불가리아 주요 경제뉴스 (4 – 18 JULY 2008 )

BULGARIAN ECONOMIC TOP NEWS DIGEST

REPORT (4 – 18 JULY 2008 )

 

 

Sections/headline briefs:

 

 

MACROECONOMY:

 

·        Bulgaria to provide 12% of natural gas shipments for Europe

·        US wants to enter Nabucco talks

·        Green light for the construction of 'Belene' NPP

·        NPP Kozloduy units 3 and 4 were enough to solve Greece's energy problems

·        Bulgaria ranks last in EU by energy conservation

• Exports rose 27.8% in January – April 2008

·        Sales revenue in Bulgaria's trade sector up by 4.6% Y/Y in May

·        Bulgaria registers deflation in June

·        Inflation in Bulgaria reaches new heights

·        EU annual inflation up to 4.3%, Bulgaria sill among the leaders

·        Bulgaria ranks 39th in WTO international tourist visits

·        Bulgaria introduces the Euro in 2012 at the earliest

·        Russia's Ambassador: Bulgaria's water is as precious as oil

·        Expensive properties force Bulgarians draw bigger credits

·        Bulgaria imports dilligent workers

·        UBB: Bulgarians still drink the cheapest beer in Europe

·        Construction prices in Bulgaria to grow 10-15% by end of 2008

·        Over 30 000 new cars sold in Bulgaria in January-June 2008

·        Macro Watch report: Bulgaria with booming economy and record GDP growth

·        Bulgaria expects bumper wheat harvest

·        Bulgaria and Romania with highest industrial raise in EU

·        Cigarette prices up 36% in 2016

·        Bulgaria expects � 1,600 M in revenues from greenhouse gas emission trading

 

 

 

INVESTMENTS:

 

 

·        Bulgaria needs more FDI in food processing, software, chemical industries to sustain growth

·        Foreign investments in Bulgaria decrease with �200 M data for Q1 of 2008

·       WirschaftsWoche: Investors in Bulgaria must get ready to pay bribes

·        Bulgarian company invests BGN 100 M in printing establishment in Kostinbrod

·         Pirinland amusement park for � 100 M might be built in Bulgaria's Razlog

·        Logistics park opens in Bulgaria Black Sea capital Varna

·        Egged to invest �6 M in Rousse transport

·        Plovdiv`s central railway awaits investor  

·        Bulgaria Mall to digest over �100 M

·        There is lack of funds for investments in water supply sector

 

 

COMPANIES:

 

 

·        Large companies swoop down on PHARE funds

·        Deutsche Bank awarded two Bulgarian banks

·        Lidl buys plot for Pazardjik supermarket

 

 

ANALYSIS:

 

 

·        Bulgaria's location could be a golden ticket

·        Belene would be the most expensive N-Plant in the world

 

 

 

 

 

 

 

 

 

 

 

 

Articles:

 

 

MACROECONOMY:

 

 

Bulgaria to provide 12% of natural gas shipments for Europe

 

Bulgaria is vying to provide between 10% and 12% of natural gas shipments to Europe, thus hoping to pop up on the world’s energy map. This is what Minister of Economy and Energy Petar Dimitrov said, adding that Bulgaria was not a factor in the global energy map at the time due to the closing of NPP Kozloduy’s units.
‘The global crunch has been going on for almost a year now and it has had negligible impact on Bulgaria in terms of both foreign investments and industrial development, Minister Dimitrov said further.

US wants to enter Nabucco talks

"The US wants to enter the negotiations on the implementation of the Nabucco project," Bulgaria's Deputy Prime Minister and Minister of Foreign Affairs Ivaylo Kalfin said in an interview with Nova TV private channel following Wednesday's visit of the US Secretary of State Condoleezza Rice to Bulgaria. The US is not to participate in the project directly; it just wishes to join in the dialogue initiated by President Georgi Parvanov. The Bulgarian Head of State proposed a summit meeting of all the countries that will partake in the project implementation plus the countries that declared willingness to be supplied with gas through Nabucco, among them are the Caspian states, such as Azerbaijan, which has made a commitment to supply one-fourth of the gas needed for starting the project. "Rice has even proposed that the US should appoint an energy envoy to attend the negotiations," Kalfin disclosed. "Besides Nabucco, the US is interested in many other energy projects having to do with Bulgaria," the Deputy PM reminded. The biggest ever single-transaction US investment to Bulgaria was made by AES, who poured US$ 1.6 billion into the Maritsa Iztok Complex. "There are many US companies interested in nuclear projects, new technologies as well as in the construction of an ultra modern greenhouse-gases free thermal power plant," Kalfin said.

Green light for the construction of 'Belene' NPP

The Ministry of Regional Development issued permission for the National Electric Company (NEC) for the construction of ‘Belene' NPP. The construction works will be realized by the Russian company ‘Atomstroiexport'. From the Russian company comment, this is an important step towards the realization of the project and gives opportunity for beginning of a new cycle of working processes. We remind you, the contracting of the agreement for the construction of ‘Belene' NPP conducted on January 18, 2008 in the borders of the official visit of the Russian President Vladimir Putin in Bulgaria. The cost of the project is 3, 997 Billion EUR.

 

 

 

NPP Kozloduy units 3 and 4 were enough to solve Greece's energy problems

on Principle, Bulgaria should not sell electricity to Greece, because it was namely Greece's vote that decommissioned units 3 and 4 of NPP Kozloduy," nuke's director Ivan Genov said. "The decommissioning of the reactors costs Bulgaria 880 megawatt-hours of electricity a day, but Greece deserves to have severe energy problems so as to fully realize the consequences of its deed. Of course, the decisions as regards the export of electricity are not taken by the NPP Kozloduy management only, but also by the National Electric Company," he went on. He says the peak in electricity consumption is normal in the summer, as air conditioning has become more popular in Bulgaria."But these 880 megawatt-hours which Bulgaria consumed on a hot summer day could have been generated by the closed power units," Genov said.

