불가리아 주요 경제뉴스 ( 7 – 14 NOVEMBER 2008 )

BULGARIAN ECONOMIC TOP NEWS DIGEST

WEEKLY REPORT ( 7 – 14 NOVEMBER 2008 )

 

 

 

Sections/headline briefs:

 

 

MACROECONOMY:

 

·        Presidents of Bulgaria, Argentina agree to promote bilateral economic relations

·        Ruse municipality to sell off property in industrial park

·        Bulgaria flooded by new wave of foreign workers

·        Bulgaria to receive €107M under FP "Fishery"

·        Coface: Corporate debts increase by 25%

·        New car sales rise 16% y/y in Jan-Oct

·        Construction business turns to infrastructure

·        Burgas-Alexandroupolis pipeline construction to be delayed until end of 2009

·        Bulgarian Industrial Association predicts economic growth of only 2% in 2009

·        10.9% inflation in October

·        Foreign trade deficit widens 29.5% y/y in Jan-Sep

·        US Ambassador:Bulgaria needs more agressive strategies, policies for growth

·        Heavy industry wrestles with faltering foreign demand

·        Bulgaria needs €12 B for the modernization of the water infrastructure

 

 

 

 

 

 

 

 

 

 

INVESTMENTS:

 

·        Bulgaria is nearing investment heaven

·        Bulgarian-Israeli tie-in to build congress hall in Veliko Tarnovo

·        Lukoil may put off key project in Burgas oil refinery

·        Former owner ready to invest € 80M in steel plant Kremikovtzi

·        Prof. Steve Hanke recommends investments in big companies, gold

·        New textile plant operates in Blagoevgrad

·        New plant opens doors in Sofia

·        € 60 M to be invested in Vidin regional economy while Vidin-Calafat Danube bridge is under construction

·        AVN to invest € 200 M on the Balkans

·        Assets of Bulgarian investment funds down by 50% in a year

 

 

COMPANIES:

 

·        Toplofikaciya Sofia to be given to the state

·        Bulgartabac with 65% market share

·        26 Bulgarian firms take part in London's "World Travel Market" Tourism Expo

·        More Bulgarian companies financed with EU funds

·        Builder GBS eyes Rila highway project

 

 

GLOBAL FINANCIAL CRISIS ANALYSIS AND NEWS:

 

·        There won’t be Recession in Bulgaria

·        Joseph Stiglitz: Financial crisis to strike the Balkans

·        Global financial crisis causes credit crunch in Bulgaria

·        The crisis affects insurance business Unions, employers, government discuss 2009 draft national budget

·        Maritza Iztok is not afraid of the financial crisis

·        Bulgarian stocks plunge on economic downturn fears

• The crisis in Bulgaria: small downturn and hard to get loans

 

 

 

 

 

 

 

 

 

Articles:

 

 

MACROECONOMY:

 

