BULGARIAN ECONOMIC TOP NEWS DIGEST
WEEKLY REPORT ( 24 – 31 OCTOBER 2008)
Sections/headline briefs:
MACROECONOMY:
· The Vice Premier and Minister of Internal Affairs and the Minister of Labor and Social Policies look for investors from South Korea
· Bulgaria needs active international marketing
· Bulgarian triple coalition discusses Budget 2009
· Bulgaria state to grant BGN 400 M to support business
· Nearly � 900 M for BDZ, NPP "Belene" & Minsitry of interior
- Business urges export backing
- The West weaves currency lifeline for Eastern Europe
- Belgium pours � 3.5 B into owner of Bulgaria's EIBank KBC
- Bulgaria bank system with best capitalization in EU
- Bulgarian -Tunisian economic commission holds 13th session
· Bulgaria to negotiate natural gas imports from Tunisia
· North Korea and Bulgaria mark 60 years of diplomatic ties
· Bulgaria donates handbooks to students in North Korea
· Future problems in the viniculture-wine sector
· Biofuel makers may challenge state over scrapping tax incentives
· Base Interest Rate in Bulgaria up by 1.14 p.p. in one year
· Bulgaria 2008 revenues from hunting tourism to reach BGN 5,5 M
· Bulgaria last in energy sources efficiency
· Bulgarian borders become CCTVed
· Melrose finds new gas in Bulgaria
· Plovdiv Fair to pay BGN 300,000 in fines for unfair conditions and price malpractices
INVESTMENTS:
· Bulgaria cabinet to support Knauf Bulgaria investment plan
· Cumerio wraps up � 80 М investment
· Wind park in small town expected to cost BGN 400 M
· “Black sea” mine to make electricity from the sun
· Tandem invests BGN 1.5 М in a subsidiary
· Balkan trade house breaks ground on � 10 M multi-task complex in Pazardjik
· Zobele Group invests in a plant near Plovdiv
· Portugese to invest �150 M in stations for eco-energy
COMPANIES:
· Bulgaria's cigarette monopoly Bulgartabac with 50% increase in sales revenue
· Steel plant Kremikovtsi shuts down main production lines
· Metallurgy giant opens office in Sofia
· Lufthansa Technik to repair Boeing, Airbus planes in Sofia
· Logitech to open agency in Bulgaria
GLOBAL FINANCIAL CRISIS ANALYSIS AND NEWS:
· World Bank urges Bulgaria to prepare emergency econоmic plan
· Bulgaria mulls action plan as financial crisis looms
· Bulgarian yuppies return home
· Crisis makes budget key investor
· Bulgaria government does not plan to raise taxes over financial crisis
· NSI: Business climate in Bulgaria worsens
· BSE – down and down and down ...
· Construction business loses fight with crisis
· Government to save the construction business with � 2.8 B
· UK real estate agency freezes residential complex project in Sofia
· Bulgaria Tourist Agency prepares plan to deal with global financial crisis
· “It is not a crisis of finance, but of credit”
Articles:
MACROECONOMY:
The Vice Premier and Minister of Internal Affairs and the Minister of Labor and Social Policies look for investors from South Korea
The Vice Premier and Minister of Internal Affairs Ivaylo Kalfin and the Minister of Labor and Social policies Emilia Maslarova were accepted by the Prime Minister of the Republic of Korea. The purpose of the visit of the two ministers is the signing of an agreement for economic cooperation and social security. The Korean premier emphasized that the two agreements will aid the increased interest of Korean business in investment in Bulgaria, but added that this can be expected right after the world financial crisis.Kalfin introduced in detail the Korean PM to the energy projects with Bulgarian participation, as well as the opportunities for using the Bulgarian ports on the Black sea and the Danube for easy and cheap access to the rest of Europe.The Korean Premier expressed interest in participating in energy projects with new technologies and especially renewable energy sources."I hope we will manage to attract new Korean investment in Bulgaria and to find markets for Bulgarian export in Korea, which is a way to reduce a small part of the negatives of the world financial crisis", Emilia Maslarova said for "Darik radio" after the meeting with the Premier.
Bulgaria needs active international marketing
Bulgaria needs an extremely active international marketing in order to show that it is a stable island in Eastern Europe, claimed the chairman of the Bulgarian economic forum Georgi Tabakov during the presentation of the forthcoming 10th edition of the forum. According to Tabakov the state should give bigger stimuli to the foreign investors, who are becoming more and more conservative towards the risk markets.It is not easy to attract foreign investment anymore and Bulgaria should manage the competitive environment through a stable strategy, explained the chairman of the Bulgarian economic forum.“Bulgaria in this case should unhook from the image of Hungary. Three-four years ago we wanted to be like Hungary, to attract as many investments as possible. The problem, however, you see what it is in Hungary – the investors started withdrawing. Such a thing in Bulgaria so far cannot happen because Bulgaria is protected by the currency board. The other thing is that in Bulgaria every year the Bulgarian governments instead of deficit make a surplus in the budget, which is also a financial anchor and this is something that should be communicated all the time”, said Tabakov.The chairman of the Bulgarian economic forum presented the main topics, which will be discussed by the participants in the 10th economic forum for Southeastern Europe, which will be held in Sofia on November 5 and 6. The topics include: the financial crisis, its reflection first on the financial sector in Bulgaria and then on the other economic fields, the establishment of the Bulgarian infrastructure, the energy and energy efficiency and the telecommunications.
Bulgarian triple coalition discusses Budget 2009
The leaders of the triple coalition – Sergei Stanishev, Ahmed Dogan and Simeon Sax Coburg Gotta will discuss the draft budget for 2009.In the preparation of the draft the decrease in the foreign direct investments, the increase of the price of the credit resource, the nearly certain entrance of Europe into an economic recession, which will affect the Bulgarian export – all these issues are taken into consideration. The economic growth is expected to be at levels from 4-5 years ago and will be under 6%, while for the first half of this year it was over 7%. The investments will be around or less than 20% from the GDP, the speed of unemployment's decrease will slow down. The budget surplus will be not less than 3%, the expenditure part will be not more than 40% of the GDP. The social priorities will remain, with 200 million euro more than this year's being given for healthcare and education each. Prime minister Stanishev and the leaders of the Movement for rights and freedom Ahmed Dogan and of NDSV Simeon Saxe Coburg Gotta will adopt a 20% -increase of the pensions from July 1. The budget salaries will be raised at the same time but with 10%. The planned by the governing coalition inflation for the first quarter of 2009 should not exceed 6% and the maximum set in the macro frame of the budget is 10%. “The percent of the inflation should not be a double digit one, we believe will be able to make it somewhere between 7-9 %”, explained members of the parliament. Despite all obstacles, however, the opinion of NDSV, which was expressed by the former financial minister Milen Velchev, is that the macro framework for the next year should provide for a stimulus for the young families and money should be alloted for the in vitro program. According to the chairman of the budget committee in the parliament Rumen Ovcharov the key fields which the socialists will insist on, will be education and healthcare.