 

Bulgaria ranks last in EU by energy conservation

 

Bulgaria ranks last in the European Union by the conservation of energy, according to Petar Dimitrov, Bulgaria's Minister of Energy and Economy.Dimitrov has stated that the best way for Bulgaria to deal with the fuel price hike and the necessary energy production was to reopen the 3rd and 4th blocks of the Nuclear Power Plant (NPP) Kozloduy until the 1st and the 2nd blocks of the NPP "Belene" become ready for exploitation.The Energy Minister, along with the Chair of the Parliamentary Commission for Foreign Policy Solomon Passi participated Saturday in a forum in Pomorie dedicated to Bulgaria's export of electric power, nuclear plants, renewable energy resources and other energy prospects.Dimitrov has further stated that Bulgaria had sold 30% less energy, but this decrease had not influenced the revenues due to higher energy prices, adding that there was a compelling need to emphasize on the renewable energy sources as a way to safeguard energy production in Bulgaria.The forum has been organized by the Atlantic Club in Bulgaria and the NATO Information Center in Sofia with the goal to improve relations between business and the state authorities in the area of energy production.

Exports rose 27.8% in January – April 2008

Bulgarian exports (FOB value) in the first four months of this year increased 27.8 per cent year on year, the National Statistical Institute said on Wednesday. Imports to Bulgaria (CIF value) increased 25.8 per cent.Exports to the EU grew 23.5 per cent, and imports from the EU increased 17.9 per cent.In January-April 2008 Bulgarian exports totaled 9,900 million leva (FOB), and imports to Bulgaria stood at 15,600 million leva (CIF).The trade deficit over the first four months of this year was a little over 5,000 million leva (FOB/FOB).The largest increase occurred in the export of animal-based and vegetable-based fats, oils and waxes to the EU - a little over four-fold. The largest increase in imports occurred with foods and live animals - 53 per cent.

Sales revenue in Bulgaria's trade sector up by 4.6% Y/Y in May

Sales revenue in Bulgaria marked a 4.6-percent year-on-year increase in May, data of the National Statistical Institute (NSI) show.The revenue from sales of automobiles and fuels and from automobile repairs marked the highest increase – 7.3%. This may be put down mainly to the higher growth of the automobile and motorcycle trade - 11.2%, and the lower growth in the revenue from sales of automobile fuels and lubricants - 1.7%.The revenue from retail sales and repairs of household appliances grew by 6.1% in May. Trade in textile, clothing ans shoes expanded by 15.8% in May 2008, compared to the year-ago period. In Pharmaceuticals and medical supplies trade rose by 9.2%, while the revenue fro household goods and consumer electronics sales rose by 8.1%.Wholesale trade expanded by 3.7% in May 2008 compared by May 2007. The trade in non-agricultural products, machinery and equipment grew by 8.0 and 2.7%, respectively, offsetting the decline in the revenue from sales of food, beverages and tobacco products (-0.4%) and in the sales of household goods (-5.8%).The sales revenue for May remained almost unchanged from April, edging up by 0.1%. The revenue from retail sales and wholesale grew by 1.6 and 0.3%, respectively, while the revenue from sales of automobiles and fuels declined by 2.5% on a monthly basis.The sales revenue went up by 6.3% year on year in the period January to May. The revenue from sales of automobiles and fuels went up by 13.5%, in the period, while retail sales revenue advanced by 9.4%. Wholesale revenue grew by 4.2% weighing considerably in on the overall index as it accounts for nearly 70% of the revenue in the trade sector.

 

Bulgaria registers deflation in June

 

Deflation of 0,2% has been registered in Bulgaria for the month of June compared to the month of May, according to data from the National Statistics Institute.The deflation has been created by the 2,3% price reduction of food items and non-alcoholic beverages in June compared to May.Prices of alcoholic beverages and tobacco products have gone up with 2,1%.The biggest price increase is registered in the area of transportation services - 3,35 and fuels.From the food items the price of rice has gone up the most - 26,7%, but prices of bread and eggs show a reduction.The increase of consumer prices on an annual base for the month of June is 15,3% while since the beginning of the year (June 2008 compared to December of 2007) this increase is 4,6%.

Inflation in Bulgaria reaches new heights

Neither the summer season nor the rich crops could help curb the galloping inflation. Inflation rate was lower in June, when there was a slight (0,2-percent) drop in prices. Nonetheless, according to the National Statistical Institute (NSI) calculations, the accumulated inflation for the period June 2007-June 2008 reached a new record height: 15.3 percent. The downward trend at the beginning of the summer could not save the Bulgarians from growing poorer. Higher inflation rate was last registered in the notorious winter of 1997, when Zhan Videnov's government was in power and price tags had to be changed several times a day. To a certain extent the worldwide problem of high prices of fuels and foods may be blamed for a new inflation wave. Within a year alone, both food and transport in Bulgaria have got costlier by 24.2 and 18.7 percent respectively, owing to skyrocketing petrol prices and agricultural produce prices on the international markets. The question now is whether foods will get cheaper in view of the expected rich crops this year or high consumer prices will linger on. The high inflation is melting down savings, incomes and loans. Even if you've kept your levs (1euro = 1.95 levs) on a deposits at a comparatively high interest rate of six percent, for the past year eight levs per each 100 has been lost. The high inflation makes living on credit more advantageous: the current loan interests range from 8 to 13 percent, which is  lower than the inflation rate.            

 

 

 

EU annual inflation up to 4.3%, Bulgaria sill among the leaders

 

Euro area annual inflation was 4.0% in June 2008, up from 3.7% in May. A year earlier the rate was 1.9%. Monthly inflation was 0.4% in June 2008.EU annual inflation was 4.3% in June 2008, up from 4.0% in May. A year earlier the rate was 2.1%. Monthly inflation was 0.4% in June 2008.These figures come from Eurostat, the Statistical Office of the European Communities.Inflation is twice higher than the expectations of the European Central Bank, which forecasted a 2% inflation. The high inflation is attributed to the price hike of fuels and food.In June 2008, the lowest annual inflation rates were observed in the Netherlands (2.3%), Germany and Portugal (3.4% each), and the highest in Latvia (17.5%), Bulgaria (14.7%) and Lithuania (12.7%). Compared with May 2008, annual inflation rose in twenty-one Member States, remained stable in two and fell in three.The lowest 12-month averages up to June 2008 were registered in the Netherlands (1.7%), the United Kingdom (2.4%), Denmark and Sweden (2.6% each), and the highest in Latvia (14.5%), Bulgaria (11.7%) and Estonia (9.7%).In the Euro area the main components with the highest annual rates in June 2008 were transport (7.1%), food (6.4%) and housing (6.1%), while the lowest annual rates were observed for communications (-1.6%), recreation & culture (0.1%) and clothing (0.7%).

