불가리아 주요 경제 뉴스 ( 11 - 18 APRIL 2008 )

BULGARIAN ECONOMIC TOP NEWS DIGEST

WEEKLY REPORT ( 11 - 18 APRIL 2008 )

 

 

Sections/headline briefs:

 

 

MACROECONOMY:

 

·        Bulgaria to become stakeholder in Arabian gas pipeline

·        Bulgarian officials discuss with EC representatives Danube Bridge 2

·        Lyulin Highway to belt Sofia earlier than planned

·        Varna may get 2nd containerised cargo terminal

·        Bulgaria ranks 68th in IT technologies usage

·        Dairy imports almost level with exports

·        Bulgarian canning factories import vegetables from abroad

·        1/5 of Bulgarian operators fail to report 2007 greenhouse gas emissions

·        Bulgaria property market outstrips the forecasts

·        Bulgarian Stock Exchange shrinks by BGN 6.5 B

·        Mayors are searching for external consultants on EU projects

·        Municipalities in limbo over eco-projects

·        Switzerland to stimulate Bulgarian economics development

·        7% rise in electric energy consummation

·        Bulgaria may become leading power exporter in SEE in 2010

·        Bulgaria with the cheapest electricity in Europe

·        Bulgaria has lowest gasoline, diesel prices in EU

·        14.2% annual inflation in Bulgaria

·        Bulgaria suffers food price tsunami

·        Bulgarian current account deficit went over �1B just in 2 months

·        Bulgaria pays back to Japan $45.35 M

·        Bulgaria still in top 10 of the German tourists

 

 

 

 

 

 

 

INVESTMENTS:

 

 

·        Economy minister expects �7B investment in 2008

·        Austrian DYI chain bauMax plans to invest some �200 M in 20 stores in Bulgaria

·        Sandanski Mall to open by end-April

·        Kronospan to build �110M factory

·        Bulgaria elevator company invests BGN 5 M in new factory

·        TNT to invest �100М in network expansion

·        Bulgaria's Naftimex International to build �3 M trade centre in Berkovitsa by End of 2009

·        Investor for Belene nuclear stake to be named by the end of June or early July 2008

·        Bulgaria's Investra to invest �160 M in 8 business parks by end of 2010

·        Bulgarian Kazanlak city to have own airport

 

 

 

COMPANIES:

 

·        Austria's bauMax enters Bulgaria mkt with Plovdiv outlet

·        Opel bosses new car sales in Q1 2008

·        LNM offers � 100 M for Kremikovtzi

·        Four giants compete for Bulgartabac

·        World companies arrive for the Hemus 2008 exhibition

·        Five companies after Bulgaria's 'Bobov Dol' coal-fire plant

·        Iceland's Kvos Group buys Bulgarian printing co Delta+

·        Bulgaria company starts joint production with IKEA

 

 

ANALYSIS:

 

·        Expect economic crisis in Bulgaria

·        Bulgarian inflation quickened in March on fuel, food

 

 

 

 

 

 

 

 

 

 

Articles:

 

 

MACROECONOMY:

 

Bulgaria to become stakeholder in Arabian gas pipeline

The possibility for Bulgaria to become a stakeholder in an Arabian gas pipeline as early as 2009 was the central topic for Bulgarian President Georgi Parvanov and his Egyptian counterpart Hosni Mubarak. Bulgaria's first couple is currently on an official three-day visit to Egypt. The pipeline is to stretch across the territories of Egypt, Jordan, Lebanon, Syria, make an entrance into Turkey in 2009, then into Greece and, possibly, Bulgaria, which would turn it into part of EU's grand pipeline project Nabucco. Parvanov has already received full support on the part of Egypt's PM Ahmed Nazif. "What remains to happen is Bulgargaz and EGAS to start working," President Parvanov commented. Another of his proposal to Egypt was cooperation in the nuclear power production sector. Egypt is commencing construction of big nuclear plants with Russian participation. "We could train Bulgarian specialists in nuclear power production to work in your county as well as help you in the building process," in addition the Bulgarian Head of State said. In their one-to-one talk, President Parvanov expressed his gratitude to his counterpart Mubarak for his help for the release of the Bulgarian nurses in Libya. "I can't allow myself to miss the chance of thanking Egypt for actively participating in the final talks for the medics release, and most importantly, for having played such a key role in one of the most significant events for Bulgaria: their release," Bulgaria's President said.
 Last but not least the two presidents along with PM Nazif discussed the setting up of a Bulgarian-Egyptian business council.

Bulgarian officials discuss with EC representatives Danube Bridge 2

The development of the project “Construction of the new combined (road and railway) bridge over the Danube river between the towns of Vidin (Bulgaria) and Calafat (Romania)” is to be discussed today at a meeting with representatives of the European Commission.The event will be held in the conference center of the Regional administration in Vidin, informs Vidin.info.The officials to take part in the meeting include the deputy minister of transport Vessela Gospodinova, the mayors of Vidin and Calafat, the regional governor Krustio Spassov, the general secretary of the Ministry of transport of Romania Septimiu Bozasu, other representatives of the ministries of transport as well as representatives of the General Direcotrate for regional policy for Bulgaria and Romania.

Lyulin Highway to belt Sofia earlier than planned

 

The construction of the new Lyulin Highway to belt Sofia city is likely to be completed earlier than it was planned, Bulgaria's Prime Minister Sergey Stanishev said during a tour along the facility on Sunday."If the building works follow the same rhythm, the highway will be ready in the mid-summer of 2009," the premier foresaw. During the inspection, PM Stanishev was accompanied by the Regional Development Minister Assen Gagauzov, reports The 24 Chasa Daily. The official start of the project was given by Stanishev himself, who turned the first sod in January last year. About EUR 148 M will be invested in the construction of Lyulin Highway. Bulgarian government will finance 25% of the project and the remaining 75% will be funded under the ISPA program of the EU. The highway, which will be a part of Trans-European transport corridors 4 and 8, will be 20 kilometers in total. The facility will have a complex structure supplied with 26 bridges and viaducts, three road junctions and three tunnels. The highway will ease the extremely heavy traffic on the route Sofia-Thessaloniki. Part of it, closer to the Greek border, is also Struma highway whose newest 39-km stretch, linking Dupnitza and Daskalovo.