Bulgaria state to grant BGN 400 M to support business
The ruling triple coalition has approved additional measures to help the real businesses in Bulgaria in the conditions of the global financial crisis, according to the Bulgarian Prime Minister (PM) and leader of the Bulgarian Socialist Party (BSP), Sergey Stanishev.Stanishev spoke Tuesday, after the conclusion of the meeting of the BSP leadership.The Premier stated that the three ruling parties have united around the idea to establish an additional investment program, aimed at supporting the Bulgarian economy."This program would provide for an additional BGN 400 M off capital investments, on top of the 7% from the Gross Domestic Product that have already been planned," the PM pointed out.The Premier also spoke about the upcoming significant capitalization of the Bulgarian Bank for Development, which would receive BGN 500 M to use for crediting of the commercial banks.Stanishev also said that the fuels' excise and taxes would not be increased in 2009 and new industrial zones would be created in different areas of the country.The Cabinet further plans to increase the retirement pensions in Bulgaria in two steps - first on April 1, 2009 and then on July 1, 2009. The Premier explained that all details about the upcoming economic measures would become clear at the Thursday meeting of the Ministries Council.
Nearly � 900 M for BDZ, NPP "Belene" & Minsitry of interior
Five projects will start in Bulgaria in 2009 with state loans and guarantees up to 874 million euro.The government decided two of them to be funded by state loans up to 47 million euro and three to be supported with state guarantee up to 827 million euro.The implementation of the projects according to the cabinet will improve the railroad infrastructure, stimulate the energy development and better the capacity of the ministry of internal affairs.The projects “Establishment of telecommunication infrastructure of ministry of interior” and “Bulgaria – regional and municipal water supply” will be realized through state loans, informed BNR.The projects for stabilization of the railroad infrastructure in the period 2009-2011, the provision of a state guaranteed loan for student crediting and the construction of a nuclear power plant in Belene in which 600 million euro will be invested, the state will support though guaranteed credits.The aim of the project for stabilization of the railroad infrastructure, which will be funded by the World bank, is to renovate the rail roads and their equipment, increase the speed of the trains and the safety of transport as well as reduction of the expenses through the import of new technologies.
Business urges export backing
Bulgarian businesses will press for further export promotion measures in budget 2009, said Evgenii Ivanov, executive director of the Confederation of Employers and Industrialists in Bulgaria. Businesses backed the budget’s main parameters and its conservative policy but called for further protection in case the crisis should go uglier. Companies cheered at the Government’s plans for hefty investments, unchanged tax policy and lower social security burden, which will ease cash-strapped firms’ way to banks.
The West weaves currency lifeline for Eastern Europe
The International Monetary Fund has reportedly rushed to put together an unprecedented credit line worth billions of dollars to satisfy the urgent need for foreign capital among developing markets. Bulgaria could potentially feature among these credit markets.The IMF will throw hefty three- or six-month dollar lines of credit at softer requirements to stave off economic and currency disaster in countries excluded from the safety nets of the Fed and the European Central Bank.Sofia, on the other hand, was adamant it does not need foreign help and has denied reports, cited in the Economist, that it was in talks with the IMF.Sources say Bulgaria may grab a two-billion-dollar credit line after Ukraine reached a 24-month agreement with the IMF on a $16.5 billion loan under a 24-month stand-by arrangement.The IMF can lend about $240 billion to struggling economies and prop up withering currencies but major central banks can also join in.Washington denied it is weighing a $1 trillion rescue package but Japan, a few oil production countries and the Fed have said they were ready to back the project.The New York Times placed Bulgaria, Romania, Hungary, Ukraine, the Baltic States and Turkey on the list of countries threatened by the crisis but where leaders say there is no cause for concern.The Economist reported that the crisis is posing a major threat to the EU’s poorest countries, Bulgaria and Romania, and warned that a burst property bubble and a wave of corporate failures might jeopardise their banking systems. Bulgaria is also unlikely to receive foreign help because of its failure to stem organised crime, according to the publication.The European Bank for Reconstruction and Development is mulling over giving loans or buying more shares of banks it has stakes in throughout the region, said president Thomas Mirow.Bulgaria, Turkey, Romania and Croatia will fail to attract foreign funding over their low sovereign credit ratings.Last week rating agency Standard & Poor’s placed Bulgaria's BBB+/A-2 foreign and local currency sovereign credit ratings on credit watch negative and said the country’s credit market is unstable and is facing a sharp slump in foreign funding.The Bulgarian Government, on the other hand, is vigorously denying there is any trouble ahead.The prudent macroeconomic and fiscal policy has equipped Bulgaria with sufficient reserves to avoid having to knock at the doors of the European Commission, the IMF, the ECB or any other institution, Finance Minister Plamen Oresharski said on October 24.The Bulgarian economy should be stopped from cooling off or else foreign investments will fall and the economy may be in for a shock landing, according to Yordan Tsonev, chairperson of Parliament's economic policy committee.
Belgium pours � 3.5 B into owner of Bulgaria's EIBank KBC
The government of Belgium will aid the financial and insurance group KBC with EUR 3,5 B in order to stabilize it amidst the troubles it has as a result of the global financial crisis.The Belgian state and KBC agreed upon the aid package on Monday, which made KBC the third Belgian financial institution turning to the government for stabilization after Fortis and Dexia.The Belgian government will pour the EUR 3,5 B in exchange for securities with profitability of 8,5% or more.The state aid will create an additional capital buffer to help the financial group deal with potential challenges, the official statement of the company reads. KBC owns 75% of the Bulgarian EIBank and of the Bulgarian insurance company DZI.
Bulgaria bank system with best capitalization in EU
The Bulgarian bank system has the best capitalization in the entire European Union (EU), according Ivan Iskrov, Manager of the Bulgarian National Bank (BNB).Iskrov made the statement on Thursday before members of the Greek Business Council during a discussion about the effects of the global financial crisis in Bulgaria.According to data from BNB until September of 2008, the credit institutions, operating in the country, have registered profits of BGN 1,1 B, which is 30% more compared to the same period of 2007. It is projected that the profits would reach a total of BGN 1,5 B by the end of the year.Iskrov further stated that there was no need to recapitalize banks in Bulgaria similarly to the recapitalization taking place in Western Europe, because they were over capitalized. The problems created by the global financial crisis are not affecting the bank system in the country, but the real business, Iskrov explained.The BNB manager also pointed out that in the conditions of a long-lasting crisis, Bulgaria can expect deflation, increase of unemployment, low rate of salaries' increase, adding that Bulgaria was going to overcome these issues because the country possessed the best instrument - its membership in the International Monetary Fund.
Bulgarian -Tunisian economic commission holds 13th session
Economy and Energy Minister Peter Dimitrov is taking part in the opening of the 13th session of the Bulgarian-Tunisian Commission on Economic, Industrial, Trade and Technological Cooperation, which is taking place in Tunisia on October 27 and 28, Dimitrov's Ministry said in a press release.During the session, an agreement on cooperation between the two countries' chambers of commerce and industry and an agreement on economic cooperation between the governments of Bulgaria and Tunisia will be signed.Investment, dual taxation and cooperation in education, science and culture will be among the topics of discussion.Dimitrov is scheduled to confer with Foreign Minister Abdelwaheb Abdallah, Trade and Handicrafts Minister Ridha Touiti, and Industry, Energy and Small and Medium-Sized Enterprises Minister Afif Chelbi.