 

Bulgaria ranks 39th in WTO international tourist visits

 

Bulgaria ranks 39th according to the World Tourism Organization's (WTO) barometer in respect to visits of foreign tourists, the Chairperson of the State Agency for Tourism Anelia Kroushkova said Friday. This country, however, is not even included in the ranking of the amount of revenue from this sector. For the first time WTO has included Bulgaria in the issuing market list, Kroushkova said, addressing a forum dedicated to the opportunities for developing congressional tourism with the help of European funds. Bulgaria ranks 50th in another category: the number of tourists who have visited other destinations, she said.This means that the large companies will begin to woo Bulgarian tourists and hoteliers will have to consider their policy carefully in order to succeed in keeping them at home for their holidays, she underscored and specified that by May the number of Bulgarians who travelled abroad has increased by nearly 29 per cent year-on-year. Greece, Egypt and Turkey are the most favoured destinations. Kroushkova also reported a 16.6 per cent year-on-year rise in the number of foreign tourists visiting Bulgaria. The largest increase was registered with the guests from Romania and a growth of 80 per cent of visitors from Serbia and Macedonia was registered for the first time. In the case of Russian tourists the increase stands at 26.6 per cent. Addressing the forum at the opening, MEP Bilyana Raeva spoke of congress tourism, remarking that Bulgaria has only three large congress centres - the National Palace of Culture, the Festival centre and Sports Hall in Varna, while the hotels have facilities that are intended for small and medium-sized events. Congress tourism in the world is exceptionally profitable, Raeva said, noting that the average guest in this category leaves some 1,500 euro in the host country in three days, while the annual profit of the sector stands at about 1,000 million dollars.

 

 

 

 

 

Bulgaria introduces the Euro in 2012 at the earliest

Will the Bulgarians start using the common European currency, Euro, and when will it happen? Many politicians have come up with different answers to these questions. Before introducing the Euro, however, the Bulgarian authorities should meet certain requirements, one of the primary ones being Bulgaria's becoming a member of the EU Economic and Monetary Union.One of the main problems, which prevent Bulgaria from joining the Economic and Monetary Union as a full member is the prices? instability and the steadily increasing inflation in the country. one thing is certain - the deadline for the introduction of the euro provided in the EU accession strategy of the Bulgarian National Bank will not be met. According to the most optimistic prognoses, the Euro could be introduced in Bulgaria in 2012 at the earliest. Maybe these prognoses are far too optimistic, given the steadily increasing inflation in Bulgaria.

Russia's Ambassador: Bulgaria's water is as precious as oil

"The Bulgarian mineral water will cost as much as oil and gas in the future," said Russia's Ambassador to Bulgaria, Anatoly Potapov in Vratsa. He believes that the record rise of oil prices might be a result of speculations and says that Russia is not responsible for this fact because it follows the market. Potapov thinks that the projects for supply of Russian energy-carriers for Europe are beneficial for all countries, Bulgaria included. "And those who use as a scarecrow energy and economic pseudo-dependency, err. Even China insists on unlimited supply of oil and gas without fearing any kind of political reward," Potapov was explicit. To him, if Bulgaria has a little patience, it will become the economic power of the future. Because, to Potapov, Bulgaria possesses the most precious treasure - mineral water, which is the best in the world and will cost the price of gold, oil and gas.

Expensive properties force Bulgarians draw bigger credits

The average credit have increased with 44, 33%, CreditCenter data shows. The drawn loans for the first 6 months of 2008 year the average loan reached round 44, 800 EUR. In compare, for the same period in 2007 the Bulgarians have drawn the average credit of round 31, 100 EUR. The main reason for the big jump is hidden in the prices of real estates, the experts of CreditCenter explain. The property prices in Sofia have risen with near 50% under the influence of the people's migration from the smaller settlements towards the capital. The average credit taker works in the sphere of informational technologies and telecommunications or the state administration and finances between 80% and 90% of the buying of a real estate with loaned capital. The people more often draw credit in EUR for a term of over 25 years and interest between 6,4 and 7, 25% in EUR. The experts form CreditCenter expect increasing of the people who consider the prices of the properties in Bulgaria too high and might give up buying own house.

 

 

 

 

Bulgaria imports dilligent workers

For years Bulgaria has been a source of cheap labour for Western Europe. Now the tables have been turned on the Black Sea state, as it finds itself facing an acute shortage of workers and turning to far-reaching measures to make up the shortfall: inviting Vietnamese to fill jobs in manufacturing and construction."Bulgaria employed Vietnamese workers under communism and they fitted in well. We would offer jobs on contract terms with temporary residence," Petar Dimitrov, the economy minister, said in an interview with the Financial Times.Economic growth, set to be more than 6 per cent again this year, has exposed the shortage of skilled workers in the European Union's poorest member state. About 1m Bulgarians are working overseas, according to official estimates - the result of a decade of mass emigration by graduates and skilled workers. The official unemployment rate has fallen from 18 per cent of the workforce in 2002 to less than 6 per cent in May.But this does not reflect labour market reality, say officials, because it includes a high percentage of older people who are unlikely to retrain and are from the Roma community, many of whom lack basic skills.The labour market is especially tight in Sofia and the Black Sea port of Varna, the fastest-growing cities since Bulgaria joined the EU last year. Both have jobless rates of less than 3 per cent.The decision to seek workers from Asia follows a successful campaign to persuade the 500,000-strong Bulgarian diaspora in Moldova and Ukraine to return home by offering a fast-track process to acquire Bulgarian citizenship.This policy is being revised after thousands of the "Bessarabians" left to seek jobs in Spain, Italy and Greece once they received their Bulgarian passports."Diaspora workers are much in demand because they don't have a language problem. What we need to do is introduce a green card arrangement, requiring five years' work here to qualify for a Bulgarian passport," Mr Dimitrov says.Another measure is to cut 12,000 civil service jobs ahead of next year's parliamentary election, "to make additional white-collar workers available to the private sector", says Plamen Oresharski, finance minister.Bulgaria has so far escaped the impact of the global credit crunch, but growth is projected to have slowed to about 5.5 per cent in the second quarter from 7 per cent in the first.While the boom in construction of low-priced holiday homes for the UK and Irish market is over, foreign investment still drives demand for high-quality residential and commercial property in larger cities.The skills shortage is highest in construction, tourism and IT, according to Dikran Tabeyan, deputy chairman of the Bulgarian Industrial Association. "This summer there are between 80,000 and 100,000 positions left unfilled," he says. "Workers are in a position to select their employer."Al-though private sector wages are still competitive with Romania and central Europe, they jumped 24 per cent in the first quarter after rising 23 per cent last year.Mr Oresharski says that after food and fuel price rises, wages make a "significant contribution" to Bulgaria's high annual inflation rate - the EU's second-highest at 14.3 per cent in May.Although the outflow of Bulgarian workers may stabilise this year because of rising domestic wages and the slowdown in western Europe, only a trickle of migrants is coming back.Maria Georgieva, an executive with a Greek hotel chain, says she is unlikely to return soon. "I came because I needed a job, and I stayed because I was able to start a career."