 

Varna may get 2nd containerised cargo terminal

A second new terminal for containerised cargo could be built in Varna, said Danail Papazov, executive director of Varna Port. A 2.0 ha site on Canal 1, which links the Black Sea with the inland Varna lake, has been earmarked as a likely location for the new terminal. The great advantage of the site is that it is located before the Asparuh bridge. Navigation under the bridge is currently limited to an airdraft of 41.5 m which stops bigger containerised cargo carrier from docking at the Varna-West port. The new containerised cargo terminal funded by the Japan Bank for International Co-operation will also be located after the bridge. The addition of a second cargo terminal accessible for vessels carrying 2,500 to 3,000 TEU will improve the competitiveness of the Varna port. The port processed 104,000 TEU of cargo last year, up 14% over 2006. According to Papazov, the port handled 30,000 TEU in the first quarter of 2008. The port will get over the next two months a 105 ton electro-hydraulic mobile crane that will cut the handling time for containerised cargo.

Bulgaria ranks 68th in IT technologies usage

Bulgaria ranks 68th in network development, according to a new report announced by the World economic forum in Geneva, informed technews.bg. The study, which is published for a seventh successive year, encompasses a record number of countries – 127. It became the most prestigious international source of information about the influence of the information technologies on the development processes and the competitiveness of the national economies. Denmark is the most developed country in terms of network, followed by Sweden and Switzerland. Among the first 10 countries are also South Korea (9th place) and USA (3rd place), which have the highest growth climbing up respectively with 10 and 3 positions compared to last year. The consistent efforts and the vision of the governments for the ICT significance combined with the focus on education and innovations are of key importance for the development of network readiness and lay the foundation for sustainable development, commented Irene Mia, one of the report's editors. This year's edition of the report is on the topic Fostering of innovation through network readiness. The Networked Readiness Index -NRI used in the report, measures the level of readiness of the countries to use information and communication technologies in three fields: common business, regulation and communication infrastructure, and readiness of the tree key groups of consumers – final clients, business and government – to use information technologies.

 

 

 

Dairy imports almost level with exports

Bulgaria imported dairy products worth $40 mln in Jan-Oct '07, shipping abroad goods in the same category valued at $47 mln, shows a farming ministry analysis. Condensed milk processed by the local dairy farms made up almost half of the 25,271 tons of dairy products imported over the review period. Experts anticipate that these imports will continue t increase as the local dairy farmers find receptive markets for their output and crank up export operations.

Bulgarian canning factories import vegetables from abroad

Hardly half of altogether 80 canning factories in Bulgaria work relatively well. This writes “Factor” newspaper cited by BGNES. The paradox is that the factories import fruits and vegetables because the Bulgarian ones are too expensive for the mass consumer.
The prices of the raw materials in the world jump up, but the price of the human labor in Bulgaria – no, says Alexander Yotsev, honorary chairman of the Union of the fruit and vegetables manufacturers. The main suppliers for the Bulgarian canning factories are Macedonia and Turkey. The reason for the fall of the consumption of home-grown goods is the fact, that we are not competitive, claims Alexander Yotsev.

1/5 of Bulgarian operators fail to report 2007 greenhouse gas emissions

Twenty-six of the Bulgarian installations taking part in the EU system for greenhouse gas emission allowance trading have failed to report their emissions performance for 2007. A total of 126 installations were required to submit to the environment executive agency with the eco ministry by March 31, 2008 the verified reports on their 2008 performance. Despite a deadline extension, only 100 operators had complied by Friday. Without the verified reports, the Bulgarian register for the management of the emissions allowances will not be able to launch. The operators that have handed in their reports will be designated allowances matching the volume of their 2007 emissions. Those that failed to submitted the required information will be slapped with a 20.8% reduction in their allowance. Almost all the major installations in the power, cement and metallurgical industries filed their emissions reports. Most of the operators that failed to submit the necessary information are ceramics and limestone businesses that account for 19% of total emissions allowances. Experts said the reports were not filed because the verification process is too expensive and these companies prefer to instead buy the allowances they need. Steel maker Kremikovtzi is the only one of the major operators to miss the deadline. The reason is the fact that it is yet to be granted an integrated pollution prevention and control permit by the eco ministry. However, while Kremikovtzi litigates the permit refusal, it is allowed to participate in the trading scheme. The domestic allocation of the 2007 allowances - 42.3 mln tons in volume, should approved by the government by April 17. At the moment, experts from the eco ministry are negotiating with the European Commission on what is the fastest way to include the Bulgarian register in the European trading system.

 

 

Bulgaria property market outstrips the forecasts

With nearly 70% of foreign buyers investing in Bulgaria coming from the UK, Principal International says that the property market in Bulgaria is showing no signs of slowing down nor are investors losing interest.Principal International, one of the UK's leading overseas property investment companies, says that investors interest in both the ski resort of Bansko and the popular resorts of Sunny Beach and St Vlas, where property prices are still as low as 52,000 Euros, is still rising, and despite the forecasts of the bubble bursting and oversupply being a major issue, Paul Cooper, Director of Principal International, says this is clearly not the case, as the numbers of enquiries they receive on a weekly basis is constantly going up.Principal International says that a major motivation for buying in Bulgaria is still price, and the serious investors still believe that the holiday market has not yet reached its peak. With more and more investment in the tourism sector, Bulgaria is attracting not just the Europeans but the Americans are also becoming wise to the low cost of living and high quality standards offered by the improved infrastructure.With visitors from all over the globe and the numbers rising year on year, Bulgaria still offers an attractive rental opportunity with a low cost up front investment. It is still one of the fastest growing property markets in Europe and Principal International say that if you are realistic about your investment and consider it for the medium to long term it can still offer attractive returns.Principal International warns buyers to avoid the unsophisticated and unregulated estate agency chains in Bulgaria and are able to offer investors knowledgeable advice and guidance based on a wealth of overseas property experience.Sound monetary reforms, responsible fiscal planning and a fixed exchange rate against the Euro have all helped to fuel the property market in Bulgaria and Principal International say that the country can still offer a good return on your investment if you are prepared to look at a more long term opportunity. The tourism sector is growing by 22% a year and is predicted to be the most popular emerging holiday destination for 2007, according to a leading holiday company, and it is reported to be amongst the top 5 in Europe for housing price growth. All in all it seems Bulgaria's popularity is set to continue.

