불가리아 주요 경제뉴스 ( 6 – 13 JUNE 2008 )

BULGARIAN ECONOMIC TOP NEWS DIGEST

WEEKLY REPORT ( 6 – 13 JUNE 2008 )

 

 

Sections/headline briefs:

 

 

 

MACROECONOMY:

 

·        NSI reports 15% inflation in May

·        IMF director Strauss-Kahn commends Bulgaria for its economic stability

·        Foreign Minister Kalfin receives World Bank Director for Central Europe, Baltic states and Central Asia Orsalia Kalantzopoulos

·        Russia reiterates readiness to fund Belene nuclear plant

·        Bulgaria introduces 14-18 % electricity price hike

·        Bulgarian Economy Minister says planned energy prices hikes to speed up inflation by up to two percentage points

·        Bourgas - Alexandroupolis construction to start within a year

• Oil prices rise to new record high

·        Prices on Bulgarian Stock Exchange will hardly skyrocket

·        Oxford Business Group unveils report on Bulgaria

·        Breakfast and wines make Bulgaria popular in Brussles

·        Lower VAT on bread demanded from producers

·        Danube Bridge-2 construction starts off

·        Varna Airport with regular flights to 24 destinations

• New tender for Gorna Arda hydropower project mulled

·        25 000 new motor vehicles sold for the first five month

·        Automobile union turns into association

·        Sofia, Bucharest chambers of commerce step up cooperation

·        Bulgarian business interested in Macedonia

·        EC warns Bulgaria about report on renewable energy sources

·        Bulgaria's Kozloduy N-Plant to run at full capacity of 15 Bln KWh of electricity per year

·        Energy Minister Dimitrov pays visit to Germany

 

 

INVESTMENTS:

 

·        Lithuanian investments in Bulgaria to reach $500M, foreign minister expects

·        Bulgarian arm of Israeli Electra Group plans to invest �320 M in 2 residential compounds in Varna

·        Sparkasse Immobilien AG to invest up to �300 М in Bulgaria

·        Buyers lured by luxury houses in Simeonovo

·        German retailer Metro to invest BGN 150 M in Bulgaria

·        Fiscal tourism starts in Bulgaria

·        Spain company Marina d'Or invests in vacation complex in Bulgaria's Ribaritza

·        Spain's Sol Meliá may run Sozopol yachting marina

·        Investors to build dozen yacht marinas on Bulgarian coast

·        Trade centre worth � 31.5M to open in Sliven

·        Dutchmen invests �36 M for building a Mall in Blagoevgrad

·        Golf and Spa complex to be built in Pravets

·        Metinvest mulls investments in local Promet Steel

·        Actavis has invested more than �75 M in Dupnitsa factory

·        Microsoft to invest USD 1 M in innovations in Bulgaria schools

 

 

COMPANIES:

 

·        890 Bulgarian firms registered in Romania

·        Gaz de France eyes projects in Bulgaria

·        Bulgargaz to request natgas price hike by 22%

·       Roca Bulgaria leader with 60% of market

·        Kamaz interested in opening plant in Varna

·        5 Bulgarian firms among CEE best employers 2007-2008

·        Steel maker ventures into cars industry

·        Glavbolgarstroy, Bulgartabac, Domayne-Boyar аmong largest Bulgarian investors in Russia

·        Automobile Expo Room Sofia will open doors for 18^th time in Bulgaria's capital

·        Germany extends �9.5 M to back SMEs, micro lending in Bulgaria

 

 

ANALYSIS:

 

·        The Washington Times: No Bulgarian sanctions

·        Bulgaria's Q1 GDP growth seen accelerating Y/Y

 

 

Articles:

 

 

MACROECONOMY:

 

NSI reports 15% inflation in May

Consumer prices in Bulgaria went up by an average of 4.7% in the first five months of 2007, the National Statistical Institute (NSE) reported. The inflation rate stood at 15.0% in May alone. The consumer price index (CPI) stood at 100.5% in May against April, which indicates that the inflation accelerated by 0.5%. The Harmonized Consumer Price Index came to 100.9% in May against April, which indicates inflation of 0.9%. Year-on-year inflation in the period January to May stood at 13.9%. The prices of the following foods appreciated in May: rice (+14.7%), bread and paste products (+1.1%), pastry products (+1.4%), poultry meat (+0.7%), pork (+0.6%), fish and fish products (+1.4%), milk (+0.9%), fresh and frozen vegetables (+15.8%), ice cream (+1.7%), potato and potato products (+7.1%), alcoholic beverages (+2.5%), soft drinks (+2.6%) and tobacco products (+3.4%). The following foods depreciated: cheese (-1.0%), mushrooms (-5.9%), cucumbers (-51.2%), garlic and leek (-19.3%), leaf vegetables and radishes (-18.9%), tomatoes (-3.0) and cabbage (-27.6%). Non-food products and services that registered price increases in May included: men's suits (+2.8%), women's suits (+3.7%), shoes (+1.8%), housing rents (+1.3%), А95Н gasoline (+6.6%), А98Н gasoline (+5.7%), diesel fuel (+7.6%), taxi fares (+0.2%), bus transportation (+2.2%), restaurant and cafe services (+0.6%), social services (+0.9%), car insurances (+2.5%) etc. The prices of the following products and services declined: photographic equipment (-1.0%), cookers (-0.2%), heating equipment (-1.2%), gardening and floriculture (-1.5%), vacationing and tourism services (-2.6%).

 

IMF director Strauss-Kahn commends Bulgaria for its economic stability

 

The Director of the International Monetary Fund Dominique Strauss-Kahn has expressed a high opinion of Bulgaria's economy and financial system. Strauss-Kahn made the comments in Amsterdam at the meeting of the IMF and the World Bank, where he met with the Director of the Bulgarian National Bank Ivan Iskrov. The IMF Director has emphasized the need for the continuation of Bulgaria's present prudent fiscal policy, the press service of the Bulgarian National Bank announced. The participants in the Amsterdam meeting, which is to last until June 8, are going to discuss matters related to the credit crisis on the international financial markets, the global movement of capitals, and the consequences for the national economies, as well as the World Bank strategy for aiding developing economies.

 

 

 

 

 

 

Foreign Minister Kalfin receives World Bank Director for Central Europe, Baltic states and Central Asia Orsalia Kalantzopoulos

Foreign Minister Ivailo Kalfin conferred Friday with World Bank Director for Central Europe, Baltic States and Central Asia Orsalia Kalantzopoulos, the Foreign Ministry said in a press release. The meeting was also attended by World Bank Resident Representative in Sofia Florian Fichtl. The participants in the talks discussed a broad range of issues, including the progress of the reform in the judiciary in Bulgaria, improvement of the social living conditions, the state of the labour market, immigration and demography, risk management in the event of natural disasters and the provision of adequate resources to face the challenges of the global climate change in the regional scale. Kalfin said that the creation of an effective judiciary in this country in cooperation with its partners in the EU is a priority of the incumbent government. Kalantzopoulos expressed the World Bank's expectations for visible and effective results from the reform of the judiciary. She said that the World Bank has observed an improvement of living conditions in Bulgaria. The participants in the talks also discussed the state and opportunities to extend regional cooperation in infrastructure, economic relations and risk prevention of natural disasters caused by climate change.