Bulgaria to negotiate natural gas imports from Tunisia
Bulgaria, whose gas supplies come almost solely from Russia, plans to start talks early next year on natural gas deliveries from Tunisia, Bulgaria's Economy and Energy Ministry said on Tuesday. Economy and Energy Minister Petar Dimitrov and Tunisian companies discussed options for natural gas deliveries from Tunisia to Bulgaria during a meeting earlier in the day, the ministry said in a statement.There are significant gas deposits in the southern parts of Tunisia and the country plans to start exports, the ministry added, providing no further details. Two major gas pipelines are expected to run across Bulgarian territory - the EU-backed Nabucco pipeline that would supply gas to Europe from the Caspian region and is aimed at decreasing the dependence of European gas supplies on Russian deliveries; and the South Stream gas pipeline, a project by Russia's gas giant Gazprom and Italy's oil and gas company Eni.
North Korea and Bulgaria mark 60 years of diplomatic ties
North Korea, Bulgaria mark 60 years of diplomatic ties. Text of report in English by state-run North Korean news agency KCNA. Pyongyang, 28 October: Stoyan Gortchivkin, Bulgarian charge d'affaires a.i. here, arranged a reception on 27 October on the occasion of the 60th anniversary of the opening of diplomatic relations between the DPRK and Bulgaria. Present there on invitation were Kung Sok Ung, vice-minister of Foreign Affairs, Ri Myong San, vice-minister of Foreign Trade, Hong So'n-ok [Hong Son Ok], vice-chairwoman of the Korean Committee for Cultural Relations with Foreign Countries, officials concerned and diplomatic envoys of various countries here. on hand were members of the delegation of the foreign ministry of the Republic of Bulgaria headed by Deputy Minister Radion Popov and staff members of the Bulgarian embassy. Speeches were made there.
Bulgaria donates handbooks to students in North Korea
Donation of handbooks and appliances for the studying of Bulgarian language received the students in North Korea who study the language from the Bulgarian ministry of education.The donation was delivered by the vice-minister of foreign affairs Radion Popov, who was on a 3-day visit in the Democratic People's Republic of Korea. The visit is with regard to the 60th anniversary of the establishment of diplomatic relations between Bulgaria and DPRK, informs the press center of the ministry. In the framework of his visit the vice-minister has spoken with the deputy chairman of the Presidium of the Supreme people's assembly Yang Hyong-sop. An arrangement has been reach for review of the outdated contract-normative basis between the two countries and development of the six party talks on the North Korean nuclear program has been discussed.The 60th anniversary of the establishment of the diplomatic relations between Bulgaria and DPRK was marked in Pyongyang also with the opening by vice-minister Popov of a photo exhibition “Bulgarian monuments of culture under the UNESCO protection”.
Future problems in the viniculture-wine sector
The funds, which are to be given to Bulgaria by the EU for the viniculture-wine sector will not be acquired fast enough because of the lack of expert personnel. This is the opinion of Plamen Molov, Chair of the National viniculture-wine chamber, cited by BNR (Bulgarian National Radio).For a term of 7 years, 166 million Euro will be given to the viniculture-wine sector.About 70% of the funds will be directed to the creation of new vines or reconstruction of old wine fields.Also, a lot of funds will be given for the construction of different facilities, which are to increase the quality of wine."All this requires a lot of effort and expert personnel. I am concerned that this programme will not start fast enough", Molov explained.
Biofuel makers may challenge state over scrapping tax incentives
Bulgarian biofuel producers have threatened to file a lawsuit against the Customs Agency after the agency said that it would impose an excise on pure biofuel products starting from October, the National Biofuels Association in Bulgaria has said.Deputy Finance Minister Kiril Zhelev said in mid-October that biofuel producers will have to pay excise duties until the European Commission issues a ruling saying that the tax incentive is not illegal state aid. Bulgarian authorities have not submittted such a request over complications in calculating the costs of fossile fuels in the country, which is part of the package that has to be submitted to the EC.Dimitar Zamfirov, the chairperson of the biofuels association, told Dnevnik that the organisation would seek court action as soon it receives an official notification of the new excise duties, arguing that it was against the law.Under Bulgarian legislation, biofuels bear a zero excise duty, but removing the tax incentives brought the collateral paid for their storage to the level of the excise on fossile fuels. Biodiesel will be taxed as gas oil with 600 leva for 1000 litres, and the tax rate will be 1100 leva for 100 litres of pure bioethanol.Biofuel producers have said that the measure would put them on the brink of bankruptcy and argued that that the EC's state aid ruling was not mandatory, only recommended.The same reason stalled the introduction of a lower tax on biofuel blends. Mineral diesel and unleaded petrol with a four to five per cent content of biofuel are eligible for a three per cent tax break, resulting in a net decrease of costs by 0.18 and 0.21 a litre, respectively.