Bulgarian Stock Exchange shrinks by BGN 6.5 B

The volume of the trade at the Bulgarian stock exchange has shrunk by 6.57 billion levs (1euro=1.95levs) since the beginning of this year. At the end of last year, the market capitalization at the Sofia Stock Exchange was about 29 billion levs, whereas at the end of last week the market value of all securities traded in at the stock exchange shrank to 22,412 billion levs. The main reason for this decrease in trade volume is the world financial crisis that started from the USA and affected many world markets, including the Bulgarian. Over the past few months most of the foreign investors withdrew their capitals from Bulgaria's stock exchange because of the lack of fresh capitals and the continuing devaluation of the US dollar. As a result, the shares at the stock exchange lost much of their value and the indices went down. From the beginning of this year until last Friday, Bulgarian leading indices SOFIX and BG40 went down by 32,64% and 32,13%, according to information of investor.bg. This means that the Bulgarian stock exchange is one of the least active in the world. only the indices at the Croatian and the Chinese stock exchanges have slumped more than the Bulgarian indices.

 

 

Mayors are searching for external consultants on EU projects

 

Municipalities lost a lot of time for the preparation of projects due to elections last year. Yet, they had to have started work in 2006-2007, so they could be ready by now, said owner of consultant company Bulbrokers Evgeni Borisov. His experience up to now shows that municipalities are not yet well prepared for the absorption of money under operative programs. Currently the company has 15 active contracts with local authorities and management structures. The reason why external help is needed is that there are programs and measures where people have no experience. The experience with pre-membership programs can only help a municipality develop a successful project. The documents then used to be in English, while all of them now are in Bulgaria. The financing in advance then was 80%, while now the most is 10-20% mid-term payment. Basically the payment comes after the successful completion of the project. This means that money has to be found in advance. Municipalities may work with partners and public-private companies in some cases. It is a positive trend if authorities meet with local business representatives to develop together the future development schemes for the region. The program that finished in January was not advantageous for the business, commented Borisov. The transactions were highest for micro-companies. In reality the investment of EUR 1 million that they had to obtain beforehand was an impossible sum. Small and middle-sized companies that could find the amounts needed received a very small co-financing percentage, a mere 20-25%. The percentage of co-financing has to change, according to him. Currently people are not motivated to apply for financing and prefer to work on their own with bank credits.

Municipalities in limbo over eco-projects

Municipal mayors are kept in limbo by Bulgaria's ministry of environment and water. They have a very short time to apply for financing for construction of water treatment plants, sewerage, etc. Municipalities and their associations may apply with projects in the high-priority water sector by May 30 for almost BGN 723.9 million. National co-financing, which is 20% of amount, is not included in this sum. Almost all Bulgarian municipalities already have special departments for preparation of EU projects.
An enormous amount of documents is required to apply for water infrastructure projects. The procedure was opened at the end of March. If you start from scratch, you can never make it within a two-month period, municipalities said. Just the procedure for choosing a project designer takes between three and four months. It takes just as long for municipalities to secure the necessary bank loans for financing the projects. There is no way for us to be ready with the projects in advance, because nothing more than the general directions for the procedures was clarified at the beginning of the year, Dikran Ovanesyan, head of the project management and European integration department at the municipality of Pleven, said. In his opinion, deadlines have to be cancelled, so that municipalities can prepare better projects. Experts from municipalities in the Dobrudja region in northeastern Bulgaria have the same idea. They even cited as an example the regional development operative programme. By cancelling the deadline, authorities will make sure that no projects will have to be returned for revision, the experts said. Municipalities should be ready with the projects before the procedure is announced, the ministry of environment and water, headed by minister Djevdet Chakarov, said. It is not a problem if they fail to apply now. They will have a chance to participate in the upcoming water infrastructure procedures, which will operate on a continuous basis until 2013, the ministry said.

Switzerland to stimulate Bulgarian economics development

Switzerland will assure the resources to maintain the Bulgarian economics' development in order to harmonize faster with the European, the Swiss ambassador for Bulgaria Thomas Feller announced in Varna, on a Swiss - Bulgarian economical forum. In his words money will be provided for Romania too. The amount for the both East European countries will be round 200 million EUR. Soon Switzerland will sign bilateral agreements with the both countries for fixing the conditions of resources' adoption process. Most probably the priority areas will be infrastructure, environment, forestry and biological agriculture and municipal and regional cooperation, Ambassador Feller announced. The Swiss added, the procedure of approving the project by the Swiss Parliament will take round a year. Bulgaria is not priority tourist destination for the Swiss citizens, but the interest towards your country increases, the diplomat said. Ambassador Feller added there are good opportunities for vacations in Bulgaria, but they are not enough popular.   

7% rise in electric energy consummation

7% rise in electric energy consummation was registered for the first three months of the year in comparison to the same period last year. Annually consummation was rising by 2,5 - 3%, Executive Director of National Electric Energy Mardik Papazyan said, Radio FOCUS – Varna informed. According to him there was no danger of crisis in the internal market and if there was need the company would import electric energy from outside. The insufficient quantity of electric energy however did not allow any export which would contribute to profit.

Bulgaria may become leading power exporter in SEE in 2010

 

Bulgaria may regain its role as a leading power exporter in southeast Europe in 2010 after having connected to the grid 3 new power generation units, a local daily reported on Thursday. Two units with a capacity of 335 megawatts (MW) each at the state-owned Maritsa East coal-mining and electricity-producing complex and a 80 MW hydroelectric plant Tsankov Kamak, all in southern Bulgaria, are due to be completed by 2010, daily Klasa reported quoting the executive director of the national power-grid operator NEK, Mardik Papazyan, as telling an energy conference in Varna on Wednesday. The new capacities will allow NEK to restore its position on the regional market, Klasa quoted Papazyan as saying. Electricity deficits in the region are estimated at five to ten billion kilowatt hours (KWh), Papazyan was further quoted. Bulgaria is not expected to suffer power shortages this and next year, he said. The shortages in the region are mostly caused by the shutdown of a pair of 440-MW reactors at Bulgaria's sole nuclear power plant at Kozloduy at the end of 2006, by when the country used to cover over 70% of the electricity deficits of its neighbours. Bulgaria, a European Union member since January 2007, has closed down the reactors of the four older generation units of 440 MW each at Kozloduy before joining the bloc to address nuclear safety concerns voiced by the European Commission. The closure left Kozloduy with two operational reactors of 1,000 MW each. Bulgaria expects to cover just 13% of the electricity deficits in southeast Europe this year, down from 37% in 2007.