 

Russia reiterates readiness to fund Belene nuclear plant

Russia is ready to raise funding for the construction of a new nuclear power plant at the Danube town of Belene, Bulgarian energy minister Petar Dimitrov said after meeting with Rosatom CEO Sergei Kirienko and representatives of AtomStroyExport, the company hired as a building contractor for the new asset. Last week, Bulgarian power utility NEK and France's BNP Paribas signed an agreement on the project funding. During then Russian president Vladimir Putin's visit here earlier this year, he said that 3.8 bln euro have been set aside for the Belene project. The meetings confirmed the project is not facing a funding crunch of any kind, said Dimitrov. The competition to select a bank to structure the project funding attracted two entrants, BNP Paribas and Societe Generele. BNP Paribas has already extended a 250 mln euro syndicated loan to NEK.The Bulgarian and Russian sides have already signed the contract for the demolition of the structures assembled on the Belene site before the project was put on hold in the early 1990s. Construction in earnest is expected to get underway in early 2009.

Bulgaria introduces 14-18 % electricity price hike

 

The price of the electricity across Bulgaria will be increased by between 14 and 18 per cent on July 1, announced Tuesday Konstantin Shushulov, the chairman of the State Commission for Energy and Water Regulation.Sofia citizens as well as people, living in Western Bulgaria, will have to pay 16.01 % more for their electricity supply, which is the increase fixed by the provider CEZ.The clients of EVN Company are to see 14.59 % hike of the electricity. The third provider E.ON has set 17.72 % increase in the price of the electricity."Podkrepa" Labor Confederation and the Independent Syndicates Confederation (KNSB) demanded that the electricity price should not go up for at least one year more accusing the energy regulator of intentionally boosting the inflation by such an increase in the prices."All attack us just because we are doing our work properly. Actually the problem is not the higher price of the electricity but the low incomes of the Bulgarian population," Shushulov explained.

Bulgarian Economy Minister says planned energy prices hikes to speed up inflation by up to two percentage points

 

Planned hikes in the prices of electricity and steam-heating power for households will speed up Bulgaria's inflation by one or two percentage points, according to the country's Economy Minister Petar Dimitrov, a local daily reported on Wednesday. If the state energy regulator, however, accepts the economy ministry's proposition for a smaller increase in prices, inflation will accelerate by less than one percentage point, Monitor daily quoted Dimitrov as saying. Bulgaria's energy regulator has proposed an increase of up to 18% and 14% in the prices of electricity and steam-heating power for households, respectively, as of July 1. Following the increases, the prices of electricity and steam-heating power would reach a weighted average of 151 levs ($120.3/77.2 euro) and 172.9 levs per megawatt hour (MWh), respectively. However, Bulgaria's Economy Ministry, which advertises Bulgaria's lowest electricity prices in the EU as one of the country's attraction for investors, proposed on Tuesday a reduction of the planned electricity price hikes by 7.0% for households. It also proposed that the increase in the price of steam-heating power for households be 1.0% to 1.5% lower than the one planned by the regulator. Bulgaria's annual consumer price inflation accelerated to 14.6% in April from 14.2% in March, official statistics indicated earlier this month. Bulgaria's finance ministry expects end-year inflation to slow to about 6.9% in 2008 from 12.5% at the end of last year. The planned rise in regulated heating and electricity prices in Bulgaria, the poorest European Union member state, will affect businesses and energy companies along with households, industry officials said earlier.

Bourgas - Alexandroupolis construction to start within a year

The construction of oil pipeline Bourgas - Alexadroupolis will start within a year, the chairman of political cabinet in Regional Development Ministry Stefan Gunchev declared.According to his words, the new pre-projecting examinations for the pipeline effectiveness have to be conformed to the new petrol's prices.In Gunchev's words the executive directors of the companies, included in the project will meet in Moscow on June 10. There will be elected economical consultant and in 5 to 6 months the terrain pre- project examinations will start.The construction itself will most probably start within a year.The plans are the construction works to be finished for 12 months, so in 2010 the pipeline will be ready to start function.

 

Oil prices rise to new record high

 

Oil prices have shot up more than USD 10 on Friday to a new record above USD 138 a barrel.The biggest one-day surge ever in crude prices was fueled by a mix of factors, including a gloomy US job report and interest-rate fears that drove down the dollar, as well as unease in the oil-rich Middle East, the Los Angeles Times reported.The news for the new price hike came along with the prediction from a Morgan Stanley analyst, claiming oil could hit USD 150 by July 4.Aviation executives at the same time have said even USD 125 oil wrecks the industry's business model.

 

 

Prices on Bulgarian Stock Exchange will hardly skyrocket

There are some long-term positive prospects for Bulgaria's Stock Exchange Sofia - a constant inflow of foreign investments and of over one billion euro a year from the EU funds, as well as a rather conservative budgetary policy of the Cabinet and the recent tax reduction, etc. These factors, however, were also present nine months ago, yet SOFIX index slumped by over forty percent. Last month, the market capitalization went up by ten percent, but given the disappointing annual reports of many Bulgarian companies, high inflation, world financial crisis, which has not abated yet, and the unstable property market in the USA, which may cause some indexes at the world stock exchanges to slump again, we can hardly expect the prices at the Bulgarian stock exchange to skyrocket by the end of the year.

Oxford Business Group unveils report on Bulgaria

 

A report on Bulgaria by the Oxford Business Group was unveiled in Sofia on Monday. The report contains interviews with President Georgi Purvanov, Prime Minister Sergei Stanishev and Deputy Prime Minister and Foreign Minister Ivailo Kalfin, the viewpoint of European Commission President Jose Manuel Barroso, US Senator George Voinovich and former rapporteur for Bulgaria Geoffrey van Orden.The report analyses the effect of Bulgaria's accession to the EU on various economic sectors. It contains a detailed analysis of the new corporate tax and the taxation reform. Special attention is devoted to the development of the energy sector, infrastructure renovation and the country's potential in the IT sector.Foreign Minister Kalfin said the report is objective as it combines the outside view with the inside view, which gives the best possible picture to investors. Last year, when the report was compiled, was the first year of Bulgaria's EU membership, Kalfin said. According to him, the report acknowledges the high growth of foreign investment, which totals 13,000 million euro since 2005. Bulgaria remains a leader among European countries in terms of foreign direct investment, he said.The report pays attention to a major issue: the current account deficit, Kalfin said, adding that a large part of the deficit is due to production investments. With the changes in the Investments Act, the available incentives are for investments in production activity, he said.The report also discusses last year's inflation, which was much higher than the projection for the 2007 budget. This is due primarily to two reasons: growing prices of food and of energy resources, Kalfin said. According to him, the Government carefully follows the problem and takes anti-inflation measures. The Bulgarian economy, including the financial sphere, is well protected. Bulgarian banks have not been affected by the credit crisis, he said.