 

 

 

UBB: Bulgarians still drink the cheapest beer in Europe

Bulgarian brewers have a portfolio of 32 beer brands and 65 light and dark beers, it emerged at a press conference of the Union of Brewers in Bulgaria (UBB). The number of Bulgarian beer brands will not increase considerably as the production capacity is limited, according to UBB chairman Vladimir Ivanov. None of the domestic brewers believes that their portfolio may be diversified too much on a relatively limited market and against the backdrop of stiff competition, according to Ivanov. Bulgarians continue to drink the cheapest beer in Europe, Ivanov added. Beer prices in shops range between 35 eurocents and 70-80 eurocents, something that cannot be seen on other European markets. Beer price hike is prompted by the increase in the prices of electricity and raw materials. Beer prices, however, grow slower than the inflation rate in the country. The prices of the beer have grown differently for the different brands. The increase stands at 8% on an annual basis within the Calrslberg group. Kamentza prices have grown slower that inflation, according to the company. At the same time Bulgarian brewers have a relatively low efficiency and this is something they have to invest in. A total of 70 mln leva were invested in the Bulgarian brewing industry in the last six months, which compares to 77 mln leva investments for the entire 2007. Investments are made mainly in expansion of output capacity, refrigeration, warehouses, new bottles, IT systems and advertising. The 2008 UEFA European Football Championship did not have a considerable effect on beer as it coincided with the strongest beer sales period.This year UBB became the 26th member of the The Brewers of Europe organization.

 

Construction prices in Bulgaria to grow 10-15% by end of 2008

 

The Chair of the Sofia Chamber of Commerce and Industry Georgi Chernev predicted Friday that the prices of construction services in Bulgaria might grow by 10-15% by the end of the year.As the main factors that would likely drive up the prices, Chernev pointed to the significant growth of the concession prices for the extraction of construction materials since the beginning of 2007, as well as the rise of petrol prices on the world market.In his words, the prices of construction services in Bulgaria were 30-40% lower than those in other Eastern European states, and were gradually expected to reach their levels.Representatives of the Sofia Chamber of Commerce and Industry took part Friday in the discussion of a new EU directive that will harmonize the conditions for construction products entering the market including the obligations of producers, importers, distributors, consultants, construction firms, and supervisory institutions. The meeting was organized by the Bulgarian Ministry of Regional Development and Public Works. The new EU regulation is currently being discussed in all member states, and is expected to enter into force in 2011. Chervnev pointed out that the new directive would remove from the construction market many of the firms using unfair and illegal practices.

 

Over 30 000 new cars sold in Bulgaria in January-June 2008

 

A total of 30 186 new cars were sold in Bulgaria in the first half of 2008, which is a 21,16% increase compared to the same period of 2007. The data was made public Thursday by the Association of Auto Producers. It also shows that the purchases of new buses and trucks for the first six months of 2008 grew 67,3% to reach 2188. OPEL was the most popular brand selling 3240 new cars, which gives it a market share of 11,57%. It is followed by Toyota with 2779 sales (9,92% of the market). Volkswagen ranks third with 2447 new cars sold, and a market share of 8,74%. A total of 5167 new cars were sold only in June, which is a 5,38% increase compared to the May purchases.

 

Macro Watch report: Bulgaria with booming economy and record GDP growth

 

A report of the Macro Watch group states that the positive development of the Bulgarian economy was continuing with a record GDP growth, but that the country still faced high-risk macroeconomic factors.The Macro Watch is a group formed by the Open Society Institute - Sofia. It also included experts from three other Sofia-based think tanks - the Center for Economic Development, Industry Watch, and the Center for Liberal Strategies, who presented their report on Sunday in the Bulgarian capital.According to the report, in the first six months of 2008 Bulgaria's GDP growth has reached the record 7%, while the burden of rising prices had shifted from foods to other less crucial goods such alcohol, which is expected to tame the overall inflation levels. Yet, the Macro Watch group reminds that despite the improved performance of the Bulgarian economy, the country still remains the poorest in the European Union. Georgi Angelov from the Open Society Institute predicted that the 2008 inflation would be about 9%, down from the present annual level of 14-15%. The report also points out that the reserves of the Bulgarian National Bank had reached the record EUR 13 B. At the same time, the drastic decrease of the corporate and income taxes to 10%, which was adopted in 2007, is reported as successful because it had encouraged the payment of taxes. Thus, the state budget's tax revenues have increased. As a result, the budget surplus has also reached levels never recorded before, while the state debt is at its lowest levels, the experts point out.The Micro Watch report also mentions that for a second quarter in a row the growth of Bulgaria's exports is greater than the growth of imports. Bulgaria currently has the lowest unemployment level recorded ever but the shortage of skilled and high-qualified laborers is increasingly problematic. The high number of persons employed by the state, and the low standard of living are also listed among the main problems the Bulgarian economy was facing. According to the report, the business climate in the country was improving, but serious institutional drawbacks still remained. The main macroeconomic risks for the Bulgarian economy have to do with the global financial crisis, the rising petrol prices, and the expected slowing down in the EU. Increasing the state spending before the coming parliamentary elections and other populist moves could also be problematic, according to Macro Watch. The main recommendations of the Bulgarian experts are the acceleration of the structure reforms, and the preservation of the economic stability and monetary council in order to prepare for joining the Eurozone.The Micro Watch group also suggests that a shock reduction of the social security payments, the value-added tax, and other state fees be adopted. According to their analysis, the VAT, which is currently 20%, could be reduced to 15% thanks to the enormous budget surplus.