Base Interest Rate in Bulgaria up by 1.14 p.p. in one year
Тhe Base Interest Rate in Bulgaria stood at 5.23% in September 2008, rising by 1.14 percentage points compared to September 2007, data of the Bulgarian National Bank show.The LEONIA Reference Rate amounted to 5.38%, rising by 1.14 percentage points in comparison with September 2007. In September 2008 the one-month SOFIBOR Reference Rate rose by 1.84 percentage points to 6.80% compared to September of the previous year, and the 3-month one rose by 2.07 percentage points to 7.32%.In September 2008 the long-term interest rate for convergence purposes (LTIR) was 5.17%, rising by 0.73 percentage points compared to the same month of 2007.In September 2008, compared to September of the previous year the average interest rate on loans up to EUR 1 million increased by 1.56 percentage points to 11.24% for the loans agreed in BGN and by 0.31 percentage points up to 9.06% for the loans agreed in EUR. The average interest rate on loans over 1 million EUR rose by 0.42 percentage points to 8.80% for loans agreed in BGN and by 0.43 percentage points to 8.42% for loans agreed in EUR.In September 2008 the average interest rates on BGN consumer loans, BGN loans for house purchases, EUR loans for house purchases and on BGN other loans increased respectively by 2.09 percentage points to 11.59%, by 1.07 percentage points to 9.45%, by 0.59 percentage points to 8.00% and by 0.27 percentage points to 12.52% on September 2007.The Annual percentage rate of charge on BGN consumer loans was 12.37%, rising by 1.34 percentage points compared to September 2007. The Annual percentage rate of charge on BGN loans for house purchases increased by 1.22 percentage points to 10.24% on September 2007 and that on EUR loans for house purchases increased by 0.81 percentage points to 8.88% in comparison with the same period of 2007.The average interest rate on deposits with agreed maturity was 5.76%, rising by 2.03 percentage points in comparison with September 2007.Compared to September 2007, the average interest rate on deposits with agreed maturity increased by 1.75 percentage points to 5.98%.In September 2008 the average interest rate on BGN overdraft was 9.84%, rising by 1.14 percentage points in comparison with September 2007. The average interest rate on BGN loans other than overdraft increased by 1.06 percentage points to 10.60% while that on EUR loans other than overdraft increased by 0.01 percentage points to 8.80%.The average interest rate on BGN overdraft decreased by 0.27 percentage points to 13.01% compared to September 2007. The average interest rate increased by 0.34 percentage points to 11.21% for BGN consumer loans, by 0.33 percentage points to 9.02% for BGN loans for house purchases and by 0.37 percentage points to 12.58% for BGN other loans while the average interest rate on EUR loans for house purchase decreased by 0.08 percentage points to 7.80%.In September 2008 the average interest rate on overnight deposits increased by 0.17 percentage points to 0.79% compared to the same month of the previous year and that on deposits with agreed maturity increased by 1.52 percentage points to 5.27%. The average interest rate on deposits redeemable at notice decreased by 1.11 percentage points to 3.08%.Compared to the same month of the previous year, the average interest rate on overnight deposits decreased by 0.03 percentage points to 0.89%, while that on deposits with agreed maturity increased by 0.90 percentage points to 5.37%. The average interest rate on deposits redeemable at notice increased by 0.90 percentage points to 3.49%
Bulgaria 2008 revenues from hunting tourism to reach BGN 5,5 M
The 2008 revenues form hunting tourism in Bulgaria are expected to exceed those from 2007 by BGN 0,5 M, according to the Deputy Chair of the State Forestry Agency Iordan Radoslavov.Radoslavov spoke on Wednesday, at the opening of the Fifth National Hunting Trophy Exhibit, held at the Plovdiv Fair.The current revenues from game shooting amount to BGN 4,2 M with a forecast of the total amount for 2008 to reach over BGN 5,5 M.Currently the game preserves in Bulgaria receive investments of BGN 20 M per year split between the State Forestry Agency and the National Hunting and Fishing Association. There is a planed investment increase that would come from the concession of the preserves to private investors, which would lead to better facilities, services, health of the game and would create new hunting destinations.According to Radoslavov, private investments would only hurt the interests of those shooting in hunting areas without legal permits, by making personal agreements with local rangers.
Bulgaria last in energy sources efficiency
The seventh national conference on energy efficiency “Implementation of the politics on energy efficiency: use of the national and international opportunities” was opened today at Sofia Sheraton Hotel Balkan, informed Focus agency. At the beginning of the conference a greeting from the minister of economy and energy Peter Dimitrov was read.It is well known, that the energy intensity of the Bulgarian economy is high and the country ranks at one of the last places among the EU member states in terms of efficiency of the energy sources use.This is an obstacle for the increase in the competitiveness of the Bulgarian economy and for the improvement of the characteristic of the environment, says the statement, in which the positive cooperation between Bulgaria and the EU in the field of energy efficiency is emphasized. Andre Mernier, general secretary of the European charter, claimed that we lived in time of insecurity, we didn't know what the future would offer to us in the conditions of world financial crisis, but in this globalized world a synchronized response was necessary. Science is increasingly confident that the emissions of greenhouse gases should be decreased in the future. I am certain that the European charter in which 51 countries take part, is the epicenter of all challenges, claimed Mernier. He greeted Bulgaria for the achieved results and pointed out that there was a lot of work left to be done.The director of the Agency on energy efficiency Tasko Ermenkov claimed that the conference is a traditional one. He pointed out that it was organized together with the European charter.The idea was to gather an active European society from partners, for whom the energy efficiency is a way of life, said Tasko Ermenkov and underlined that the debates on the law for energy efficiency in the parliament had been concluded successfully and the draft was expected to be voted on tomorrow. To remind, the deputy prime minister Ivaylo Kalfin claimed that in the last years Bulgaria was paying significant attention to energy – through the lasting change of the energy production in the country and through the export of energy. In the last years the energy field is not just part of the economy. Its scope does far beyond – in fields such as environment protection and climate change, commented minister Kalfin.
Bulgarian borders become CCTVed
Close-circuit television (CCTV) cameras will be planted at Bulgaria's borders with Turkey, Serbia and Macedonia to watch smuggling. The Bulgarian Customs Agency and Border Police will build a CCTV network at the major outer EU borders, draft budget 2009 envisages. To increase budget revenues, the government also plans to rotate tax inspectors in order to reduce corruption pressure on them. The Customs Agency and the Bulgarian Ministry of Interior will carry out joint inspections of alcohol and cigarettes traders. There will also be international joint operations against frauds with Chinese and Turkish imported goods.
Melrose finds new gas in Bulgaria
Melrose Resources has revealed a major gas discovery in Bulgaria, as the company draws close to securing a lucrative deal to provide gas storage to the country, the Scotsman reads.The Edinburgh-based oil and gas firm supplies about 15 per cent of Bulgaria's gas from its Galata field, which it plans to turn into a storage facility.Yesterday, it said it had made a discovery in the nearby Kavarna exploration permit, and that its initial estimate is that it contains reserves of 24 billion cubic feet of gas.
Plovdiv Fair to pay BGN 300,000 in fines for unfair conditions and price malpractices
After checking the signals, the Commission for Protection of the Competition found that there was a dominant market position in the sector of providing rights to building exhibition halls, and the Plovdiv Fair did in fact make use of this situation, having raise the prices for competitors. The enterprise however kept its package price for construction of exhibition premises, depriving other companies from their chance to profit and eliminating competition in the sector. There is no clear regulation with regard to the Fair's right to denial for construction of exhibition premises as well as with respect to its right to unilaterally change General Terms and Conditions. All this gives the enterprise the possibility to impose unfair trade conditions and unilaterally change the General terms and Conditions, including prices, to the detriment of fair's clients, the state regulatory commission said. It has ordered the violation practices to be stopped. Representatives of the Plovdiv Fair said they would appeal the decision before the Supreme Administrative Court. The management of the fair believes that its enterprise is not a monopolist, because the country hosts as many as 200 fairs a year, while Plovdiv organizes only 47 of them. According to the General Terms and Conditions, the fair has the right to change these conditions, which was the principle according to which other large companies were working in Bulgaria, too. As all commercial entities in Bulgaria, Plovdiv Fair has its right to choose which entities to sign contracts with, representatives of the organization pointed out. "In this particular case its decision was based on safety standards, quality of construction, loyalty of the partners and other important factors. Up to now we have not refused the right to build stands and halls to any foreign company," people from Plovdiv Fair commented. According to them, the construction fee was raised because construction companies asked for increase of the building period from 10 to 20 days, which led to increase of costs for power supply, water, security services and servicing personal.