 

Bulgaria with the cheapest electricity in Europe

Bulgarians use the cheapest electricity in the EU, Eurostat statistics reveals. A kwh cost just 6.8 eurocents last year in Bulgaria, which is 6.8 euros per 100 kwh. Next is Greece with 7.30 euros per 100 kwh. Electricity in the countries in Central and Eastern Europe is also relatively cheap – households in Lithuania, Latvia and Estonia pay less than 10 euros per 100 kwh. Croatia is also included in the chart as a candidate EU member. 100 kwh there costs 9.23 euros, while in Malta the price is 9.34 euros. Denmark has the most expensive electricity – 24.47 euros per 100 kwh. Next are Italy (23.39 euros), Holland (21.80 euros) and Germany (19.49 euros).

Country	kwh/EUR
Bulgaria	0,07
Greece	0,07
Latvia	0,07
Estonia	0,08
Lithuania	0,08
Malta	0,09
The Czech Republic	0,11
Slovenia	0,11
Finland	0,11
Romania	0,12
France	0,12
Spain	0,12
Poland	0,13
Great Britain	0,13
Hungary	0,13
Cyprus	0,13
Portugal	0,15
Austria	0,16
Belgium	0,16
Slovakia	0,16
Ireland	0,17
Luxembourg	0,17
Sweden	0,17
Germany	0,2
Holland	0,22
Italy	0,23
Denmark	0,25

 

 

Bulgaria has lowest gasoline, diesel prices in EU

Bulgaria holds the lowest diesel and gasoline prices among the EU member countries, Eurostat data show. The price of the unleaded gasoline 95 stands at 1.01 euros per liter in Bulgaria at the pump at present, while the price of the diesel is even higher at 1.07 euros per liter. The price of gasoline in Romania and Lithuania stands at 1.02 euros per litre and is just 0.01 euros higher compared to Bulgaria. The price of gasoline stands at under 1.1 euros in countries such as Cyprus, Latvia, Estonia, Slovenia, Malta. The price is relatively higher in the countries that joined the EU in 2004, such as Poland, the Czech Republic and Hungary, where the fuel is sold for around 1.2 euros per liter. The Euro 95 gasoline is most expensive in the Netherlands at 1.55 euros per liter. Finland and Belgium follow with 1.43 and 1.42 euros per liter, respectively. There is a trend for diesel fuel, which is traditionally cheaper, to be sold at prices close to these of gasoline. Bulgaria and Romania have the lowest diesel prices in the EU at 1.07 euros per liter. At 1.46 euros per liter, the most expensive diesel fuel is sold in Great Britain. The almost complete alignment of the gasoline and diesel prices may be put down to the high consumption in the EU countries where nearly 60% of the vehicles run on diesel.

Country	Gasoline price	Country	Diesel price
Bulgaria	1,01	Bulgaria	1,07
Lithuania	1,02	Romania	1,07
Romania	1,02	Lithuania	1,08
Cyprus	1,03	Luxembourg	1,09
Latvia	1,04	Cyprus	1,09
Estonia	1,05	Malta	1,1
Slovenia	1,06	Latvia	1,11
Greece	1,12	Slovenia	1,14
Spain	1,12	Estonia	1,15
Hungary	1,17	Finland	1,17
Ireland	1,19	Greece	1,18
Luxembourg	1,19	Belgium	1,19
Slovakia	1,21	Ireland	1,21
Austria	1,22	Austria	1,22
Sweden	1,34	Portugal	1,25
Great Britain	1,36	The Czech Republic	1,25
Italy	1,36	France	1,26
France	1,37	Netherlands	1,27
Germany	1,38	Slovakia	1,28
Portugal	1,39	Denmark	1,28
Denmark	1,41	Germany	1,29
Belgium	1,42	Sweden	1,32
Finland	1,43	Italy	1,33
Netherlands	1,55	Great Britain	1,46

*Price is in euro per liter. Data by Eurostat.

14.2% annual inflation in Bulgaria

Bulgaria's annual inflation is up to 14.2% in March compared to 13.2% the previous month. The reason was provoked mainly from high food prices, says statistical data announced on Monday.The consumer prices increased to 0.8% m/m in March from 1.1% in February.IMF sees inflation dropping to 7% by the end of the year, hoping that grain crops will increase from last year's drought-hit levels, avoiding renewed food price hikes, commented from Reuters. The inflation by the end of last year was 12.5%, one of the highest rates in the EU.

Bulgaria suffers food price tsunami

Bulgaria has not been spared by the huge increase of food prices. Prices of food in this country have surged by a whole 24 percent in a single year, according to a National Statistical Institute (NSI) report. The inflation rates in Bulgaria broke the record reaching 14,2 percent for a year only. Such a high jump has not been seen since the winter of 1997 when shopkeepers would change show-cards several times a day.The prices of vegetables increased by 300%, the cost of bread went up by 42%. In March this year, the prices of chicken meat, vegetables, cigarettes and spirits marked the highest price increase of all the consumer goods.The whole world suffers a food crisis. The cost of food products went up by 45% in a single year, wrote The Financial Times. This caused riots in the poorest countries. Robert Zoellick, the President of the World Bank, called on the governments to urgently donate 500 million euro as aids for the famine-stricken population.