 

Bulgaria expects bumper wheat harvest

Bulgarian farmers expected a bumper harvest of 3.8 million tons of wheat in 2008, an increase of nearly 60 per cent over the previous year, the head of the cereals producers association Krassimir Avramov told Reuters, as quoted by Dnevnik daily on July 8.In 2007, only 2.4 million tons were harvested, largely due to the rainy weather and floods that hit the country in April and August.The barley harvest is expected to come in at 740 000 tons, compared to 420 000 tons a year ago, Avramov was quoted as saying.The better harvest would allow Bulgaria to export 1.35 million tons of wheat and 250 000 tons of barley this year, he added.Bad weather in 2007 was singled out as the main reason for the underpar harvest, which resulted in foodstuffs prices rising by more than 25 per cent year-on-year at end-May and contributed to annual inflation in the country growing to a 10-year high of 15 per cent in May.

Bulgaria and Romania with highest industrial raise in EU

Bulgaria, Romania and Ireland show the highest raise of industrial production in EU in May this year, Eurostat data shows.The local industrial production registers a raise of 3,3% in May and 8,6% raise for the last year. The raise of the Romanian industry in May is 0, 5%, and for one year - 4,1%.The European industrial production has narrowed in May, compared to April and also compared to May last year. The sharpest drop is in Lithuania (-7, 5%), Netherlands (- 6,0), Portugal (- 5,7% ) and Latvia (- 5,6%). The industry in the Euro zone have tighten with 1, 9%, and of the European Union - 1,4%. Compared to May last year the production in the Eurozone have decreased 0,6% and in the EU - 0,5%.

Cigarette prices up 36% in 2016

 

Cigarettes in Bulgaria will become at least 36% more expensive as of 2016 onwards and 16 out of 100 Bulgarians will quit smoking. This is what Brussels expects to obtain as a result of imposing the proposed single tax base on tobacco products. The effect will be most tangible in Poland and Bulgaria. The proposed tax update will levy the hardest burden on fine-cut tobacco, which will be charged equally with cigarettes. And in the case of Bulgaria the increase will be 53%. The new minimum tobacco excise tax will become 67% from its current levels of 57%. In the old EU Member States, the new tax base will become effective as of 2014, while for Bulgaria, Romania and the Baltic states it will be introduced in 2016. Thus Brussels hopes to tackle cigarette smuggling and curb tobacco tourism.

Bulgaria expects � 1,600 M in revenues from greenhouse gas emission trading

 

In 2020 Bulgaria will be able to sell slightly over 42 million quotas, which means that proceeds of some 1,600 million euro are expected to the national budget in 2020 alone. Environment and Waters Ministers expert Kalin Iliev said this at the 126th meeting of the European Affairs Council held on Tuesday.Within the meeting representatives of the business and ecological non-governmental organizations got familiarized with reports of the Environment and Waters Ministry and of the Economy and Energy Ministry regarding the Bulgarian position on the European Commission's legislative proposal on climate and energy.It is envisaged that part of the trading rights be redistributed from countries, having a GDP higher than the EU average, to countries with a GDP lower than the EU average. The European Commission proposes that the greenhouse emission quotas in energy be distributed through a competitive bidding procedure. Commenting on the  EU 10 per cent binding target for renewables, Economy and Energy Ministry expert Milena Tsoleva said that this target should be tied up with the launching of biofuels of second generation on the market.

 

 

INVESTMENTS:

 

Bulgaria needs more FDI in food processing, software, chemical industries to sustain growth

Bulgaria should step up efforts to attract foreign direct investments (FDI) in the food processing and software industries if it wants to sustain a healthy economic growth as it needs to invest in production facilities rather than in services, a senior government official said. I think that we need to intensify investments in the food processing industry - this is an important sector with a high potential in Bulgaria and traditions; here we should increase our presence in international markets and in the Arab world in particular," the executive director of the government's investment promotion agency InvestBulgaria, Stoyan Stalev, told SeeNews in a recent interview. We should expand our presence also on the software market, i.e. with software products and not just services, and of course, in the chemical industry where we already have good traditions, particularly in the production of fertilisers and lubricants," Stalev said. Companies from the Arab countries and India have shown interest in studying the investment opportunities in chemical production, he added. Most of the FDI Bulgaria attracted last year were in residential, business and office projects and services. However, the country is focusing on attracting more foreign investments in production, renewable energy resources, innovation and healthcare services, rather than in real estate and services. Services generated 50.5% of the country's gross domestic product of some 56.5 billion levs ($46 billion/28.9 billion euro) last year and the industry accounted for 26.5% of it. Bulgaria's economic growth is seen at a real 6.2% in 2008, the same as in 2007. The agency expects that this year's FDI will probably exceed last year's all-time high of 6.1 billion euro. FDI in the country in the first four months of the year are estimated at 1.2 - 1.3 billion euro, some 100 million euro more than in the year-ago period, Stalev said. That is why I am optimistic as a whole that we will achieve a level [of FDI] which will be some six billion euro and maybe more this year," he added. FDI in Bulgaria will exceed 7.0 billion euro this year and the turmoil on global financial markets will not affect them, Economy Minister Petar Dimitrov has said. InvestBulgaria is currently working on ten projects whose combined value is estimated at between 800 million and 900 million euro. Most of the projects are the non-ferrous metals industry, renewable energy resources and spare parts for the automotive industry. Bulgaria relies on foreign investments as the key instrument to curb its swelling current account gap. It ended 2007 with a current account deficit equivalent to 21.5% of the gross domestic product, compared to 17.8% in the previous year, mainly due to a widening trade gap. According to Stalev, the major holdbacks for foreign investors entering Bulgaria are the poor infrastructure and the lack of skilled labour force. The clumsy administration and procedures for the start-up of production facilities too impede foreign investors from pouring more money into the country's economy, he added.