Breakfast and wines make Bulgaria popular in Brussles

Breakfasts, prepared by national recipes and Bulgarian wines welcome the visitors of the Bulgarian stand on the organized in Brussels 'Festival of Europe' on 7th June. During the international forum all EU member - countries present their native land on separate stands. Except obtaining all kinds of advertising Bulgaria materials, the numerous visitors of Bulgarian stand can receive all kinds of information about the country. The tasting of Bulgarian national breakfasts and local wines contributes for the common good spirit and arises higher interest in Bulgarian national cuisine, the Black sea resorts and opportunities of spending vacation in Bulgaria and the culture and history of the country.

Lower VAT on bread demanded from producers

Sofia. The Federation of Bread producers in Bulgaria made a proposition the VAT for all bread products to be reduced with 5% each year for two years in a row reaching 10%. Bulgaria is the only country, which has no preferential VAT practice for food. In the same time VAT considerably contributes to the price of bread in Bulgaria, head of the Federation Dimitar Lyudiev announced. According to Lyudiev the high VAT is the main reason for the large extent of “grey sector” in bread production.

Danube Bridge-2 construction starts off

At long last, the Danube Bridge-2 construction has been launched. "The first concrete pier has been embedded," one of the engineers in charge of the project's implementation, Konstantin Zhiponov, said. Driving the first pier in also set off the planned testing of the foundations of the Danube Bridge-2 at the construction site in Vidin. Vidin Municipality Mayor Rumen Vidov attended the long awaited event, which certainly gave the locals a strong sense of occasion. Fixing the piers will be done around the clock in three shifts to compensate for the delay of the project. The Italian Terra Test have been assigned the task of embedding all piers, the scaffolding is a Bulgarian company's responsibility and there is also a team of French experts to keep tabs on the works. The experience of one of them extends to as much as 700 kilometres of tunnels worldwide. In fact, the technology utilized is his brainchild.  

Varna Airport with regular flights to 24 destinations

Varna airport had serviced over 185,000 people since the year started until May.This is 8% growth compared to the last period last year, informed from the airport administration.The bigger possibilities for traveling are the low-cost air companies.There are many flights to the Denmark and the German capitals - Copenhagen and Berlin and also to Dusseldorf and Koln (Germany).In June started flights to the central European capitals of Warsaw, Prague, Bratislava and Vienna.There will be also flights to Sofia four times a week starting from July.From Varna airport are also realizing charter flights to several destinations in Europe.During the week occur happen regular flights to 24 destinations in different countries: Russia, Germany, UK, Ukraine, Poland, Switzerland, Belgium, Luxembourg, Denmark, Hungary, the Czech Republic, Slovakia and Austria.

New tender for Gorna Arda hydropower project mulled

Bulgaria's Economy and Energy Ministry would shortly call a tender for an investor and developer of Gorna Arda hydropower project, sources close to the ministry told Dnevnik daily on June 8. Economy and Energy Minister Petar Dimitrov is said to have signed the relevant paperwork to this effect.According to Bulgaria’s Deputy Economy and Energy Minister Valentin Ivanov, a score of companies, among which Italy’s Enel, Norway’s Statkraft, Austria’s Alpine Bau, have expressed interest in the project.The news comes amid an ongoing litigation between the successor of Turkish holding Ceylan and Bulgaria’s power grid operator NEC at the International Court of Appeals in Paris, in which Turkish company CCG Insaat Sanayi Yatirim Ve Turizm has requested 75 million euro in damages over the Government’s failure to grant the hydropower project on concession.During the recent visit of Turkish prime minister Recep Tayyip Erdogan in Sofia, Bulgarian Prime Minister Sergei Stanishev is said to have asked the company to withdraw its lawsuit.Ivanov said that despite the plea at the highest level, Bulgaria is yet to resolve another outstanding issue, the 1999 inter-governmental agreement for export of electricity in return for participation of Turkish companies in infrastructure projects.

25 000 new motor vehicles sold for the first five month

25 000 new motor vehicles have been sold for the first five months of this year, chairman of Management Board of Union of the Importers of Automobiles in Bulgaria, Stoyan Zhelev, Focus News Agency reporter informed. The total growth is around 24%. The main “merit” is to trucks and buses where the growth is 78%. “Those are the automobiles connected to the business and industry development. The number of the light-freight vehicles is seriously decreased compared to last years’ growth”. In terms of makes, Opel remained leader with 2,830 vehicles sold and a market share of 12.17%. It was followed by Toyota with 2,345 deals and 10.08% of the market and Volkswagen with 2021 sales and 8.69% of the market. Ford (1,930 sales, 8.3%), Peugeot (1,718 sales, 7.39%) and Dacia (1,386 sales, 5.93%) completed the top six list.

Automobile union turns into association

The Union of the Importers of Automobiles in Bulgaria has instituted changes to its articles of association and will hereafter carry the name Association of Automobile Producers and Their Authorised Representatives in Bulgaria, Stoyan Zhelev, chairman of the industry organisation, said at a news conference. The change reflects the new situation in trade with new automobiles in Bulgaria following Bulgaria's EU accession.
Bulgaria already applies the EU directive 1400/2002, which divides automobile distribution into exclusive and selective. In this connection, importers had to change their style of work and register new legal entities specialised in wholesale trade only. Several world producers registered their direct local representations, while others handed over similar rights to former dealers. AAP is an organisation of wholesalers that are direct representatives of automobile priducers. It will remain a member of the International Organization of Motor Vehicle Manufacturers (OICA) and the European Automobile Manufacturers Association (ACEA). The association will promote the establishment of modern conditions for the development of automobile production, import, trade and maintenance.

Sofia, Bucharest chambers of commerce step up cooperation

The Chambers of Commerce and Industry of Sofia and Bucharest signed an agreement Monday here to step up cooperation.They will participate jointly in EU-funded project, will exchange business information, map out measures to encourage small and mid-sized businesses and underscore tourism in their contacts, said the leader of the Sofia Chamber of Commerce Georgi Chernev.Chernev met with the new chairman of the Bucharest Chamber of Commerce and Industry, Ion Pargaru, the Executive Director of the Bulgarian-Romanian Chamber of Commerce and Industry, Emilian Enev, and the chairmen of the Rousse Chamber of Commerce and Industry, Valeri Andreev and Ivan Cherkezov, to discuss the cooperation opportunities this and next year.

 

 

 

Bulgarian business interested in Macedonia

 

A twenty-five-member business delegation from Blagoevgrad, southwestern Bulgaria, was on a working meeting in Macedonia. Businessmen from both countries discussed investment opportunities and possibilities for cross-border cooperation among entrepreneurs. The Bulgarian delegation had meetings with the management of the Economic Chamber of Macedonia and the Agency for Foreign Investments of the Republic of Macedonia, as well as with the management of Kapital Banka Skopje, owned by Bulgaria's Alpha Finance Group. The Bulgarian visitors also saw the work of the Macedonian Stock Exchange and the Securities and Exchange Commission.At the Bulgarian Embassy, the business delegation was informed about the obstacles to Bulgarian investments, visa preferences offered to entrepreneurs, as well as opportunities for hiring Macedonian workers by Bulgarian companies. It was pointed out that geographical proximity, the lack of a language barrier, the similarity in legislation and the already established business links provide an advantage to entrepreneurs from Blagoevgrad and the region in doing business with their Macedonian colleagues.