Presidents of Bulgaria, Argentina agree to promote bilateral economic relations

Presidents Georgi Purvanov of Bulgaria and Cristina Fernandez de Kirchner of Argentina reached an agreement to promote economic relations between their countries, to encourage reciprocal investments diversifying and expanding two-way trade.Purvanov is paying a state visit to Argentina. This is the first visit by a Bulgarian head of state to Argentina in more than 15 years.Bulgaria and Argentina signed two documents in the presence of their heads of state: an intergovernmental agreement on economic cooperation and a memorandum of cooperation and technical assistance between the Institute of Geology with the Bulgarian Academy of Sciences and the Argentinean Mining and Geology Office. For Bulgaria, the documents were initialled by Economy and Energy Peter Dimitrov.The two countries will seek to establish joint productions in the food industry and will check the opportunities of setting them up in Bulgarian territory, Purvanov told reporters.There are untapped possibilities for interaction in the energy sector - nuclear power generation, the use of renewable energy resources, the presidents said. Two-way trade, which accounted for 110 million US dollars in 2006, dropped to 37 million in 2007, which is too little for the potential of Bulgaria and Argentina.Purvanov and Fernandez de Kirchner agreed that it is necessary to activate the political dialogue between their countries and agreed to look for establishing contacts at all levels and between all departments and institutions.The attitude of the state of Argentina towards the Bulgarian community there was also on the agenda. Purvanov thanked to the Argentinean institutions and the Argentinean president in particular for the support provided for the Bulgarians immigrants to preserve their cultural identity. There are several tens of thousands of Bulgarians who migrated to Argentina in the 20th century. They have eight societies for culture and education and implement regularly patriotic and cultural initiatives.Purvanov and Fernandez de Kirchner agreed that their countries would interact in international organizations for the nomination and support of candidates for senior positions in the organizations. The Bulgarian head of state recalled the mutual support of the two countries in bidding for alternate members of the UN Security Council expressing hope they would do the same in future, too. Purvanov raised the question of supporting Irina Bokova's bid for UNESCO director general, which was accepted favourably by the Argentinean President and the Foreign Minister, as he told reporters later.A joint communique of Purvanov and Fernandez de Kirchner points that in view of the global financial crisis, it is absolutely necessary to carry out sweeping reforms in the international financial and credit institutions, to provide effective instruments for facilitating the access of the developing countries to financing and to enhance the role of the state as a regulator of the performance of credit institutions.The two heads of state declared themselves to be for the early signing of an agreement on the strategic association of Mercosur and the EU and for a progress in the trade negotiations between the two blocs.Later in the day Purvanov paid a flower tribute to the monument of Argentina's national hero Jose de San Martin.

 

Ruse municipality to sell off property in industrial park

An.8 hectare land plot in the industrial park of the Danube town of Ruse will go up for sale at a guide price of BGN 25 euro/sq m. The mayor’s proposal is waiting for the nod of the municipal council. The plot is estimated at BGN 405,000, taxes and fees excluded. Ruse’s industrial park sprawls on 63.7 ha and is occupied, among others, by French auto maker Montupet, the local subsidiary of Spanish ceramic products maker Keros and Ubbicalia Bulgaria, a unit of Spanish construction and engineering group Detea.

Bulgaria flooded by new wave of foreign workers

Employers in Bulgaria are hiring more and more third-country foreigners in spite of sluggish and costly permit procedures. The employment agency issued work permits to nearly 1,600 foreigners from January to October, which is some 600 more than for the same period of 2006. The trend is likely to change as companies bleed jobs in the face of a worsening global crisis. Bulgarian firms hired 841 Turks in 2008, the largest number of all 54 countries who sent over workers. The second biggest group is Vietnamese followed by Macedonians. More than 7,400 Bulgarians found jobs in the nine months of 2008 in Germany, Switzerland, Spain and France.

Bulgaria to receive €107M under FP "Fishery"

The acceptance of documents under the functional program “Fishery” within which Bulgaria will receive nearly 107 million euro from the European Union starts today.The program for support of the fishery field till 2013 will be officially opened by the minister of agriculture and food Valeri Tsvetanov. The aim of the program is to secure sustainable development of the fishery branch, to develop the fish products market and to improve the quality of life in the fishing regions. The funding will be for provision of modern equipment of the fishing vessels, easing the young fishermen entrance in the sector, improvement of the vessels' safety, quality of the catch and sanitary conditions. The program offers measures, which will support the production of more precious types of fish in Bulgaria, informs BNR. European money could be received also for the modernization of the fishing harbours, the quay for unloading as well as for fishing tourism.

Coface: Corporate debts increase by 25%

Bulgaria's credit ratings have frozen at A4 level and the country is being monitored by Coface, a world leading credit insurance and credit management service provider. "Bulgaria is on the 'negative' list of monitored countries, because our economy is very dependent on external factors and foreign investments. This dependency can prove very risky under the conditions of a world financial crisis,' said Kameliya Popova, Chief Executive of Coface Bulgaria. However, Coface experts have made it clear that Bulgaria's ratings are frozen, but not downgraded, because for the time being the country's economy is not seriously influenced by the global financial crisis.
For instance, Bulgaria is not seeing a boom of bankruptcies; bankruptcy rates are the same as they were during the same period of last year. "The negative effects of the financial crisis will be felt in Bulgaria next year, when the economy will slow down, crediting will become more difficult and financial resources, more expensive. Corporate debts will increase by 25%,' Mrs. Popova said.