Bulgarian current account deficit went over �1B just in 2 months

Bulgaria's current account deficit was 1.29 billion EUR ($2.04 billion) or 3.9 percent of annual GDP at the end of February, compared with 1.11 billion EUR and 3.9 percent of GDP a year ago, data showed on Tuesday. The Socialist-led government sees the external shortfall rising to 22 percent of gross domestic product this year, after it hit 21.5 percent in 2007 due to strong imports of both consumer and industry goods. Exports rose 30.7 percent to 2.3 billion EUR, while imports rose 24.7 percent to 3.5 billion EUR, the central bank data showed. Rampant domestic consumption is the key driver of the deficit, as Bulgarian rush to buy after decades of austerity under communism, while companies import machinery and other investment goods to expand production. The bloated gap makes the emerging economy vulnerable to a hard landing, especially if foreign direct investment (FDI), which offsets it, slows due to tighter global liquidity, analysts say. FDI was 432 million EUR in the first two months, up from 375 million euros in January-February of 2007, and covered 33.7 percent of the current account gap. Bulgaria leads one of the tightest fiscal policies in the European Union and plans a budget surplus of at least 3.0 percent of GDP this year to counter external risks arising from the deficit. Sofia operates under a currency board regime which curtails central bank operations and makes fiscal policy its key tool to influence the economy.

 

 

Bulgaria pays back to Japan $45.35 M

Bulgaria said on Tuesday it has paid early 4.580 billion Japanese yen ($45.4 million/28.6 million euro) worth of debt owed to Japan Bank for International Cooperation (JBIC). The payment follows the early repayment of six World Bank loans in March, the the Finance Ministry said in a statement. The six loans, repayed on March 25, were worth a total 266.9 million euro and $12.8 million (8.2 million euro), interest included. The early payment has been made taking into account the budget performance forecasts for 2008 and the level of the country's fiscal reserve. Bulgaria targets a budget surplus of over 3.0% of GDP this year, aiming to slow the growth of its current account shortfall, which is expected to rise to 21.9% of the projected GDP from 21.5% for 2007 mainly due to the widening trade deficit. Bulgaria paid early 339.1 million euro worth of debt to the World Bank in 2006.

Bulgaria still in top 10 of the German tourists

Bulgaria is the only Eastern European country entered in the classification for preferred by the Germans tourism destinations. Their favorites are Spain and Mallorca. This was announced in the analyze agency ‘GIATA-Ranking', informed from local Union of Investors in Tourism.According to the agency Bulgaria ranks 9^th. Bulgaria has improved its factor from 1.7 to 2.2 compared to March 2007.Turkey and Greece are first in the classification followed by Egypt, Germany, Italy, Tunis and Thailand.For first time the competent tour operator ‘Dertour' published huge independent catalogue for knowledge traveling from Bulgaria and Romania.All reservation bureaus are unanimous  - Germans are mostly interested into destinations that offer charter programs with low-tax carriers.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INVESTMENTS:

 

Economy minister expects �7B investment in 2008

Foreign direct investment (FDI) in Bulgaria will exceed EUR 7 billion in 2008, minister of economy and energy Petar Dimitrov forecast. The figure will exceed last year's result, when investment reached EUR 5.2 billion. In January 2008 alone foreign investment doubled, year on year. I expect the trend to be preserved until the end of the year, Dimitrov added. The minister pointed out that according to a World Bank report Bulgaria is one of the most attractive countries in the world for foreign investment. We have all reasons to expect that the inflow will be much bigger than in 2007, he added. According to the executive director of InvestBulgaria Agency, Stoyan Stalev, the investment growth in 2008 will be smaller than in 2007. He voiced concern about the imbalance between investment in different sectors. The share of trade, tourism and real estate continues increasing. Investment in construction in 2008 is expected to double, compared with 2006. Last year it reached 80% of all projects that were certified by the agency, Stalev pointed out.

Austrian DYI chain bauMax plans to invest some �200 M in 20 stores in Bulgaria

 

Austrian do-it-yourself chain bauMax plans to invest around 200 million euro ($317 million) in opening 20 stores in Bulgaria in the coming years as part of its expansion strategy in Central and Southern Europe, a company official said on Monday. "In total we want to open 20 stores in Bulgaria. This is for the next years in general [...] we do not have an exact timeframe," bauMax public relations officer Monika Voglgruber told SeeNews. bauMax invests around 10 million euro in the opening of one outlet and it plans to open three stores a year in Bulgaria, Voglgruber said. The company will open on Tuesday its first store in the country - in the second largest city of Plovdiv. It will open its second Bulgarian store in the southeastern city of Stara Zagora next week and plans to open its third Bulgarian store at the end of the year in the capital Sofia. bauMax will compete on the Bulgarian market with Germany's Praktiker and Bulgarian-based Doverie Brico, the franchisee of French do-it-yourself retail chain Mr. Bricolage for Bulgaria, Serbia and Macedonia. bauMax (www.baumax.com), set up 30 years ago, runs a network of 128 stores in seven countries across Europe. The company targets to double its annual sales to 2.5 billion euro by 2012, from 1.25 billion euro in 2007.

Sandanski Mall to open by end-April

The first shopping and entertainment centre in the Bulgarian town of Sandanski will be opened by the end of April, the investor company, Sandanski Properties, said. The investment in Sandanski Mall amounts to more than BGN 12 million. The project is located in the centre of the town. Two of the building's three floors will be commercial space. Entertainment facilities and catering establishments will be located on the third floor. The project will have a hotel part, too. Sandanski attracts 1 million tourist a year, according to data of Sandanski Properties.

 

Kronospan to build �110M factory

 

Bulgaria’s Economy and Energy Ministry will award a Class A certificate to chipboard products maker Kronospan BG on April 14, Bulgaria’s investment promotion agency InvestBulgaria said on April 11.The company plans to invest 110 million euro in a new chipboard plate-making plant in Haskovo municipality, catering to the needs of furniture and construction industries.The factory, due for completion in three years’ time, will give jobs to 200 people.About 40 per cent of the plant’s output looks destined for the home market and the remainder will be exported.Kronospan BG is part of the multinational Kronospan company, which has 24 plants in 24 countries. Its annual turnover last year stood at three billion leva. Currently, it has 11 000 staff.Kronospan set foot in Bulgaria in 1997 after buying a melamine faced chipboard and laminate factory in Bourgas. Ever since then, the company has invested 98 million euro in Bulgaria.

 

Bulgaria elevator company invests BGN 5 M in new factory

 

The Bulgarian company Technos Ltd is starting the construction of a new factory for BGN 5 M in the village of Novo Selo, close to the city of Veliko Turnovo in the central part of the country. Technos has recently bought a large plot in Novo Selo. It plans to employ about 200 local people in the new factory, which will make it one of the major employers in the region. The Sofia company Technos Ltd produces electrically and hydraulically propelled elevators, computer-guided elevators, and other types of elevating gear. It is a leader at Bulgaria's domestic market, and a large share of its production is exported to countries like Austria, Albania, Ukraine, and Germany.