EC warns Bulgaria about report on renewable energy sources

 

The Economy and Energy Ministry on Tuesday received a letter from the European Commission in connection with the requirements concerning the promotion of the production and the consumption of electricity from renewable energy sources on the domestic electricity market, the Ministry said in a press release.An EU directive requires the member states to submit by October 27, 2007, a report containing an analysis of the success achieved in the attainment of the national goals. The letter says that the European Commission has not received Bulgaria's report on the production and consumption of electricity from renewable energy sources and sets a two-month deadline for the submission of the report.Bulgaria's report is ready and will be sent to the European Commission within ten days, together with information about the reasons for the delay. For the purposes of this report it has been necessary to collect, process and analyze large amounts of information on the available resources of renewable energy sources, alternative energy sources and biofuels, the technical potential which can be used, the producers of energy from renewable energy sources, alternative energy sources and biofuels, and projects for the utilization of renewable and alternative energy sources and biofuels. For the necessary analysis for the purposes of the report, the respective data was necessary, which the National Statistical Institute provided in March, the press release says.

Bulgaria's Kozloduy N-Plant to run at full capacity of 15 Bln KWh of electricity per year

Bulgaria's sole nuclear power plant Kozloduy plans to operate at full swing and generate between 14.5 billion and 15 billion kilowatthours yearly in the following years, aiming to meet rising domestic demand, its CEO Ivan Genov said.Last year we generated over 14 billion kWh [...] and this year we have the ambition to generate 15 billion kWh but these are the upper limits," Genov told SeeNews in a recent interview.Kozloduy plant has generated 7.47 million megawatthours (MWh) so far year, meeting its six-month production target ahead of schedule.The limit for the next years is around 14.5-15 billion kWh," Genov said.Kozloduy, once operating six units with a combined installed capacity of 3,760 megawatts (MW), has remained with just two operating reactors of 1,000 megawatts each after closing two pairs of 440-MW units - the first one in 2002 and the second one at the end of 2006 - to address nuclear safety concerns of the European Union prior to its accession. Bulgaria joined the EU in 2007.From now on, in this regulatory framework, a rise in output is impossible," Genov said.Prior to the closure of the two pairs of reactors, Kozloduy was the main tool that ranked Bulgaria among Europe's largest power exporters.It exported 7.5 billion kWh in 2005 and 7.8 million kWh in 2006. Bulgaria's dominant power exporter NEK said earlier the country exported just 4.5 billion kWh last year."The output of Units Three and Four [closed in 2006] was 7.0 billion kWh a year so you can easily see where this energy has come from," Genov said.Our output actually fell by 4.9 billion kWh last year and even though we succeeded to raise the capacity of Units Five and Six by some 2.0 billion kWh, this cannot compensate fully for the loss of Units Three and Four," he added.Kozloduy completed last year an upgrade of its last two operating units allowing for an extension of their lifespan by 15-20 years.The plant's gross electricity output last year reached 14.6 billion kilowatthours (kWh), 6.3% above plan. Net electricity output totalled 13.69 billion kWh, of which close to 4.1 million kWh were sold on the free market.Kozloduy has no exports data for last year because of a change in the regulatory framework introduced in the middle of the year, Genov said. Before July 2007, Kozloduy had a quota for sales on the free market and the rest it sold at government-regulated prices, while as of July a quota was introduced for its sales on the regulated market, he explained.The energy generated by Kozloduy is currently sold only domestically. The plant is not directly selling on the free market under an agreement with NEK, which obliges the plant to sell to NEK its total power output and then NEK contracts deals for power exports. Its quota for the next half year starting from July 1, 2008 is 8.2 billion kWh. The rest will be offered on the free market," said Genov, adding that it is up to NEK to conclude export deals. [...] if we start exporting without coordinating it with NEK, others will also start doing it," Genov said. He added Kozloduy has serious commitments locally, selling electricity to companies that are crucial for Bulgaria's economic growth and rely on it for cheap energy. A megawatt of electricity generated by Kozloduy sold to NEK now costs 12.68 levs ($10.2/6.5 euro), while electricity produced by Bulgaria's coal-fired power plants costs between 35.22 levs and 58.33 levs per MWh. Prices do not include value-added tax of 20%.

Energy Minister Dimitrov pays visit to Germany

Economy and Energy Minister Peter Dimitrov is paying a two-day visit to Germany, his ministry said on Wednesday. Dimitrov will confer with the Minister for Economic Affairs and Energy of North Rhine-Westphalia, Christa Thoben, and Duisberg Mayor Benno Lensdorf. A visit to Europe's biggest river port in Duisburg and a meeting with the port management are also on the agenda of Dimitrov's visit.In Hamburg Dimitrov will have meetings with Berndt Roeder, President of the Hamburg Parliament, Axel Gedaschko, Senator at the State Ministry of Urban Development and the Environment and the management of the Hamburg Chamber of Commerce. He will also visit the Hamburg Port and will meet local companies interested in Bulgaria. During their talks, Dimitrov and his counterparts will focus on the opportunities to enhance bilateral trade and economic cooperation, investments and intercompany cooperation. The Economy and Energy Minister will also get acquainted with the German experience in the field of small and medium-sized enterprises, absorption of EU funds, development of innovations and clusters, export promotion.

 

INVESTMENTS:

 

 

Lithuanian investments in Bulgaria to reach $500M, foreign minister expects

 

Lithuanian foreign minister Petras Vaitiekunas told Bulgarian counterpart Ivailo Kalfin at a June 10 2008 meeting he expected a big increase of Lithuanian investments in Bulgaria, the press service of the Foreign Ministry said in a statement. According to Vaitiekunas, investments from Lithuania to Bulgaria could rise to up to $500 million, compared to their current value of $10 million. Kalfin, for his part, said he was glad Vaitiekunas came accompanied by a big business delegation, which he defined as proof of Lithuania's serious intentions and the big opportunies for Bulgarian-Lithuanian business co-operation. He added that Lithuania accounted for 60 per cent of Bulgaria's trade with the Baltic states and that the forthcoming opening of a Lithuanian embassy in Sofia was a sign of the importance the two states attached to their relations. Vaitiekunas arrived June 9 to an official three-day visit to Bulgaria at the invitation of Kalfin. During their June 10 meeting, the two minsters observed the big pace at which bilateral relations in the political and economic field developed and ascertained similarity in the two states' stands on a number of current issues on the agenda of the European Union and Nato. Opportunities to expand co-operation in fields of mutual interest such as transport, tourism, culture and education, agriculture, defence and construction were also discussed. Kalfin introduced Vaitiekunas to Bulgaria's policy on entering the Schengen area, the euro-zone and the efforts the Government made under the judicial reform and the fight against organised crime. The two exchanged opinions on EU's new Lisbon Treaty and its future functioning in different aspects, among which the organisation of the European diplomatic service. Kalfin and Vaitiekunas expressed close views on the situation in the Western Balkans. The two proclaimed themselves in favour of pursuing a more active European Union neighbourhood policy towards the East - the states of the Black Sea region and Central Asia. The Black Sea Synergy initiative was pointed out as an important instrument in that respect. The two said the relations between Russia and the EU were of strategic importance and should be developed based on the common European values. They pointed out the EU had to look for new forms of tripartite and multipartite mechanisms to pursue a more active neighbourhood policy. It was necessary that active work be done to solve the frozen conflicts, the ministers also said.