INVESTMENTS:
Bulgaria cabinet to support Knauf Bulgaria investment plan
The Bulgarian Cabinet is going to support the investment plan of the "Knauf Bulgaria" company with BGN 2,6 M.The company is building a factory to manufacture plasterboards in the town of Galabovo, near the Maritza-Iztok thermal plant.The total investment amount is estimated at EUR 54 M, while the new factory, which is scheduled to open doors by mid-year of 2009, is going to provide 100 new job opportunities.The estimated yearly production is 30 million square meters of plasterboards. The majority of the production is going to be exported. Currently Knauf have invested nearly EUR 20 M in Bulgaria. Knauf Bulgaria is the Bulgarian branch of Knauf Gips KG Iphofen Germany and is administered by the Knauf office in Vienna. Knauf Bulgaria was established in 1993.Operating more than 150 production sites worldwide, today Knauf is one of the world's leading manufacturers of building materials. Knauf has a workforce of 22,000 in 40 countries and in 2007 the company generated sales will amount to EUR 5,5 B. The Group started to go international as early as the beginning of the seventies of the last century and the trend continues. Today the Group produces and sells its products in all European countries. Furthermore, there are factories located in North and South America, in the CIS states, in Turkey, in China and in Indonesia.
Cumerio wraps up � 80 М investment
Cumerio Med, the Pirdop-based smelter owned by Belgian copper producer Cumerio, now a unit of German Norddeutsche Affinerie, will cut the ribbon on October 28 for a EUR 80 million copper cathodes unit, which will triple production capacity to 180,000 tonnes. Before the upgrade, the plant had an annual cathode copper production capacity of 60,000 tonnes and made 250,000 tonnes of anode copper a year. Cumerio Med ships 90 percent of its output abroad, mainly to Turkey, Greece and the Black Sea region. on the domestic market, it sells semifinished copper products.
Wind park in small town expected to cost BGN 400 M
The small municipality of Karnobat in eastern Bulgaria has predicted that investment in its own high-tech wind generator park could amount to 400 million leva, Bulgarian news agency Focus said on October 29 2008.On that very same day the city hall started a procedure for awarding the concession for the construction of the park to be built on a plot owned by the municipality. The tender is expected to be organised within the next four months. The city hall said that companies from Spain, Italy, Germany, Greece and Austria have expressed interest.The enterprise will comprise a wind generator park and photovoltaic park. By the end of the year the procedure is expected to be completed. The concession is expected to last 35 years and will produce 250 jobs, 60 of which would be full time positions.Karnobat's plans were first unveiled in June 2008. The town's mayor, Georgi Dimitrov, said at the time that the hi-tech park for alternative energy resources would cost less than 300 million leva.Dimitrov also said that negotiations between investors and the state-grid operator NEC, as well as the private electricity provider EVN were at an advanced stage so as to ensure sale of the electricity market.
“Black sea” mine to make electricity from the sun
The coal mine “Black sea” near Burgas started developing an alternative energy production. On the territory of the enterprise a “solar” electric plant has been built and put into operation.So far the plant is an experimental one and is situated at one of the industrial buildings on the territory of the mine. The special panels, which transform the solar light and heat into electric energy, are extremely modern and are imported from Japan. They have an area of 80 sq. m. and are already working with the produced electricity going directly for part of the production needs, informed BGNES.“If the experiment is successful, we will be able to produce at least 20Kw from the sun”, the director of the enterprise eng. Angel Angelov is optimistic. He has firmly decided to continue working for the building of an own “Solar” electric plant in the future.The solar audit has shown that the biggest solar shining in Bulgaria is in the region of Burgas on the territory of 40 to 50 km from the sea. Another similar place is the region around the town of Petrich. There is the technological possibility the area of the solar panels to increase to 4 decares. The motives are that the carbon production is extremely polluting for the environment.
Tandem invests BGN 1.5 М in a subsidiary
Tandem-Gabrovo, a subsidiary of Bulgaria's Tandem meat processing company, was officially opened two days ago. The new company specialises in the production of traditional Bulgarian salami and delicacies. The new building was reconstructed for the extremely short period of 4 months and the total amount of the investment is BGN 1.5 million. The new enterprise was authorised to trade freely in EU.
Balkan trade house breaks ground on � 10 M multi-task complex in Pazardjik
Balkan Trade House, the local architecture and engineering consultancy, will spend EUR 10 million to build a multi-task complex in the southern town of Pazardjik, said Filip Tsanov, who advises the project. The Fountains complex will be funded by a tailor-made mortgage product by First Investment Bank. It will sprawl on 3.4 hectares and comprise 22 four-storey blocks of flats, a swimming pool, sports facilities, children’s playgrounds, a kindergarten, a restaurant and an administrative centre. The first batch of 12 blocks is due for completion within a year, and the whole complex should be finished by the spring of 2011. The investor said apartments will sell from EUR 550 per square metre and have already drawn potential buyers. The complex will have a floor space of 32,000 sq m with most flats ranging from 82 to 95 sq m.
Zobele Group invests in a plant near Plovdiv
Italy's Zobele Group, the biggest maker of air fresheners in the world, opened yesterday a plant for household air fresheners in Rakovsky industrial zone. The investment amounts to BGN 4 million and the plant started work in February 2008. At the moment, 3 million air-fresheners electrical vaporisers are being produced by 160 workers. The plans are in 2009 the number of employees to reach 250 and production to reach EUR 35-40m to supply all European market.
Portugese to invest �150 M in stations for eco-energy
"Currently 120 firms with a personnel of 700 are operating on the plant's territory. The enterprises use solid fuel - coal, and our idea is to supply heating energy generated from forest biomass", Caldeira explained. Three of the other power stations will be built near Kuklen where there is also an industrial zone, near Gabrovo and Kyustendil. The inputs for the electricity generation will be produced in Bulgaria. Some 100,000 tons of forest waste will be necessary for the stations' operation. If the biomass is not sufficient Mape Development intends to produce it itself by planting areas under willow trees. It is one of the plants mainly used for the production of biomass in countries like Sweden. MAPA SGPS plans also investments in the sphere of tourism, the Portugese company's director Jose Caetano said.
COMPANIES:
Bulgaria's cigarette monopoly Bulgartabac with 50% increase in sales revenue
Bulgaria's cigarette maker Bulgartabac has registered a 50,59% increase in sales revenue in the first nine months of 2008 compared to the same period of 2007, the company announced Monday. The total amount of the increase in sales revenue for this period is BGN 14,102 M. At the same time the total net revenue of the company in January-September, 2008, amounted to BGN 54,344 M.However, much of the revenue came from the sale of two of the monopoly's four cigarette plants located in the cities of Plovdiv and Stara Zagora. The two factories were sold on the Sofia Stock Exchange in July in order to restructure the company and to consolidate the production in the cities of Sofia and Blagoevgrad.