Foreign investments in Bulgaria decrease with �200 M data for Q1 of 2008

 

The foreign investments in Bulgaria had decreased with � 200 million data for Q1 of 2008, chairman of Bulgarian New Democracy Nikolay Svinarov said at a press conference in Bulgarian sea resort Varna, FOCUS Radio Veliko Tarnovo reporter informed. “That is just part of the alarming information, which concerns the rightists”, Svinarov said. The high inflation of 15% and the suspended funds under the SAPARD program must be also taken under consideration.There are just part of the reasons that Svinarov pointed in reference to the coming vote of none confidence towards the government. It is expected to be carried out at the end of July.

 

WirschaftsWoche: Investors in Bulgaria must get ready to pay bribes

 

The German economics magazine WirtschaftsWoche published Saturday an article on Bulgaria stating that anyone intending to do business there must be prepared to face the rampant corruption.According to the magazine, all German companies heading to invest in Bulgaria were of the need to pay bribes, and the likelihood to come across pre-determined tenders and competition with very good connections. WirtschaftsWoche gives as an example the case of the German company Hamburg Port Consulting, which was thrown out of the competition for the concession of the Danube Port of Lom even though its bid was EUR 18 M higher than that of the favorite - Nove Holding, owned by the Bulgarian tycoon Vasil Bozhkov. As a result, the article states some German investors have decided to leave the country but at the same time many other firms are doing surprisingly well there. WirtschaftsWoche also quotes a German manager in Sofia as saying that the Bulgarian government was friendly to business in general, but friendlier to some businesses than to others. However, the German magazine states that the despite all the corruption problems, the Bulgarian economy was booming with a total of EUR 6,1 B of foreign direct investments in 2007.

 

Bulgarian company invests BGN 100 M in printing establishment in Kostinbrod

 

The Bulgarian company Heatset Single Person Ltd is going to invest BGN 100,7 M in the building of a large printing house in the town of Kostinbrod.The company is planning to invest in machines and equipment that will enable the future plant to print catalogues, magazines, and flyers.The production of the new printing establishment is to be destined primarily for exports to Bulgaria's neighboring countries - Romania, Greece, Serbia, and Macedonia. The plant is expected to employ about 170 local people.Because of the large scale of the investment, the Deputy Minister of Economy Anna Yaneva awarded the company owners an "A"-Class Investment Certificate at a special ceremony on Thursday. Heatset Single Person Ltd is a subsidiary of the Bulgarian company Billboard JSC. The town of Kostinbrod is located 15 km west of Sofia.

 

Pirinland amusement park for � 100 M might be built in Bulgaria's Razlog

 

The Bulgarian company Alpha Finance Holding intends to construct an amusement park in the mountain resort of Razlog, the newspaper Pari reported Tuesday.The holding is currently developing several different projects for the new amusement park, which is expected to cost about EUR 100 M, and will be named "Pirinland" after Pirin Mountain located nearby.The Pirinland is supposed to be located on the territory of the former cellulose and paper plant in Razlog, which has been closed down years ago, on a plot of 1000 decares. The Pari Daily quotes the Razlog Mayor Lyuben Tatarski as saying that the construction of an amusement park is only one of the opportunities for the utilization of the land of the former cellulose factory. The town of Razlog is located very close to the mountain resort town of Bansko in southwest Bulgaria.

 

Logistics park opens in Bulgaria Black Sea capital Varna

 

The first completed building of the Logistics Park in the Bulgarian Black Sea city of Varna was opened officially on Monday. The total amount of the planned investment in the Logistics Park is EUR 57 M, of which EUR 18 M have already been invested. The Park includes modern storage facilities, service offices, and commercial space. 100% of the space in the newly opened A1 Building has already been rented. The first building of the complex was completed in one year, and three more buildings are to be constructed. The main investor in the project is the construction and investment company Fair Play Commercial Jsc. Colliers International is the exclusive consultant. Logistics Park Varna is the first project of its kind in Varna meeting the contemporary standards for storage and office facilities. It has good access to the city beltway and to the main Pan-European transport corridors.

Egged to invest �6 M in Rousse transport

 

The Bulgarian subsidiary of Israel's Egged will invest more than EUR 6 million in the development and modernisation of Rousse's public transportation, Todor Nikolov, the new executive director of Egged Bulgaria, said. The company's investment programme will be carried out in three stages. First, some 80% of the city's trolley buses will be replaced. Second, 40 new Mercedes buses will be delivered. Third, a series of investigations will be conducted on the possibility of expanding the city's electric transportation network.

Plovdiv`s central railway awaits investor  

 

The head of the Concessions Directorate at the Transport Ministry, Georgi Todorov, said the builder would be selected several months after the public tender is held. In his words, the railway station's owner, the National Railway Infrastructure Company, is to start buying the neighbouring land lots, that are owned by the city transport guild's hospital, the National Revenue Agency (NRA) and the Defence Ministry. "The builder's largest expenses will come from the need to connect the new complex with the space around it, because Plovdiv's station is located almost in the city centre. There should be built new streets, new underpasses and new flyovers," Mr. Todorov added. The option to get hold of a large land lot in the Plovdiv's central area would most probably attract a lot of investors. For the time being, however, the modernisation of the station is in its preliminary stage - the selection of an architectural project. From the seven projects, Plovdiv-based company Arkont-A was listed first. It got 81.70 point out of 100 possible. The project presented by the Sofian architect Vesselin Donchev ranked second with 62.30 points. It will receive and award of BGN15,000. Alexander Sinolov, an architect from Plovdiv, came third. Transport Minister Peter Mutafchiev, who attended the ceremony, said all the projects would be bought from their authors and the most suitable in terms of technical implementation, technical parameters and price would be selected. The building of the different proposals may cost anywhere between EUR30MN and EUR120MN depending on their sophistication and effectiveness. Minister Mutafchiev also said funds were founded for the reconstruction of the Plovidiv Airport. Preliminary works are under way and the reconstruction should be finished by end-May 2009, the latest.