Bulgarian arm of Israeli Electra Group plans to invest �320 M in 2 residential compounds in Varna

 

The Bulgarian arm of Israeli investment company Electra Group, Electra Bulgaria, plans to invest some 320 million euro ($499 million) in two residential projects in the Black Sea city of Varna, a senior executive of Electra Bulgaria said on Monday. Electra Bulgaria plans to invest some 300 million euro to build a residential compound in Varna's suburbs, the company's sales manager Peter Petrov told SeeNews by phone from Varna, where the company is based. The compound will have a built-up area of around 400,000 square metres (sq. m.) and will stand on a land plot of 50 hectares, Petrov said. The construction of the project can start next spring and can take five to seven years, he said adding that the timeframe depends on the market situation and how quickly the company obtains the necessary permits. The second residential project, called Botanica VIP Residence, is worth 20 million euro and will have a built-up area of nearly 19,000 sq. m. The gated compound, also located in Varna, is under construction and is expected to be ready by the end of 2009. Electra Bulgaria funds the second project via its subsidiary Kalimantsi Properties. Electra Bulgaria has two more projects in the largest Bulgarian coastal city - a business centre with a built-up area of some 15,000 sq. m and a residential compound, Green Park, with a built-up area of 18,000 sq. m., Petrov said declining to reveal the size of the investment. The construction of the business centre is expected to start within four months and is due to be completed within 16 months. Petrov did not provide a timeframe for the latter project as it is still in an early stage. Electra Bulgaria is part of Electra Investment, which is a real estate developing arm of Electra Group (www.electra.co.il). The group company, listed on the stock exchange in Tel Aviv, is active in real estate investment and development, construction and investment in electro-mechanical systems and infrastructure. Electra Group also provides property management, systems operation and maintenance. The company is present in many countries including the U.S., Canada, Belgium, Latvia and Ukraine. The real estate sector in Bulgaria has thrived in the recent years with investors drawn by expectations for high yields after the country's accession into the European Union in 2007.

 

Sparkasse Immobilien AG to invest up to �300 М in Bulgaria

Sparkasse Immobilien AG, the real estate division of Erste Bank Group, said it will offload some of its assets in mature markets like Germany and Austria to focus on Bulgaria, Romania, Serbia and the Ukraine. The company has earmarked around 200-300 mln euro for investment in Bulgaria over the next 2-3 years. Here, the company will pursue opportunities on the retail and office property segments with several investment schemes already in progress. Sparkasse Immobilien AG said the Bulgaria market still had untapped potential and it sees a number of investment options. Sparkasse Immobilien AG has already partnered up with Germany's ECE Projektmanagement, and lease financing company Immorent Bulgaria, part of Erste Bank leasing unit Immorent Aktiengesellschaft, to build the Serdika Center shopping mall in Sofia. The project should be completed by 2010. Sparkasse Immobilien AG is also developing two office schemes and a residential community in Sofia.

Buyers lured by luxury houses in Simeonovo

Large, luxury houses will be the most expensive properties in Simeonovo River Park, a new village that will be built on the outskirts of Sofia, at the foot of the Vitosha mountain. The project will be carried out on 24.8 ha of land near the ski lift in Simeonovo residential district. Manastira of the Dinev brothers and Raiffeisen Evolution's Sofia Sky are located in the same region.Simeonovo River Park will include a total of 202 houses, which will make it the biggest such project in the region of Sofia. There will be 36 types of houses of different size. The gem of the complex will be 16 custom-made residence, each with an area of 850 sq. m. Investors in the project, which amounts to more than EUR 100 million, are Litos & Co and two companies from South Africa and Ireland.
Unexpectedly to us, the residences have attracted the strongest interest and six of the houses have been sold already, Litos & Co's manager, Ivo Kolushev, said. The buyers are Bulgarian businessmen. The most expensive property sold so far in the complex costs more than EUR 3 million. All prices are above EUR 600,000. The project will have large parks and all necessary amenities. A spa hotel is also planned to be built.

 

German retailer Metro to invest BGN 150 M in Bulgaria

Metro Cash&Carry, the German chain of self-service wholesale warehouses, has slated 150 mln levs for investment in three new local outlets in as many years, it emerged during the relaunch of an upgraded hypermarket in Varna General manager Willi Beisheim said this sis the first local Metro outlet that meets all relevant EU standards. The investment in the Varna outlet topped 6.4 mln levs. It has an area of 10,250 sq m, including over 8,000 sq m in retail space and a 600 sq m of refrigerated storage. The company is currently renovating its Metro outlet on the Tsarigeradsko Shose boulevard in Sofia to bring it in line with the same standards. Work on the first of the three new outlets has already began in Pleven. It will cost over 30 mln levs and will occupy a 2.0 ha site. The hypermarket will offer 7,000 sq m in build area and 400 parking spaces. The retailer will break ground for a new outlet in Plovdiv by the end of June. No information was immediately available on where the third of the planned outlets will be sited. The company's last launch was in Veliko Tarnovo. Metro currently operates nine hypermarkets in Bulgaria.

Fiscal tourism starts in Bulgaria

 

Fiscal tourism has started in Bulgaria. Up to the present, billions in foreign direct investments have been taken for granted. Now, the opposite trend is being observed: in March 2008, Bulgarian investments abroad amounted to BGN 710 million, outnumbering FDI by more than BGN 150 million.The main reason for this process is the 10-percent flat rate tax, as well as the favourable business climate in the country. Flat tax attracts foreign companies, which have an incentive to place their regional centres in Bulgaria, thus optimising their tax expenses. The latest example is insurance giant Generali, which located its regional headquarters in the capital Sofia. The 10-percent flat tax and proper regulation influenced our decision the most, Daniela Konova, CEO of Generali Bulgaria, said. It is too early to comment on the results of our strategic move, Konova said. The effect may be felt in September 2008 at the earliest. Bulgarians will increasingly hear about investments of local companies abroad, experts say.Bulgaria, together with Cyprus, is the country with the lowest profit tax in the European Union. However, Bulgaria has an advantage because of its strategic location and the cheap qualified workforce. The country combines the tax advantages of an offshore zone and the strategic benefits of a EU member state.

 

Spain company Marina d'Or invests in vacation complex in Bulgaria's Ribaritza

 

The Spanish real estate company Marina d'Or is investing in the construction of a luxury vacation spa complex located in the resort village of Ribaritza in the Balkan Mountains, close to the town of Teteven and 132 km west of Sofia. The Marina d'Or investment plans actually include two projects in Ribaritza - Old Ribaritza and Ribaritza II. The Old Ribaritza Complex will include 833 high-class vacation apartments located along the Ribaritza River close to the village with the same name. The first apartments are expected to be ready in 28 months. The marketing campaign is just starting but it envisages massive advertising in all 22 countries where Marina d'Or has offices. The average sale price is expected to be EUR 1100 per square meter. The Old Ribaritza Complex is also going to include a retail center, a restaurant, a children's park, and its unique spa center with a balneological part.Marina d'Or is also planning to build a small quarter with residential and office areas in the Bulgarian Black Sea city of Varna.The Spanish company is currently realizing a unique project for a vacation town in Valencia, Spain.