TNT to invest �100М in network expansion

 

Dutch TNT, which has an office in Bulgaria, will invest EUR 100 million in the next five years in network expansion, transport connections and infrastructure. The aim of the courier giant is to become leader in express cargo services among Southeast Asia, China and Europe. Demand comes mainly from the sectors of high technologies, industry and healthcare. The Bulgarian office of the company, which is headed by Ivan Vassilev, has the ambition to become a distribution centre for express deliveries in the Balkans. TNT has a cargo plane at the Sofia airport.

Bulgaria's Naftimex International to build �3 M trade centre in Berkovitsa by End of 2009

 

Bulgarian wholesaler of oil products Naftimex International said on Monday that it is building a 3.0 million euro ($4.8 million) trade centre in the northwestern town of Berkovitsa, which is due to be completed by the end of 2009. The construction of the centre was launched last week, and it should be completed in a year and a half," Naftimex International sales expert Ivan Bechev told SeeNews. The centre, with a built-up area of some 9,000 square metres, will accommodate commercial and entertainment zones, Bechev said. Berkovitsa, where nearly 20,000 people live, lies some 80 kilometres northwest of the capital Sofia, on the northern slopes of the Stara Planina mountain. In 2005, the local authorities contracted Bulgarian company Olimp to build an 80 million euro ski resort near the town. The real estate sector in Bulgaria has thrived in the last few years with domestic and foreign investors drawn by expectations for high yields after the country's accession to the European Union in 2007. After large trade centres and shopping malls sprouted in the big cities of Sofia, Plovdiv, Varna and Burgas, investors shifted their focus to smaller towns such as Gabrovo, Targovishte, Shumen and Pleven.

 

Investor for Belene nuclear stake to be named by the end of June or early July 2008

 

Bulgarian national power grid operator NEK will pick by the end of June or early July the strategic investor for the planned nuclear power plant (NPP) at the Danube town of Belene, Lyubomir Velkov, chief executive director of the utility, confirmed for Dnevnik. The country has short-listed RWE and Belgian Electrabel for a 49% stake in the 4.0 bln euro plant. Italy's Enel, CEZ of the Czech Republic and Germany's E.ON are also eligible to participate in the project under an equity stake agreement with either of the shortlisted candidates. Sources close to CEZ said Germany's RWE and Electrabel have already held talks tio that effect. In early April, news agency Reuters quoted an anonymous sources as saying that RWE was the clear favorite and it was looking into ways to take a partner. The source told Reuters RWE has offered about 400 mln euro in investment immediately so that the project to build two 1,000MW reactors starts quickly. The three bidders left off the short-list would have no formal grounds to attempt to appeal the outcome because the it was not conducted under the Public Procurement Act. NEK has not ruled out starting up talks with one of them if nether RWE nor Electrabel work out. The zoning plan for the plant site is about to be reviewed by the Belene and Svishtov municipalities, said Velkov. The plan was approved by the regional development ministry last week.

Bulgaria's Investra to invest �160 M in 8 business parks by end of 2010

 

Bulgarian investment company Investra will spend more than 160 million euro ($255.4 million) on building eight business parks in the country by the end of 2010, a spokesman for the company said on Wednesday. The projected value of the investment is currently more than 160 million euro with the price of the land included," the press relations officer told SeeNews. The company plans to build business parks in the capital Sofia and also in the cities of Plovdiv, Burgas, Varna, Ruse, Stara Zagora, Pleven and Blagoevgrad with construction work in Plovdiv due to start within two months, Investra said on Tuesday. The business parks will comprise retail, office, warehouse and showroom space. Bulgaria's real estate market, which has grown significantly in the last few years, still lacks enough business space of this type. Demand has been rising lately as many foreign companies decided to set foot or expand into the country after it joined the EU in 2007.

Bulgarian Kazanlak city to have own airport

The preparations for the construction of an airport near Kazanlak city (central Bulgaria) has started, Stefan Damyanov, mayor of the Kazanlak municipality informed. According to his words the airport will be legitimated by the international flights requirements. The airport is foreseen to have two runways and a reserve one (1,800 m), which will cover a capacity of landing planes with 40 passengers on board per day.It is expected the realizing of charter flights at the new airport.Mayor Damyanov stated that this is the biggest investment that will be implemented in 2008-2009 on the territory of the municipality - round 50-60 million BGN (25 - 30 million EUR).The municipality won't take part in the construction sides. The investor plans to finish the project by the end of 2009.

COMPANIES:

 

Austria's bauMax enters Bulgaria mkt with Plovdiv outlet

Austrian home improvement retailer bauMax opens Monday in Plovdiv its first depot for construction materials in Bulgaria. That will be followed by the unveiling of a second local outlet in Stara Zagora next week. Each of the bauMax stores will cost 10 mln euro. The Plovdiv outlet, which will be a drive-in, has a retail area of 12,500 sq m with almost half given over to the bauMax range of construction materials. Over 50% of the suppliers are local companies.

Opel bosses new car sales in Q1 2008

The local Opel dealers consolidated their lead on the chasing pack in the first quarter of 2008, shows data of the Union of Automobile Importers in Bulgaria (SVAB). The 10 local dealers of the German auto brand sold 1,843 new cars for a market share of 13.02% in January-March 2008. Toyota Balkans took the runner-up spot with 1,537 sales and a market share of 10.86%. The Q1 Opel success story owes much to the fleet purchases made by the Bulgarian interior ministry. Year-on-year new motor vehicle sales jumped 30% to 15,224. The actual market is somewhat bigger as not all auto distributors are SVAB members, especially on the truck segment where 5,934 sales were recorded in March alone. Sales of automobiles and light trucks rose 26% with a total of 14,157 sales. Compact city cars and mid-size cars made up 45% of the market. Small and mid-size vans contribute 20.5% while four-wheel-drive vehicles add 17%. The best-selling new car model continues to be Dacia Logan Sedan with 587 units sold over the review period.