Steel plant Kremikovtsi shuts down main production lines
The country’s largest steel mill Kremikovtsi is phasing out two of its blast furnaces. The plant also will shut down the coke-chemical batteries. The closure of the units will allow Kremikovtsi to produce steel out of waste iron materials only and will reduce the capacity of the company to 150,000 tons of steel annually from 2.2mn before the operation. The management of the plant announced an emergency situation on Friday on shortage of coal inputs and risks of unexpected shutdowns that could have serious environment impacts. Last week, Ukraine ’s Vorskla Steel scrapped the processing contract with the local steel producer and Kremikovtsi warned environment authorities that it may cease operations due to lack of resources. Vorskla Steel claims that the management and the labour unions obstruct a EUR 15.3mn environment programme and are not allowing the contractor to take part in the management of the plant. The local company, owned by India ’s Global Steel Holding, is undergoing bankruptcy proceedings. The total liabilities of Kremikovtsi are estimated at BGN 1.63bn as of end-2007 and overdue claims are booked on all accounts. The government has the leading role in the board of creditors with debt claims in the tune of EUR 350mn. Kremikovtsi failed to receive a general environment permit but officials from the environment ministry comment that the steel mill could get a limited environment protection certificate only for one of its production lines. In addition, Kremikovtsi has not been included in the carbon dioxide quotas and has failed to meet the investment commitments in the contract for use of state aids singed many years ago.
Metallurgy giant opens office in Sofia
“Corus” - the second biggest company in Europe, producer of steel, opened office in Sofia, writes news.bg. This happens through “Corus international” - the supplies chain of “Corus”.According to Yoanna Kehlibarova, manager of Corus-Bulgaria, the registration of the company and the problems of “Kremikovtzi” is pure coincidence. At this stage we don't have any aspirations towards “Kremikovtzi”. We are lucky to appear on the market exactly in this moment, pointed out Kehlibarova.The new team will concentrate on the possibilities for development of “Corus” in Central and Eastern Europe and the use of the package of steel supplies for internal infrastructural projects and projects in the field of energy and construction.The team will cooperate with Bulgarian companies, participating in big international projects with own resources.The new office joins the already existing network of branches in the Czech Republic, Hungary, Poland, Romania, Russia, Ukraine and Turkey.“Corus” is a branch “Tata steel” - one of the 10 biggest companies in the world producing steel and is with an annual income of over 12 billion pounds.Considering last year's achievements, the amount of steel, which “Corus” can produce is over 30 million tones. The company has approximately 82 700 employees.
Lufthansa Technik to repair Boeing, Airbus planes in Sofia
The German company Lufthansa Technik opened Tuesday its new maintenance, repair, and overhaul complex located at the airport of the Bulgarian capital Sofia. Together with the Bulgarian Aviation Group, which owns 20% of the enterprise, Lufthansa Technik has invested more than EUR 20 M in the modernization of the maintenance facility and the training of the workers.All types of planes of the series Airbus A320 and Boeing 737 will be serviced in the new repair complex, which has a total area of 6 000 square meters, and allows the simultaneous servicing of two planes.The new repair facility will employ more than 350 workers, and will serve clients from Europe, the Middle East, and North Africa. The Lufthansa Technik complex was opened by the Bulgarian Deputy Prime Minister Meglena Plugchieva, and the Transport Minister Petar Mutafchiev. Lufthansa Technik has four other similar facilities Schoenefeld Maintenance Centre in Berlin, Lufthansa Technik Malta, Shannon Airspace in Ireland, and Lufthansa Technik Budapest.
Logitech to open agency in Bulgaria
Logitech, one of the biggest makers of peripheral devices for PCs in the world, will open an official agency in Bulgaria, Pari daily learned. So far the company was working in the country through distributors. The manager of the company said in May that the Logitech's sales in the country were very good and the forecasts were for 50% growth in 2008. By mid-year, only 5% of all sales were of hi-end products.
GLOBAL FINANCIAL CRISIS ANALYSIS AND NEWS:
World Bank urges Bulgaria to prepare emergency econоmic plan
The World Bank urged Bulgaria on Tuesday to prepare an emergency plan in case its emerging economy suffered a severe blow from the global financial crisis, Reuters informed. Kristalina Georgieva, vice president and director strategy and operations at the World Bank, said Sofia should also spell out where potential foreign financial help could come from to boost investor and market confidence."What I didn't hear is whether the government intends to create an emergency plan," Georgieva, a Bulgarian herself, told a business conference in Sofia. "For instance, what are we going to do to stimulate domestic demand if unemployment increases?"Analysts and ratings agencies view the Balkan country as particularly vulnerable, along with the Baltic states, because it depends heavily on foreign borrowing to cover its huge current account deficit and refinance foreign debt.
Bulgaria mulls action plan as financial crisis looms
Bulgarian officials and business leaders discussed possible plans of action here Tuesday amid growing concerns that Bulgaria could be the next emerging economy in eastern Europe to crack under the global financial crisis.So far, the government under Socialist Prime Minister Sergey Stanishev has insisted that Bulgaria will not be directly hit by the global financial meltdown and industry will not need a wide-reaching rescue package.
At a business conference in Sofia, Finance Minister Plamen Oresharski and central bank chief Ivan Iskrov said they had no intention of seeking financial help from the International Monetary Fund for now. "We do not intend to seek a stand-by arrangement for financial support of any kind because there is no need to do that," Oresharski said.
Nevertheless, the two were scheduled to talks with the IMF later this week, they added.
World Bank Vice President, Kristalina Georgieva, said it was important for Sofia to "look around for taps of rescue money from abroad" in the event of "a worst-case scenario.
"Bulgaria meets the crisis in good shape. But there is no room for self-complacency. We are not an island in the Pacific Ocean," said Georgieva, a Bulgarian herself.Clouds certainly appear to be brewing over the Bulgarian economy, which notched up growth of 7.0 percent and 7.1 percent respectively in the first and second quarters.But as with other economies in the region, that growth was financed largely by foreign investment.Hungary has been one of the hardest hit among EU members in the global crisis because of investor concerns over its high debt level, heavy reliance on external financing and a high level of foreign currency borrowing by households. Analysts warn that Bulgaria's huge external debt and ballooning current account deficit also make it vulnerable if the foreign cash flows it depends on were to dry up as a result of the global credit crunch.At the conference, Foreign Minister Ivaylo Kalfin warned that Bulgaria was already seeing "a major slump in foreign capital inflows and an ever tightening export market for its goods, which are the basic growth drivers of the economy." Reflecting such concerns, on Monday, the government slashed its 2009 growth forecast to 4.7 percent from 6.5 percent previously. Last week, the head of the Bulgarian Industrial Association, Bozhidar Danev, warned that both Bulgarian and international companies were selling their businesses and assets here and that next year's growth could slow to as little as 2.0 percent.The government in its budget for next year is pencilling in much less foreign direct investment -- around 5.3 billion euros, down from a previous forecast of 6.3 billion euros.In order to make up for this, Sofia has pledged to pour as much as 7.0 percent of gross domestic product (GDP) next year into public projects such as building roads.
In the banking sector, the government has repeatedly declared its readiness to stand behind any bank that might experience liquidity problems in the future.The central bank recently said that it was ready to use its reserves of some 13 billion leva (6.7 billion euros) for 2008 to buy back treasury notes and guarantee interbank loans.It also eased banks' access to liquidity by reducing the amount of money banks are required to hold as minimum reserves but business leaders complained Tuesday that the banks were holding on to the cash rather than loaning it on to customers.