 

Spain's Sol Meliá may run Sozopol yachting marina

The developers of a hotel and yachting marina complex in Sozopol, on the Bulgarian Black Sea coast, said they were in talks to secure a deal with Spanish hotel and resort operator Sol Meliá. The Sozopol marina, owned by Marina Port Sozopol, can currently accommodate up to 200 sailing boats with a further 150-200 berths to be added in 2009. The marina development will be enlarged with the addition of hotels, holiday apartments, yacht club, shops, restaurants, conference center and spa. Construction is due to get underway in 2008. Veselin Danev, co-manager of the Sol Meliá operations in Bulgaria, confirmed the talks with Marina Port Sozopol but said nothing has been finalised. The company official said Sol Meliá is in talks to run several more facilities on the Bulgarian coastline with concrete agreements expected to be announced over the next couple of months. Sol Meliá entered the Bulgarian market in 2007, taking charge of the hotel portfolio of investment fund Sigma Capital. It currently runs four Sigma hotels on the Bulgarian Black Sea coast.

Investors to build dozen yacht marinas on Bulgarian coast

Investors intend to invest over 100 million EUR for the construction of about a dozen yachting marinas on the local Black Sea coast in the next couple of years.This became clear at the conference held in Riviera resort, from Dnevnik a.m. reported. Currently sailing crews can dock at the yachting ports in Balchik, Sozopol, Nesebar and the resorts of Sunny Beach, Golden Sands and Sveti Vlas. New yacht marinas may soon appear South in: Nesebar, Sozopol, Tsarevo and Ahtopol. The Balchik port is foreseen to be extended to another 100-150 berths to the current 100, from Dnevnik told. From Hypo Alpe Adria Leasing said that was agreed the financing for three new yachting ports and is in talks for another four.

Trade centre worth � 31.5M to open in Sliven

 

Bulgaria's Kronos Group and European Convergence Development Company, registered on the Isle of Man, will build a trade and entertainment centre worth EUR 31.5 million in Sliven. The project under the name of Trade Center Sliven will be carried out by the company of the same name, with both companies possessing almost equal shares of the capital.European Convergence Development Company is managed by the fund Charlemagne Capital and is registered with the purpose of participating in projects on real estate markets in Eastern Europe. It has 42.5% in the Sliven project, while 7.5% are held by another Charlemagne-managed company. The remaining 50% are held by Property Capital, part of Kronos Group. Trade Center Sliven will be built on an area of 9,907 sq. m. The total floorage of the complex will be 45,000 sq. m, and it will take 33 months to build. According to an announcement to the London Stock Exchange, where European Convergence Development Company is listed, the share of the company is evaluated at EUR 3.825 million.

 

Dutchmen invests �36 M for building a Mall in Blagoevgrad

Dutch real estate investor, manager and developer Redstone (formerly Barclays Holdings) will invest 36 mln euro in a shopping mall in the city of Blagoevgrad, Southwestern Bulgaria, said Forton International, the local project advisor. The consultant said the project will fill a gap on the Blagoevgrad property market which lacks contemporary retail facilities. The retail center, nested next to the outlets of DIY retailer Mr.Bricolage and electronics retailer Technomarket, should be ready by 2011. It will deliver 50,000 sq m of build area, including 20,000 sq m of lettable retail space. The Blagoevgrad shopping mall is the Redstone project here that is at a most advanced stage. Market sources said the company intends to develop a number of property schemes across the country and is currently buying land in sea resort Sunny Beach and in the Sofia boroughs of Bistritsa, Manastirski Livadi and Simeonovo, among others.

Golf and Spa complex to be built in Pravets

Vacation complex with golf playground and Spa center will be built in Pravets town to the middle of 2010. The investment is on the amount of 100 million BGN (50 million EUR) and will be realized by the ‘Teratour services' company.The golf complex will be with common length of 6510 meters and will allow the conducting of international competitions. The complex will also have a training playground, suited for training and practice of the beginners. The hotel complex will be with built surface of 24,500 square meters.The major trade director of ‘Teratour service' Victor Panayotov explained the average sale price will be round 1,200 EUR for a square meter. According to Panayotov the unique characteristic of the ‘Pravets Golf and Spa Club' is the immediate proximity to the hunting reserve Pravets. Such a combination of opportunities for golf and hunting tourism is extreme rare in world range, Panayotov concluded.

Metinvest mulls investments in local Promet Steel

 

Ukraine’s largest metallurgic group Metinvest is planning to invest EUR 1.3bn in capacity upgrades and one of the two possible locations is the local steel factory Promet Steel, which is competing against Makeev Metallurgical Plant in Ukraine . The investment is part of the strategy of Metinvest to stop the manufacturing of semi-finished products in order to increase its profit from higher value added items. Promet Steel is located near the Black Sea port of Burgas . The company employs 850 workers and is one of the three steel producers in the country. In 2005, Promet Steel announced plans to invest EUR 35mn in expansion to raise its production capacity from 800,000 tons to 1mn tons annually.

 

Actavis has invested more than �75 M in Dupnitsa factory

 

‘In case Actavis hadn’t acquired Balkanpharma, the company wouldn’t be what it has become. It has its grounds on Balkanpharma’s achievements’, Radoslava Ganozova, Corporate Communications Manager in Actavis, said during a regional meeting of the Communications Managers , a reporter of Focus News Agency informed. Ganozova is also host of the forum. According to her, Bulgarians had little awareness of the Actavis brand, since the name sounded neither ‘Pharmaceutical-’, nor ‘Bulgarian-like’. Radoslava Ganozova noted that the company had invested more than EUR 75 Million by 2005 in the Dupnitsa factory, which is the biggest pharmaceutical factory on the Balkan peninsula.

 

Microsoft to invest USD 1 M in innovations in Bulgaria schools

 

Microsoft Bulgaria is going to invest USD 1 M in innovative technologies in the Bulgarian high schools in the next five years. This became clear Thursday as the Deputy Minister of Education Kircho Atanasov and the company CEO Ognyan Kiryakov signed a memorandum for cooperation. According to the document, the funds are to be channeled in three main categories of programs - innovative schools, innovative teachers, and innovative students. The Microsoft program provides for linking the Bulgarian innovative schools to the world network of such schools as well as for free email account for every Bulgarian students at the live@edu domain. During the first five years of its partnership with the Ministry of Education, which started in 2003, Microsoft Bulgaria has invested USD 800 000 in providing licensed access to different programs for the Bulgarian schools.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

COMPANIES:

 

890 Bulgarian firms registered in Romania

Bulgarian firms in Romania are 890, as most of them are small and middle enterprises.This was reported in the city of Ruse by the economy councilor in the Romanian Embassy to Bulgaria Radu Moldovan.According to his words Romanian investments in Bulgaria also increase. Round 6 million EUR Romanian investments were entered in local furniture industry in 2007.The North neighbors are also investing in the petrol industry, constructions and communications.Ambassador Moldovan also informed for a jump in Bulgarian - Romanian stock exchange during 2008 with 20-30%. His prognosis for the end of the year reaches 1,6 billion EUR.The trade balance between both countries continues to be negative for Bulgaria.Bulgaria imports from Romania mostly furniture, petrol products, machines and equipments. on the other hand the country exports for Romania cement and foodstuff.