LNM offers � 100 M for Kremikovtzi

Commercial consideration, it’s known, always rules over relationship in business. The latest example is the Pramod Mittal-owned Bulgarian steel company Kremikovtzi, which is up for sale, The Times of India reports. Mr Pramod Mittal’s elder brother and the world’s richest Indian Lakshmi Nivas Mittal is keen to acquire the Balkan country’s largest steelmaker. But he is learnt to have quoted eur 100 million (Rs 630 crore), which is nearly 50 million euro lower than what his younger brother wants from the sell-off. At this rate, Mr Lakshmi Mittal’s total cost of acquisition, including debts, will be around Rs 5,200 crore. Sources said although Mr Lakshmi Mittal’s bid is lower than Mr Pramod Mittal’s expectation, the senior Mittal is expected to win the race for two reasons. one, the Bulgarian government, which holds a 25% stake in Kremikovtzi, is supportive of his bid. Two, Mr Lakshmi Mittal may win the confidence of the investors as he promised to pay out the full nominal value of bonds issued by the Bulgarian company, they added.
Creditors demanded immediately repayment of Kremikovtzi’s e 325 million bond as the company has defaulted on the payment. Mr Lakshmi Mittal’s ArcelorMittal has also proposed to carry on investments on ecological issues as well, sources said. Also, ArcelorMittal, if it manages to win the bid, will have synergy in running the Bulgarian company as it has a vast iron ore mine in Krivhyrih in Ukraine from where it could transport ore. Kremikovtzi does not have its own captive ore reserves. It accounts for more than 10% of Bulgaria’s exports. Although Mr Pramod Mittal did not receive bid up to his expectation, his selling price is still expected to be higher than his acquisition cost. His investment firm, Global Steel Holdings, bought Kremikovtzi in 2005 for 72 million euro. Sure, he has made some investments in Kremikovtzi in the past three years. He has put Kremikovtzi on the block after its debts went up to $1.14 billion (approximately Rs 4,540 crore). In addition to ArcelorMittal, other prominent bidders include Ukrainian billionaires Rinat Ahmetov and Konstantin Jevago. Merrill Lynch, advisor to the seller, is going through the bids and is expected to announce the name of the successful bidder in a fortnight, sources said. An e-mail sent to ArcelorMittal’s spokesperson did not elicit any response. A spokesperson for Global Steel Holdings declined to comment. Kremikovtzi has a production capacity of 2.2 million tonne. Last year, it produced 1.4 million tonne of steel. The debt burden and spiralling raw material costs put pressure on the company’s cash flow. Recently, it failed to pay its 8,000 workers. If ArcelorMittal manages to bag Kremikovtzi, it will be the first transaction between the Mittal brothers after the elder brother left the country to carve out his own empire in 1994.

Four giants compete for Bulgartabac

Four tobacco giants are interested in the privatization of Bulgartabac, reported Bulgaria's Deputy Minister of Economy Anna Yaneva, chairperson of the holding's supervisory board. Bulgaria's Economy Minister, Petar Dimitrov held a couple of meetings with the companies in line with the purchase of the plants in Blagoevgrad and Sofia. The companies interested in Bulgartabac are the British American Tobacco, Philip Morris, Gallahar and Imperial Tobacco Group.

World companies arrive for the Hemus 2008 exhibition

 

Leading arms giants are arriving in Bulgaria on May 28 in order to take part in the traditional Hemus international exhibition in Plovdiv. Within four days, BAE Systems, General Dynamics, Atlas Electronic, Rheinmetall, etc. will present the latest achievements in the defence industry. The 16-year-old forum will be opened by Georgi Parvanov, Bulgaria's President and Commander-in-Chief of the Bulgarian Army. The defence ministers of 13 countries are invited to attend it, too. The Bulgarian military industrial complex, concentrated in the companies within the Bulgarian Defence Industry union and the TEREM system, will demonstrate its products, too. The conferences and presentations are expected to stimulate the relations between the local companies and the foreign producers. It is not a secret that the domestic arms business is not yet able to bid for and win a big military contract. Currently, it only has potential to act as a subcontractor. However, it still needs to prove its abilities. Hemus 2008 is where this can be done. The truth is the Bulgarian plants for portable firearm, ammunitions, optics and heavy chain equipment are improving their production. In 2007, the Ministry of Defence signed supply agreements with Bulgarian companies worth more than BGN80MN. TEREM, Arsenal, VMZ-Sopot, Monbat, Samel 90, and Optics are emerging as the army's traditional equipment partners. Some of the Bulgarian companies are already successfully co-operating with western consortiums. For example, Opticoelectron has completed a number of projects with giants like Galileo Avionica - Italia, Thales, INDRA - Spain, Davin Optronics - England. The TEREM plants are well-known abroad thanks to the offset programs for modernisation of the army. TEREM - Georgi Benkovski repairs the new Cougar and Panther helicopters - Eurocopter built a modern repair centre in Plovdiv for this purpose. TEREM Naval Arsenal repairs vessels owned by Navibulgar and NATO member states as well as those from the Russian Federation's navy. The Kil-158 and Donuzlav ships should be delivered within a few days. In fact, TEREM Naval Arsenal fulfils orders by the civil fleet, too. For the first quarter of 2008, the company reported a profit of approximately BGN1MN.

Five companies after Bulgaria's 'Bobov Dol' coal-fire plant

Three foreign and two Bulgarian companies showed interest to participate in open auction for Bulgaria's ‘Bobov Dol' coal-fired power plant (Western Bulgaria), local privatisation agency informed, quoted by Reuters. The foreign firms are: Belgium's ‘Electrabel', Greek companies ‘Damco Energy' and ‘Sencap', a joint venture of Public Power Corp. and U.S. energy company ‘ContourGlobal'.The two local suitors are: ‘Bulgarian Minna Kompania' and Consortium ‘Energia'.We remind you that the state decided to sell the outdated generator through an open auction, after two previous sell attempts failed.The starting price for ‘Bobov Dol', which has two operational units with output capacity of 210 megawatts and one 210 megawatt is set at 100 million BGN (50 million EUR), report from Reuters.