Bulgarian yuppies return home
The global financial turmoil forced Bulgarian yuppies who are working in West European countries to return home, a Standart daily check showed. Worried they might lose their jobs over the shaky market, Bulgarians leave foreign companies and banks. Leading world financial institutions are downsizing by 20% on average and there are many fresh Bulgarians among the fired officers. The influx is mainly from Frankfurt. The crisis will affect chiefly construction businessmen and companies with bank loans. In Germany it is impossible to dismiss an expert over his nationality, so the cuts are at the lowest levels, an unnamed Bulgarian said. According to other yuppies Bulgaria is suitable for doing business at present because of the stable economic growth and the sizeable EU funds. Some experts consider that in times of crisis it is easier to do business in your own country. Bulgarians who have come back would stay as long as the crisis is over. People mostly return from EU states, but not from the USA. They don't plan to settle permanently in Bulgaria. Despite the stable economy they restrain from starting own business over the rampant corruption. More than 20,000 people leave Bulgaria every year looking for higher payment. But just a few of them manage to get a well-paid job or to start business. The bulk of them do seasonal jobs or join work-and-travel programmes. Politicians from all spectres are trying to catch the wave. The ruling tripartite coalition launched a mobile labour exchange moves throughout Europe, attracting successful Bulgarians. Similar move was initiated by GERB, which already met Bulgarian youths in Austria and Germany.
Crisis makes budget key investor
With its term expiring in less than a year, the Bulgarian government decided to spend BGN 5.19 billon in 2009 in an attempt to cushion the impact of the global financial crisis, shows the draft budget report obtained by Dnevnik.Public investment spending will swell by BGN 900 million from last year and will be backed by an extra investment programe of up to BGN 1 billion sourced up to BGN 400 million by the fiscal stability reserve and up to BGN 700 million from the planned budget surplus. The surplus is seen at 3% of GDP but reserve investments are set to chop off a percentage.Deputy Prime Minister Ivailo Kalfin and Finance Minister Plamen Oresharski told Capital weekly’s third annual meeting of the business and the government that the Cabinet is intent on building industrial parks and hydro plants to jump-start economic activity.Market Flexibility, one of three rescue packages outlined in the draft, will aim to encourage lending to small and medium companies by boosting the capital of Bulgarian Development Bank. Up to BGN 50 million will be sunk into the local government fund FLAG to help municipalities handle EU funds.The second package will promote employment and hiring, and the third, which is focused on fiscal policy, sees a budget surplus of 3% of GDP and redistributing 40% of the GDP from the budget.World Bank Vice-Presidenr Kristalina Georgieva said at the meeting that Bulgaria’s financial system is stable, but advised governors to be ready for the worst and consider help from the IMF.This is undoubtedly the deepest and the most complicated crisis Eastern Europe has seen since the fall of communism, and anyone trying to tell its end is acting irresponsibly. Almost all countries in the region have hard times ahead, which will question people’s faith in the use of painful structural reforms, EBRD President Thomas Mirow told Reuters on Tuesday.
Bulgaria government does not plan to raise taxes over financial crisis
Bulgaria's Prime Minister Sergey Stanishev stated Friday in Parliament that the government did not intend to raise the taxes as other European countries had done in order to deal with the effects of the raging global financial crisis, the Duma Daily reported. Stanishev made this announcement during the parliamentary discussion about the government's policies during the period of financial crisis initiated by the rightist opposition party Democrats for Strong Bulgaria of the former PM Ivan Kostov. "Bulgaria has not been affected by the global financial crisis, and this is the result of our consistent policies", the Prime Minister declared. The Finance Minister Plamen Oresharski in turn said the government had concentrated all of its efforts to preserve the stability of the Bulgarian economy. "The world is paying the price for the extreme neoliberalism, which dominated in the last 15 years", Stanishev said asking the opposition not to spur panic that the government was not taking the situation seriously enough. The opposition MPs, however, pointed out that the country was about to enter a period of recession, and that the great losers from the financial crunch were those Bulgarians who were now selling their businesses because they could not finance their loans. The parliamentary majority of the governing three-way coalition intended to approve a measure obliging the PM and the Director of the Bulgarian National Bank to provide the MPs with information about the economic situation of the country, and the respective policy measures every three months or whenever necessary. However, the voting on the planned measure failed for lack of a quorum.
NSI: Business climate in Bulgaria worsens
In October 2008 the business inquires of the National Statistical (NSI) showed pronounced symptoms of deterioration of business conjuncture in the country. In the period May - September the value of the total business climate indicator decreased by one percentage point monthly on an average. In October the indicator fell by 4.6 percentage points, which is the biggest monthly decrease in the last two years.The composite indicator “business climate in industry” decreased by 7.6 percentage points in comparison with the previous month. The decline may be put down to both the lower assessments of the present business situation of industrial enterprises and the lower level managers’ optimism about the business situation over the next 6 months.In October the industrial capacity utilization was 74.5% and as regards the expected demand over the next 12 months a certain capacity surplus was foreseen. There was a production activity decrease and the prognoses over the next 3 months were in the same direction. According to the managers’ opinions in the last 3 months the competitive position of the enterprises, both on domestic and foreign market was worsen. The uncertain economic environment, the insufficient demand and labor shortage were the main factors, limiting the branch activity in October.As regards to selling prices 3/4 (75.2%) of managers foresaw they would remain unchanged over the next 3 months.In October 2008 the more moderate construction entrepreneurs’ forecasts about the business situation in enterprises over the next 6 months send the business climate indicator 5.2 percentage points lower compared to September. At the same time the managers’ expectations were also in direction of maintaining or decreasing the construction activity over the next 3 months.The competition in the branch, the financial problems, the uncertain economic environment and the shortage of labor remained the main problems of construction enterprises.An increase of selling prices in the branch over the next 3 months expected by 34.6% of entrepreneurs in construction, whereas 2-3 months earlier their share was 43-44%.In October the retailers assessed the present business situation as better in comparison with a month ago. However their expectations over the next 6 months were more moderate, as a result of that the composite business climate indicator in retail trade increased only by one percentage points towards September. The last inquiry registered that the sales over the last 3 months were increased and the prognoses over the next 3 months were also optimistic but slightly lower compared to September. The expectations of the managers about the level of orders placed with suppliers from the country over the next 3 months remained favorable.The factors limiting at a great extend the activity in the branch continued to be the competition in own sector and the insufficient demand. At the same time in the last month the relative share of enterprises indicating the uncertain economic environment as an impediment increased.As regards the selling prices 42.4% of the retailers expected an increase over the next 3 months.The composite business climate indicator in service sector decreased by 3.3 percentage points in October 2008 compared to the previous month, which was due to the more moderate managers' assessments about the present business situation in enterprises. The inquiry registered a similar shifting to the more neutral (neither positive, nor negative) opinions also as regards the present and expected demand of services.There were no expectations for price advance in the sector - over 1/5 of managers foresaw their decrease and 65.6% - preserving their level over the next 3 months.
BSE – down and down and down ...