 

Bulgaria Mall to digest over �100 M

The Bulgaria Mall mixed-use retail/office development in Sofia will absorb more than 100 mln euro ($159.23 mln), it emerged at the groundbreaking ceremony on July 15, 2008.The project will be completed in two and a half years, said Eli Egosi, manager and representative of the investors, Sofia-based property investment management group LS Property and its partner, Salamanca Capital.Bulgaria Mall (www.bulgariamall.bg), located on the eponymous boulevard, will comprise a high-end shopping centre with a total build-up area of 115,000 sq m, including 45,000 sq m of underground space, offering 1,200 car bays and a hypermarket. An 80 m tower will host 20,000 sq m of offices and 50,000 sq m of retail and entertainment areas.One of the major tenants will be French retailer Carrefour, which will stiffen competition as rival Billa store is located nearby. Other tenants are Bulgarian electronics chain Technomarket and cinema operator Arena.LS Property (www.lsproperty.eu), which invests primarily in Sofia and ski resort Bansko, plans to pump 450 mln euro ($716.5 mln) in real estate projects in Bulgaria, said its chief executive, Myles Summerfield.Bulgaria Mall is one of the few shopping and entertainment centres under construction in Sofia. The capital city hosts three big-box shopping centres. Another 20-30 malls are in the pipeline, but the bulk of them have been staying on the drawing board for years.

There is lack of funds for investments in water supply sector

There are no funds for investment in the water supply and sewerage sector and members of staff do not stay for a long time because of low payment. These are the main problems pointed out at a meeting of representatives of the water supply companies with the State Energy and Water Regulatory Committee (SEWRC). These were some of the main reasons due to which the companies requested higher water prices. They voiced disagreement with the SEWRC-proposed prices. Other motives behind the demands for higher water prices involve the mark up of prices of electricity and construction materials. Most companies have loans, which they would not service, if the increase is not effected. Possibilities are needed to upgrade the systems so as to set up a common investment environment for the extension of the existing fixed assets and the introduction of new ones. "We are concerned about the effect the new charges would have on the consumers," Mihalevski stated. He appealed to the companies' managements to consider the SEWERC report by the week's end and hold a new meeting next week so as to seek solution of the specific problems."What matters is to be sufficiently transparent and enjoy the consumers confidence," Mihalevski said.

 

 

 

 

 

 

 

 

 

 

 

COMPANIES:

 

 

Large companies swoop down on PHARE funds

 

The idea of the PHARE programme is completely skewed in Bulgaria, Kauko Jamsen, ambassador of Finland to Bulgaria, said at a meeting with vice premier Meglena Plugchieva organised by the Bulgarian Business Leaders Forum. Instead of being used by small and medium-sized enterprises, those funds are absorbed mainly by large companies, Jamsen said. In addition, payment under already approved projects is delayed by about two years, the ambassador said. Criticism from Brussels comes because of corruption, badly functioning judiciary system, and the lack of transparency, and is already affecting the decisions of foreign investors, the UK embassy in Bulgaria warned.There is a lack of dialogue between state and business, Plugchieva said. Not only the administration, but also the beneficiaries of EU funding should be better informed, she added.

Deutsche Bank awarded two Bulgarian banks

 

UniCredit Bulbank and Piraeus Bank Bulgaria received international awards from one of the biggest banks in the World – Deutsche Bank, which is a leader in the area of EUR transactions. The award for exceptional quality of international transactions was given to UniCredit Bulbank. Towards the end of last year UniCredit Bulbank’s assets were just over BGN 9 billion and had the highest credit rating of all Bulgarian banks – BBB+. The international award for exceptional quality in EUR transactions was given to Piraeus Bank Bulgaria, Dnevnik Daily newspaper reported. Wrestling gold medal with a bonus of BGN 100,000 in goldBG 146142 2008-07-15 04:00:06 Sofia. The Bulgarian Wrestling Federation will give the record-high for Bulgarian sport – BGN 100,000 to Olympic gold medalists from the Beijing 2008 Olympic Games. Apart from that the champions will receive a further BGN 140,000 from the Bulgarian Government and a BGN 50,000 from Corporate Commercial Bank, The Trud Daily newspaper reported.

 

Lidl buys plot for Pazardjik supermarket

The local unit of German retailer Lidl has won a competition for a 4,892 sq m municipal land plot in Pazardjik, Southern Bulgaria. The company plans to develop a supermarket with a build area of 1,500 sq m and 70 parking spaces. Lidl Bulgaria bid up the plot to 1.722 mln levs from the initial price of 1.5 mln levs. The company will have to build the supermarket in nine months. As part of the deal, Lidl Bulgaria has undertaken to invest 350,000 levs to renovate the sporting venues of the nearby Hebar complex. The other candidates for the site were Immobilia Bulgaria Commerce, bidding on behalf of German retailer Plus Discount, and Rila Proekt on behalf of retailer Penny Market.

 

 

 

 

 

 

ANALYSIS:

 

Bulgaria's location could be a golden ticket

Publication: Financial Times

 