Iceland's Kvos Group buys Bulgarian printing co Delta+

Delta+, one of Bulgaria's biggest printing houses, has become part of Infopress Group, a leader in the Southeast European printing industry. In the wake of its take-over by Infopress owner Kvos Group of Iceland, the company will be rebranded to Infopress Bulgaria. Kvos began the take-over with the purchase of a majority stake in Delta+ in 2006. Kvos was eyeing several Bulgarian companies but picked Delta+ because it is the most profitable, said Birgir Jonsson, CEO of Inforpress Group, withholding the price of the deal. In a year, Delta+ has achieved a 50% increase in sales and is poised to repeat that performance in 2008. According to Jonsson, the sales growth is due to local demand as well as to Kvos investment in Delta+ which so far totals 7 mln euro. Jonsson estimates the value of the Bulgarian market for printing services to 40-50 mln euro. The group plans to have a 20 mln euro share in 2008. In addition to Bulgaria, Kvos also does business in Romania and Hungary.

Bulgaria company starts joint production with IKEA

The Bulgarian woodworking firm "Darvoobrabotvane VT" starts joint manufacturing with the Swedish furniture company IKEA. A new factory workshop has already been built in the city of Veliko Turnovo in central Bulgaria as part of the first phase of the joint manufacturing project. It has been almost fully equipped by IKEA, and employs 85 persons, with 70 more to be hired. The management of "Darvoobrabotvane VT" has emphasized that this was a new phase in the technological development of the company, which aims to come up with new products, but also to introduce new and more efficient technologies. In the last few years, the Bulgarian firm had been selling much of its production to IKEA but the offer for joint manufacturing on part of the Swedish company came in 2007. The planned investments for 2008-2010 are about BGN 5 M. The Veliko Turnovo company is currently producing mainly armchairs and stools for IKEA. The furniture is made from wooden waste treated with tar. "Darvoobrabotvane VT" has a 45-year history. Its cooperation with IKEA will enable it to continue to employ some 500 persons, which makes it one of the biggest employers in the region.

 

 

ANALYSIS:

 

Expect economic crisis in Bulgaria

Publication: News.bg

 

The Bulgarians should be extremely moderate in their desire to invest because objective economic difficulties are piling over the country.This claimed in an interview for Nova TV Dimitar Ivanov, former economic counselor of president Parvanov, member of the Economic council to the president. He forecast serious difficulties for the bank system in Bulgaria.According to the famous economist Bulgaria is at the age of the second big financial crisis within the last 11 years if urgent political and economic measures are not taken. We are witnessing two very serious things at the moment – for the first time it becomes clear that the oligarchy model of the power, created in the last 18 years, cannot continue functioning, emphasized Ivanov.The expert pointed out that the oligarchy model could not have been created, developed and functioned without the help of important state institutions. This cannot be an asset neither for the current, nor for the previous government, commented Ivanov. The economist gave as an example the owned by the richest Bulgarian, which is estimated at 3.54% of the Bulgarian GDP. According to Ivanov the three richest Bulgarians own more than 7% of the GDP.As a comparison Ivanov pointed out that the $ 56 bln of the richest American Bill Gates amount to 0.4% of the US GDP and the richest ever American Rockfeller had 2% of the US GDP.According to Ivanov, Bulgaria has turned into a symbol of the corruption and crime in Europe. “I am amazed as an expert by the pink picture which the government outlines regarding the country's economy”, claimed the economic expert. According to him, continuation of the work of the cabinet “Stanishev” means economic crisis because the question is - in this world crisis with the very high vulnerability of Bulgaria can the economic ship be led by Stanishev.Grotesque and surreal, this is how Ivanov described the situation with the scandals in the Bulgarian ministry of interior and the non-confidence vote – “at the background of the fact that hundreds of thousands of Bulgarian families might become 'under water'”.At the background of the financial crisis, the government and the coalition are dealing with protecting the public failure of a minister, claimed the former president adviser.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bulgarian inflation quickened in March on fuel, food

Author: Elizabeth Konstantinova, Bloomberg.com

Bulgaria's inflation rate rose to the highest in more than 10 years last month as higher fuel costs pushed up prices for food and services. The rate rose to 14.2 percent from a 10-year high of 13.2 percent in February, the National Statistics Institute said in a statement today. Consumer prices gained a monthly 0.8 percent after a 1.1 percent increase in February. The median estimate of six economists surveyed by Bloomberg was for an annual 13.5 percent. Bulgaria and the Baltic states of Latvia, Lithuania and Estonia are struggling to slow inflation because their currency board systems limit options for central banks to use interest-rate policy to stem price growth. The nations need to hold down inflation so they can adopt the euro.

``Apart from fuel and food prices, spending on tobacco also rose as higher excise duties imposed in January affected cigarette prices,'' Georgi Angelov, a senior economist at the Open Society Institute in Sofia, said today. ``A 33 percent increase in the excise duty on tobacco goods was not felt in the first two months of the year as shopkeepers stocked up on cigarettes at last year's lower prices. Obviously supplies ran out in March.''

Prices on alcohol and tobacco rose 2.3 percent in March after 0.3 percent in February.

Food, Transportation

Food prices, which account for 35 percent of the consumer- price basket, rose 1 percent in March, after a 1.7 percent increase in February. Transportation costs, which include gasoline prices and make up 8.6 percent of the consumer-price basket, rose 1.2 percent in March, compared with a gain of 0.9 percent in February. ``Rising costs of global oil and food prices push up service costs,'' Tsvetoslav Tsachev, head of research at Elana Trading in Sofia, said in an e-mail before the release. Service costs rose 2.2 percent in March. Bulgaria's harmonized inflation rate, measured under EU- methodology, rose to 13.2 percent in March from 12.1 percent in February. Prices climbed 0.9 percent in the month, compared with 1 percent in February, the statistics office said. The European Commission warned Bulgaria in a Feb. 13 report that it is ``vital'' the government act quickly to contain external imbalances and inflation to minimize economic risks. The International Monetary Fund cut Bulgaria's EU harmonized inflation forecast on April 8 to 7.2 percent from a previous projection of 7.9 percent. The Center for Economic Development, a Sofia-based research group, predicted on Feb. 11 an inflation rate of 6 percent at the end of 2008. To contact the reporter on this story: Elizabeth Konstantinova in Sofia at ekonstantino@bloomberg.net