Gaz de France eyes projects in Bulgaria

Gaz de France is interested in building gas connections between Bulgaria, Romania and Greece, Jean Francois Carriere, the company's vice president for Central Europe, said at an energy forum in Varna. The French company is able to deliver natural gas from Algeria and Egypt, which may reach consumers in Bulgaria and Romania via Greece and Turkey. This will be made possible through building intersystem links. The connection points are: Rousse-Giurgiu, Silistra-Kalarash and eastern Greece-southern Bulgaria. The company is currently conducting a project assessment. Prices of natural gas in Bulgaria are much lower than those in Western Europe, which may lead to problems with returns, Carriere said. For that reason, Gaz de France has no interest in investing in local gas networks or buying local gas distribution companies. However, Gaz de France has shown interest in the privatisation of Toplofikatsia-Sofia, Carriere said.

Bulgargaz to request natgas price hike by 22%

Bulgargaz will request a 22-percent increase in natural gas prices from July, the chairman of the State Energy and Water Regulatory Commission (SEWRC), Konstantin Shushulov, said. In his words, however, the regulator will not allow a price revision by more than 4% next quarter. The SEWRC has promised heating utilities that natural gas will not appreciate by more than 12% by this year's end to help save them from bankruptcy.
The gas transmission company has not yet submitted a request for the price hike because energy minister Petar Dimitrov has not approved the calculations. That is expected to be done on Monday, June 16.

 

Roca Bulgaria leader with 60% of market

 

The market share of Roca Bulgaria is about 60%, which makes it leader in the production of bathroom and kitchen fixtures, the company's executive director, Carlos Velazquez, told the Pari daily. Roca's sales increased last year, its profit jumped 10%. In 2008 we have been growing at a two-digit rate, he added.Roca Bulgaria has nearly completed the construction of its second plant in the town of Kaspichan. The factory will be put into operation by this year's end, Velazquez said.Since it entered the Bulgarian market in 1999 Roca has invested EUR 22 million here. Another EUR 15 million has been invested in the new plant in Kaspichan. The old and the new facilities will manufacture 1.5 million items for bath a year.

Kamaz interested in opening plant in Varna

Russian heavy duty automobile manufacturer KAMAZ has announced plans to open an 

assembly plant in Bulgaria, said Thursday the chairman of the National Association for Economic Cooperation with Russia and the Commonwealth of Independent States, Stefan Golev. The Tatarstan-based company has said it would like to open a plant for assembly of garbage collection/snow ploughing vehicles in Varna or Shoumen regions (Northeastern Bulgaria).Golev said that companies from Leningrad Region which produce solar panels also want to work in Bulgaria. Also, there is definitely an interest in the export of Bulgarian roofing tiles to Saint Petersburg. Golev said that a major obstacle to business between Varna and Moscow and Saint Petersburg is the lack of direct flights between these cities.Golev said his association was recently set up to attract and support Russian capital to and in Bulgaria. In his words, there is huge Russian interest in doing business in Bulgaria.Varna Regional Governor Hristo Kontrov has sent an invitation to his Leningrad Region counterpart to visit the Bulgarian city. 

5 Bulgarian firms among CEE best employers 2007-2008

Five Bulgarian companies made it to the 2007-2008 ranking of the best employers in Central and Eastern Europe drawn by consultancy Hewitt Associates and sponsored by The Wall Street Journal Europe. Bulgarian best employers are software company Telerik, the local units of property services firm Colliers International, drug maker GlaxoSmithKline, McDonalds and local copper smelter Asarel Medet. Last years A-graders were IT company Nemetschek, software firm Sciant and McDonalds.McDonaldвs Russia and Microsoft Slovenia were the best performers on a regional level.The ranking covered 71 Bulgarian companies.A total 59 pct of the employees think they would find a new job within a couple of weeks. They are encouraged by the local labour market, which offers jobs for no previous experience.The survey gauges the opinion of 120,000 employees, 3,000 managers and HR experts from 600 companies in 12 countries in the region. It studies the working environment in companies with more than 50 full-time employees and more than two years of operations on the respective market.

Steel maker ventures into cars industry

 

Stomana Industry of Pernik is entering the car industry, with Mercedes and Fiat the first buyers of its construction wheels, CEO Vladimir Nikolov said. Output will reach 70,000 tonnes this year. Two production lines - for white and for black wheels - are being installed in the thermal calibration workshop, which will soak up 2 million euro provided by Stomana Industry.

 

 

Glavbolgarstroy, Bulgartabac, Domayne-Boyar аmong largest Bulgarian investors in Russia

Glavbolgarstroy, Bulgartabac Holding, BRK Cosmetics, Bulgarconserve and Domayne-Boyar are the five largest Bulgarian investors in Russia, according to RIA Novosti.Bulgarian companies invested a total of 37.83 mln dollars in Russia in 2007.There are currently 350 representations of Bulgarian companies, subsidiaries and joint ventures with Bulgarian participation in Russia, RIA Novosti also states.Business registered in the offshore zones Cyprus and Luxemburg are responsible for the bulk of foreign investments in Russia. Some 20.6 bln dollars came from Cyprus alone last year. Investments from Luxemburg-based companies amounted to 11.5 bln dollars.500 companies registered in Cyprus currently operate in Russia. Their activity is usually concentrated in the spheres of trade, consultancy, marketing and tourism.Among Luxemburg-based companies investing in Russia are several banks, as well as SOTEG, TA Kord (a joint venture between Severstal-metiz and Trefil ARBED, which is a unit of Arcelor) etc.The majority of foreign companies operating in Russia are those with German capital (4,600), as well as Hungarian capital (1,500), Austrian (1,200) and British capital (1,000).Foreign investments in Russia last year stood at 121 bln dollars, which is 2.2 times up from 2006 figures.

Automobile Expo Room Sofia will open doors for 18^th time in Bulgaria's capital

This years' edition will be dedicated to the cargo automobiles. The event will start on June 13 and will end on June 22.The place is the International Expo Centre on Tsarigradsko Shouse Blvr.The premieres this year are foreseen to be 32, which is 9 pieces mire compared to the previous year, informed Ivailo Jeglov, general manager of ‘Expo Team' the traditional organizer of the expo.85 firms will take part in the show. The visitors will have the opportunity to see trade marks like Citroen, FIAT, Ford, Ford Cargo, Dacia, Gaz, Isuzu, Iveco, Irisbus, Kia, Land Rover, Man, Mazda, Mercedes-Benz, Mitsubishi, Nissan, Opel, Otokar, Piaggio, Renault, Setra, Ssang Young, Skoda, Toyota, Volkswagen and Volvo Trucks.The ticket costs 8 BGN (4 EUR).

