Transparency International's Corruption Perceptions Index for 2006. Bulgaria continues to suffer from substantial organized crime and high-level corruption in the government and the judiciary.

Labor Freedom - 73.2%

Bulgaria's labor market is guided by relatively flexible employment regulations that could be further improved to enhance employment and productivity growth. The non-salary cost of employing a worker is high, but dismissing a redundant employee can be costless. Increasing labor market flexibilities is on the government's reform agenda.

 

 

 

 

 

 

UniCredit: Bulgaria escapes the crisis

Author: Nevena Mircheva, Standart's Reporter, Vienna

Bulgaria and other countries of the Balkan region have already reached the ceiling in their economic growth. In 20007, the GDP leap in Bulgaria was 6.2 percent, while the prognoses by the UniCredit show it will be about 5.9 for 2008 and 5.7 for 2009, said Debora Revoltella, CEE of the UniCredit Group for Central and Eastern Europe at the Euromoney conference in Vienna. The loan crisis will affect Bulgaria, albeit slightly, UniCredit experts believe. The major effect will be a slump in banks' loan activity. The trend would rather have a beneficial effect as it is in synchrony with the intention of the Bulgarian National Bank to restrain loans growth and would cool down the overheating Bulgaria's economy. Despite the general trend, though, there spheres that can become a conductor of the liquidity crisis in the region. These are agriculture, metal processing, construction, electronics, financial and insurance sectors. According to the UniCredit, in 2008 the monopolists in power engineering and natural gas sectors will be still state-owned. However the possibility of Bulgartabac sale is finally becoming increasingly tangible.