The strong pessimism again gripped Bulgarian stock exchange on Monday. The sales led to lower average levels for most of the traded positions and the indexes sunk with the very start of the trade.The level at which SOFIX closed today was with 3.88% less than the one from the previous session: 526.76. BG40 went down with 4.38% to 143.06 points. The index of the companies investing in real estate BGREIT lost 3.78% of its value to 55.18 points. The biggest drop down is for BGTR30, which closed with a decrease of 5.14% to 364.85 points.1828 deals were made today. The most traded shares were that of Chimimport. The biggest increase registered the shares of Advance Equity Holding (+25%). The shares of Sunny beach lost the most (-44.89%). The formed total turnover for the day is 2.814 million euro and the market capitalization of the stock exchange is 6.574 bln euro.
Construction business loses fight with crisis
Real estate brokers in Sofia have been witnessing a real war of nerves between customers and sellers in the construction business over the last months. All the facts show the market favours customers. According to brokers, buildings at the first stage of construction and panel apartments are in the most critical situation. Blocks of flats with deadline after one or two years are already offered at a lower price. Undertakers who need monthly incomes to continue their business are most at bay to drop the prices. Banks refuse refunding, potential customers now are not willing to pay for residences, which haven't been finished yet, and that frustrates contractors, Radoslav Bosilkov, manager of Source Residential Properties, commented. on the contrary, entrepreneurs who are on the final stage of the construction in most cases have already sold most of the apartments and have registered profits. If the project is good, they are not in a hurry to sell the remaining residences. Brokers are not unanimous who are more endangered by the crisis and the fall of sales: big companies with projects for hundreds of apartments or the small ones that have no strong financial capacity. The result of the drop of sales is that big entrepreneurs like Black Sea Property, for example, brought to a standstill their projects in Sofia. The market is flooded with offers for sale of patches of lands with ready projects for new buildings.
Government to save the construction business with � 2.8 B
From all fields which should be saved urgently because of the financial crisis, the triple coalition chose the construction. “The government has the intention to realize urgently new investment program of 200 million euro, which to be invested in infrastructural projects and thus the whole economy to be stimulated”, announced the prime minister Sergei Stanishev.This money is from the planned in the budget for next year record 2.6 billion euro capital expenses. According to the prime minister the investments should be directed towards construction, including road projects and irrigation systems. Last week the Bulgarian industrial association recommended powerful budget injections in the big infrastructure and mainly the roads. “It is absolutely impossible whatever government to think that it can prevent fundamental problems in the real sector with infusing of money”, commented, however, the economist Luchezar Bogdanov.
UK real estate agency freezes residential complex project in Sofia
The UK Black Sea Property agency announced Monday that it was putting off the realization of its "Ever Green" residential complex project located in the Malinova Dolina ("Raspberry Valley") quarter in Bulgaria's capital Sofia. The news was reported by the Bulgarian financial newspaper Pari Daily, which explains that the management of the real estate agency, which is listed on the London Stock Exchange, had decided to postpone the project in expectation of a better market situation, and was going to keep the plot of 24,6 decares as part of its real estate portfolio. The construction of the closed-type Ever Green complex was supposed to start in September. It is designed to include 27 detached houses, and six small apartment buildings.The manager of the agency John Chapman is quoted as saying that the decision to put off the start of the construction had been motivated by the oversupply in some sectors of the real estate market.
Bulgaria Tourist Agency prepares plan to deal with global financial crisis
The Bulgarian State Tourist Agency is going to prepare an action plan to neutralize the negative effects of the global financial crisis, according to the Agency's Chair - Anelya Kruchkova.Kruchkova spoke after the conclusion of the meeting of the National Tourist Council on Wednesday.The action plan is going to be ready in two weeks and it would be later updated by those employed in the tourist sector in Bulgaria. According to Kruchkova, Bulgaria must use to the maximum the fact that the country is a low budget tourist destination, which people would be most likely to visit if their income goes down.
The Chair further explained that the advertising of Bulgaria as a tourist destination would not increase significantly since the next year advertisement budget was not going to be much higher.According to a research, conducted by the marketing research company NOEMA, most of Bulgarian and foreign tourists recommend cleaner facilities and environment, better service and infrastructure.Data shows that 64% of foreigners and 65% of Bulgarians are completely satisfied with their Bulgarian vacation in the summer of 2008, with 67% of the foreigners and 65% of Bulgarians considering the country a safe place.The foreigners have spent an average of EUR 20 per day for a 9-day average stay in addition to the prepaid EUR 256 while the Bulgarians had an average stay of 4-5 days for the prepaid EUR 180 and have spent an additional EUR 20 per day.
“It is not a crisis of finance, but of credit”
How would the world financial crisis affect Bulgaria? Would the buffers envisioned in Budget 2009 be sufficient to protect Bulgaria's economy? What are the latest news about NPP "Belene" construction? Deputy Minister of Economy and Energy Yavor Kuyumdjiev answers these and other questions. In two weeks Bulgaria's parliament would discuss the export strategy "Vision 2013", he added.
Mr. Kuyumdjiev, the media in the West speak of Bulgaria as one of the countries most prone to suffer damages from the world financial crisis. To you, which sectors of the economy will be worst affected?
First of all, I do not agree that Bulgaria is most prone to suffer damages because this is not a financial crisis. A financial crisis means lack of money, here we have lack of credit for investing this money into the instruments that have crashed. We have too much money that now start seeking new sectors to be invested in. The main problem is that the link between capital and stock markets has broken down, the latter used to provide alternative funding sources for the companies and enterprises. All different kinds of virtual instruments were traded on the stock exchange that later collapsed. That it is why it is now logical that this money will return to the roots of the capital and seek to make investments in the real economy. Actually the fact that the Bulgarian economy is more primitive is an advantage because our economy is a real one. The Bulgarian banks have not invested in the American balloon. If a crisis is to affect Bulgaria, it will be a slow-down of economy growth.
Rumours have had it that Bulgaria has been negotiating aids with the IMF as Hungary did? Do we have to?
Absolutely no, because Bulgaria has never been is such a good financial health. The country's currency reserve is about to reach 12 billion euro and in fact we do not have foreign and home debts, as these are below 14% of the GDP. A problem may arise from the foreign indebtedness of the private sector. This could happen only if things slow down too much.
There are several buffers envisaged in budget 2009 in case the consequences of the crisis are too severe. Would they suffice to sustain Bulgaria's economic growth rate?
At this stage, yes. There is the possibility of next year's growth rate not equaling this year's seven percent, nevertheless our country would still be in a position to score a growth rate higher that the EU average. The figure may drop to 4,5-5 percent, or it may not provided, of course, this money is quick in finding its way back to the real economy.
All statistics show that the foreign investments to Bulgaria are decreasing. How can this be compensated for?
By sustaining a large budget surplus. We also have a vast foreign currency reserve. Bulgaria still continues to be one of the most attractive countries to invest in due to the favourable taxation system and business environment. The outflow of cash we are currently witnessing is in the real estate sector, and is therefore not unnatural.
Will Belene Nuclear Power Plant's construction begin on time?
It has practically already begun. The reactors have been ordered. We have received the assurance of Atomstroyexport that things are going as planned. At a certain point they told us they are a month behind schedule, but now things are back to normal.