After a year and a half of European Union membership, Bulgaria is undergoing a reality check, says the Financial Times.While the country is enjoying strong economic growth, there is growing popular frustration over a wide gap with "old" Europe in standards of living and social protection. Consumer protests against fuel prices have so far been muted in Bulgaria. But planned increases in the cost of basic utilities and public transport could spark discontent on a larger scale. Yet the global credit squeeze has had only a moderate impact. Economic growth, projected at 5 per cent for 2008, remains among the highest in the European Union. The stock market has been hardest hit - although the sharp fall in prices has encouraged Bulgaria's largest companies to consider offerings on leading international stock exchanges. Strong credit growth, at about 55 per cent last year, underlines the strength of Bulgaria's recovery from the economic collapse of the 1990s. A modest decline in growth rates may even prove healthier and prevent overheating in certain sectors. But there is a sense of lost direction in the wake of EU accession.While the ratio of state foreign debt to gross domestic product has dwindled to 15 per cent, foreign private debt has surged along with levels of household indebtedness. Although the debt to GDP ratio is well below the EU average, volatile global markets leave no room for complacency, given Bulgaria's high current account deficit and further debt growth in sight. Rigid fiscal policies have yielded unprecedented budget surpluses of as much as 5 per cent of GDP. But there is a growing need for long-term budget planning, transparent budget allocation procedures and full convergence of monetary and fiscal policies. Adoption of the euro has been postponed until 2014-2015 - although, technically, inflation is the only Maastricht criterion that Bulgaria has failed to achieve. But new member-states such as Bulgaria, with currency board regimes, need clear guidance from the European Central Bank. Different speeds of convergence of monetary, financial and economic systems make integration harder for new member-states. The tough talk from Brussels should assist reformers in Sofia to put an end to old dependencies and corrupt practices. This will make it possible to start drawing down transfers from the EU cohesion and structural funds - projected to reach about 6 per cent of annual public spending until 2013. Disbursement of EU funds will help kick-start key infrastructure projects, while close monitoring will have an impact on the reform process. But the current delay in disbursement means that Bulgaria is likely to remain a net financial contributor to the EU budget in 2008. Bridging the gap with the rest of the EU is proving an elusive target. Technology-intensive, food sufficient and high value-added economies actually gain in competitiveness with upswings in key strategic commodities. But the Bulgarian added-value chain is too short at present to absorb a global shock. Traditional growth engines are showing signs of fatigue. Tourism still heals trade deficits, but outbound tourism spending is quickly eroding its effect. Real estate continues to attract the bulk of inward foreign investment. A lack of sophisticated and diverse product and service markets, a shortage of both skilled and unskilled labour and more demanding debt markets have dimmed some of Bulgaria's original lustre as an investment destination. However, the appeal of the Bulgarian property and construction markets will remain strong in the medium and longer term. Negative demographic trends paint a bleak picture: the workforce is projected to shrink by 50 per cent by 2050. A lack of effective immigration policies, low wages, poor internal labour mobility and a cumbersome administration reduce Bulgaria's appeal as a destination for job seekers. The government needs to take urgent action to address these issues. The skills deficit mainly affects the public administration as wage differences between the public and private sector widen, making it almost impossible to build administrative capacity to cope with an overloaded integration agenda. Outsourcing and public- private partnerships may offer a solution. Bulgaria has a comparative edge in sectors that are critical for the global economy - energy transit, food processing and agriculture.Moreover, Europe's best hope for diversification of its natural gas supply lies in the routes accessing Caspian and Middle East sources. It does not make sense to explore the option of importing gas from Yamal in Siberia, which will be hard to access, while overlooking gas-rich Qatar, which is the same distance. Bulgaria, and more generally south-east Europe, are bound to play a key role in the EU's energy security plans.Bulgaria has one of the lowest rates of taxation of assets and income. This offers an incentive for more local companies to come out in the open.Another indicator of normal economic conditions is that the dynamism of the economy is largely independent of the political cycle. But a genuine reform effort and clear leadership are needed if EU membership is to deliver the positive effect most Bulgarians expect.

 

 

 

 

 

Belene would be the most expensive N-Plant in the world

Publication: Banker Weekly English

 

The IAEA experts also believe that the fuel for Belene should not be Russian alone. People from the branch point out that the change of the combustion part would result in changes in the generator controlling systems which usually cost around 50% of the entire nuclear project. Therefore, for the time being IAEA cannot exactly say how much the initial budget for the Belene N-plant would rise, but it will be certainly significant. In fact, during the last two years the Banker weekly has repeatedly wrote that the second Bulgarian N-plant would cost almost twice the initially announced calculations. But until recently, the investor - the National Electricity Company (NEC) - has stubbornly insisted it wouldn't exceed �4B, i.e. the price stipulated in the agreement with the project's chief contractor, Russian company Atomstroyexport. The Russians themselves were not so categorical and admitted it was an usual world practice for such huge undertakings as the construction of a power plant, that the price would be up to 30% higher. Two months ago the Chairman of the Bulgarian Nuclear Regulatory Agency, Georgi Kaschiev, calculated that Belene's construction would "swallow" more than �7B. only then did the NEC note that some 20% appreciation could be expected, equalling the percentage of accumulated inflation according to Eurostat. However, it is the NEC where IAEA's sent its new stance. Towards the end of last week (July 3) the British website www.ijonline.com announced that the French BNP Paribas found it wiser not to ensure loans for the future Belene N-plant, although it is a leading structure-defining and crediting bank in financing construction. According to an insider, the credit institution's decision was made at the highest possible level. The Belene N-plant is a complex project, requiring huge financial liabilities to be undertaken, which would be risky for the potential sources of financing, the internet publication says. It seems banks have been also pressed by environmentalists' protests against the power station. Another negative impact on them was the choice of the Russian company Atomstroyexport to implement the project. That aroused doubts of insufficient experience in the branch. Finally, www.ijonline.com concludes that BNP Paribas' denial to finance the project might also influence other credit institutions that could give up participation in the undertaking. BNP Paribas is Belene N-plant's main organizing bank, which does not require it to ensure the financing for the new power station, the NEC specified, refusing to make further comments. Under the contract signed by credit institution and the NEC on June 4, 2008, the bank should examine the interest of potential creditors, work out the terms for holding a tender for an organizer of financing, and draft the agreement with it. The money itself would be ensured later on, at three stages. The first one of them is to send the parameters for the project's financial model to the banks with which the French work. The NEC has presented to BNP Paribas a list of 67 financial institutions that are already expected to give the concrete parameters of their proposals with the terms and the entire prices of loans they would extend. Judging from the statements of the French bank itself, it is only a consultant and would neither organize nor finance the deal. Let's recall that the contract with the NEC was closed in the last minute possible, as BNP Paribas insisted to have the opportunity to withdraw even without having found financial institutions that would participate in the construction, but nevertheless to get its remuneration. The interesting point now is if such a clause is present in the contract with the NEC. And the latter certainly is not aware of the financial scheme itself. The main reason are the state guarantees that have been so far fixed to �550M (i.e. a little more than one eighth of the initially earmarked �4B). It's more than obvious that amount won't make the project attractive for financing. Therefore, NEC's managers have recently asked to raise the state guarantees for the second Bulgarian power station. Speaking the truth, BNP Paribas is already financially engaged with Belene. Last year it extended a syndicated credit of �250M to the NEC, earmarked for the future N-plant. NEC's report for 2007 says that the bank has also attracted in the financing the Swiss Nordic Bank. The term of the loan is till 2012 and it's another matter where and how the released �110M tranche was spent. According to former vice premier Alexander Bozhkov, who co-chairs the Centre for Economic Development, construction of administrative buildings, hostels, and infrastructure, is still going on at the Belene N-plant's site. Payments to the consultants Parsons continue as well. According to official information, the company will get �28.9M this year under an annex to its contract with the NEC. Insiders of the electricity company said that the additional money would be released in order to prepare the start of construction work. However, nobody said a word about Parsons' reregistration in Australia or why that was done. And who is NEC's consultant on the Belene N-plant project as of today?