Germany extends �9.5 M to back SMEs, micro lending in Bulgaria

 

Bulgaria said on Thursday Germany has extended 9.5 million euro ($14.8 million) to support small and medium-sized enterprises (SMEs) and micro-lending institutions in the EU newcomer.Germany has extended 9.12 million euro to ProCredit Bank's Bulgarian unit to be distributed in 10-year loans for re-financing of SMEs' projects in towns and rural areas, the government said in a statement.German state development bank KfW granted an additional 410,000 euro for consulting services to Bulgarian micro-lending institutions in order to improve their institutional capacity, develop new services and introduce international accounting standards.ProCredit Bank Bulgaira (www.procreditbank.bg) ranked sixteenth among Bulgarian banks in terms of assets at the end of March. It was set up in 2001 by international financial institutions to support the growth of SMEs in the country. ProCredit Holding owns 80.29% of the bank and Commerzbank holds the remainder.ProCredit Bank Group has a network of 23 banks in developing and transitional economies in eastern Europe, Africa and Latin America.

 

ANALYSIS:

 

 

The Washington Times: No Bulgarian sanctions

Publication: Profit.bg

 

 

 

Bulgaria's efforts to fight corruption have not gone unnoticed, the Washington Tims reported. on June 6, International Monetary Fund Director Dominique Strauss-Kahn praised Bulgaria's economic stability. A day earlier, Bulgaria was accepted as a member of the World Bank's "Reformers' Club;" the nation ranks among the top 10 of the 200 countries surveyed. According to a recent survey by Ernst & Young, in 2007, Bulgaria ranked 17 in the world in foreign investments. Clearly, this economic stability and reform could have not been possible in a criminal and corrupt environment.Yet, the European Commission (EC) is threatening Bulgaria with sanctions: the EC claims Bulgaria has not done enough to fight corruption and organized crime. Bulgaria's accession to the European Union (EU) in 2007 included many conditions - above all to eradicate corruption and to fight organized crime.Bulgaria's Prime Minister Sergei Stanishev readily admits his government could have done better. However, he insists media reports neglect his accomplishments. Indeed, a March 2008 United Nations Office on Drugs and Crime (UNODC) report states that while corruption and crime are in steady decline, "disproportionate media coverage appear to be outweighing expressed concerns about crime and corruption." This sensational media seems to be the source of the "150 contract killings since 1999" - often cited by the EC.Bulgaria also suffers from a large number of low-paid, incompetent investigators and prosecutors. This was a direct outcome of the political decision taken after the collapse of the communist system: 2,000 professional policemen and prosecutors and 1,400 magistrates were fired overnight which left Bulgaria without functioning law enforcement institutions. The deficiencies of this outdated judicial system continue to hinder efforts to arrest, investigate and successfully prosecute corrupt officials and major crime figures.Though some high-level arrests were made, there have been only few convictions. High profile cases were suspended due to collusion between corrupt lawyers and physicians.The Washington Times points out to the establishment of a new State Agency for National Security (SANS). The agency is authorized to scrutinize and investigate all top Bulgarian officials in all branches of power, high-level corruption, suspected links to organized crime and alleged contract killing. SANS is already making a difference. The ministers of Justice and the Interior were replaced, and the head of the National Customs Agency - along with two of his deputies - resigned and are under investigation.A new deputy prime minister took office last month to specifically coordinate, audit and control the disbursement of EU funds. New legislation addresses conflict of interest in the judiciary, local government and parliament. These reforms and initiatives receive widespread public support.Meanwhile, Bulgaria is fast developing, according to the Washington Times. Salaries are up 10% since last year. Unemployment is down to 6.5% from 17% five years ago. Also, the GDP grew 6.1% - with a noticeable rise in the standard of living.An independent study of Bulgaria's efforts to fight organized crime and corruption was conducted last month by the New York-based American Center for Democracy. The center recommends the establishment of a special court to prosecute serious crime and high-level corrupt officials. Another recommendation is to create a national campaign for ethics and civic behavior - including special school curriculum beginning in first grade. This would mobilize the public and help change deep-rooted conceptions about the individual's role in a civic society.Bulgaria's premier reiterated his cabinet's commitment "to fight corruption and bring criminal organizations to justice." The EC "sanctions could undermine Bulgaria's progress and deprive the pro-European Bulgarians from the benefits of their EU membership," he argued. Moreover, such sanctions could destabilize the country, and "would affect the fragile stability of the region."Penalizing Bulgaria will be counterproductive. The most expedient way to help Bulgaria attain its comprehensive reform programs is not by EU sanctions; this will add political resistance to the Government's efforts to intensify and accelerate clean governance reforms. The EU should instead provide the Stanishev government with constructive criticism, objective monitoring and auditing. After all, a successful Bulgaria would add value to the EU and help stabilize the region.

 

Bulgaria's Q1 GDP growth seen accelerating Y/Y

Publication: SeeNews

Bulgarian economic growth is seen speeding up on an annual basis in the first quarter of 2008 with services remaining the engine behind the increase, analysts forecast on Thursday, ahead of official figures due on Monday.The analysts polled by SeeNews think that the country's gross domestic product (GDP) has increased between 5.6% and 6.3% in the first quarter of the year, compared to growth of 5.5% recorded in the year-ago period. Ivailo Vesselinov, Senior EEMEA Economist at Dresdner Kleinwort Wasserstein, had the most optimistic forecast, expecting that Bulgaria's GDP has increased by 6.3% in the first three months of the year. According to Agata Urbanska, Emerging Europe Economist at ING Bank, the country's economic growth has reached 6.1% in the first quarter of 2008, while Desislava Nickolova from Raiffeisen Research, the research department of Austria's Raiffeisen Zentralbank, was the most pessimistic forecasting that GDP has increased by 5.6%-5.7% in the three months through March."Our forecasts are based on the data for industrial output and sales for the first three months - the rise in output was 3.8% on an annual basis which is quite low growth compared to previous quarters," Nickolova said.The slowdown in the construction sector, seen in the reduced number of building permits - by 13.4% year-on-year for the first quarter of the year, will also hold back GDP growth, thinks Nickolova. "From the other side, the financial services will back growth - we are seeing continuing high growth [in financial services] especially in data for banks' total assets and lending growth particularly - it reached some 60% on an annual basis in the first quarter, which is very high growth," added Nickolova. Urbanska also thinks that services will remain the key growth engine. According to Vesselinov main drivers of the growth will be private consumption and investment and a key drag on the growth will continue to come from net exports."Consumption remains the main contributor to growth in our opinion though, as such, we envisage slowing domestic demand which leaves space for less negative contribution to growth from net exports," Urbanska said. Nickolova thinks that the agriculture sector will have a positive impact on first-quarter economic growth. "Agriculture is the other sector backing up growth but it's role is more seeable in the second half of the year. Despite this, it has its contribution to the first-quarter data especially having in mind the low base from last year and the good data for the early grain crops this year," said Nickolova.

 

 

FULL-YEAR VIEW

Nickolova and Vesselinov expect that the country's full-year economic growth will be below 6.0% - 5.5% and 5.7%, respectively, while according to Urbanska it could exceed last year's 6.2% rise. "It is 6.3% with risk skewed to the downside," Urbanska said. "Our full-year forecast is for 5.5% growth which shows a certain slowdown as compared to last year's 6.2%," Nickolova said adding :"But despite this it is quite high growth having in mind the global forecasts and trends." The government in Sofia forecasts the Bulgarian economy growing by a real 6.2% in 2008, as in 2007. This year's GDP is seen reaching 64.929 billion levs ($51.6 billion/33.2 billion euro) in current prices. The government has no forecast for first quarter GDP growth.