New car sales rise 16% y/y in Jan-Oct

The number of new passenger cars sold on the local market by the members of the association of automobile importers rose by 16% y/y to 49,531 in Jan-Oct, slowing from 18.3% a month earlier and 22% last year. The market has increased by 10.5% on a monthly basis. The sales of new passenger cars slowed further to 14% y/y to 45,838 units in Jan-Oct from 15.9% y/y in Jan-Sep. Opel retained its leading position on this segment with a market share of 10.2%, followed by Toyota with 9.7%, and Volkswagen (8.9%). The sales of buses and trucks slowed to 57.9% y/y to 3,934 units from 58.8% y/y in Jan-Sep. The market leader in the truck sector continues to be Mercedes with share of 34.9%.

 

Construction business turns to infrastructure

 

The government of Bulgaria took the decision to support the construction business by giving more money for infrastructure. The reaction of the branch is expressed by Ivan Boikov, executive director of the Chamber of Constructors in Bulgaria (CCB), in an interview for Pari daily. According to him, each year so far the construction companies have been spending annually about BGN 600 million for infrastructure reconstruction and new roads, which were not covered by the budget. It is praiseworthy that this year these expenses are included in the budget. The turnover in the branch for 2007 was BGN 13 billion, of which BGN 800 million were for road building. The year of 2008 is expected to be with zero amount of road building as not a single project has started and, at the same time, projects under SAPARD, ISPA and PHARE programmes amounting to EUR 500 million were frozen. The good thing of the crisis is that the companies will turn their attention to infrastructure and the process has already started. There will be detention of the growth but I don't expect catastrophe in the branch.Bulgarian companies are also seeking foreign markets. There is great interest towards Albania, which has very good conditions for road construction, as well as Arabian countries and Ukraine with projects for EUR 29 billion.

Burgas-Alexandroupolis pipeline construction to be delayed until end of 2009

By July 2009 it will be clear whether the Bourgas-Alexandroupolis oil pipeline project will be profitable for Bulgaria, representatives of Trans-Balkan Pipeline, which will build the pipeline, said a news conference Wednesday. The news conference was called after a planned presentation of the company failed due to protests against the project. The feasibility studies for the construction of the pipeline will continue until July 2009. The consultancy services for this stage will amount to between 7 and 11 million euros.Trans-Balkan Pipeline said that the precise route of the pipeline is yet to be finalized, as well as the means of unloading the oil in Bourgas.Deputy Regional Development and Public Works Minister Kalin Rogachev, who attended the news conference, said that Bulgaria "has in no way committed itself 100 per cent to implement the pipeline". However, it has committed itself to as clear and transparent process as possible, he said.Rogachev said that the oil pipeline project is to be presented in detail and that there will be a public discussion of it.

 

 

Bulgarian Industrial Association predicts economic growth of only 2% in 2009

The Bulgarian Industrial Association submitted Wednesday a letter to the Parliament, the Council of Ministers, and the other relevant institution asking for emergency preemptive measures against the financial crisis in the 2009 Draft Budget. "We are witnessing unprecedented global crisis in the financial system and the economy. For the first time the tensions in Bulgaria's economy are caused not by internal but by foreign factors", the letter of the Industrial Association reads. Its members express their grave concern regarding the disposition of the state institutions for unrealistic income growth, social commitments, and promises for the importation of foreign laborers. The emergency changes in the 2009 Draft Budget that the Association insists upon include the lowering of the projected economic growth from 4,5% to 2%; the lowering of the projected inflation from 5,4% to 4,5% at the end of 2009; a current-account deficit of 24-26% of the GDP instead of the projected 22,2%; expectations for foreign direct investments of up to EUR 4 B instead of the projected EUR 5,3 B. The Association also insists that the 2007 budget surplus be redistributed, and that more funds be allocated for transport infrastructure at the expense of the social expenditures. Its members call upon the Bulgarian political elite, the trade unions, and the employers to concentrate all of their efforts on anti-crisis measures and programs.

10.9% inflation in October

The inflation in Bulgaria in October is 10.9% on an annual basis, informed the National statistic institute. In the period January – October 2008 compared to the same period last year the inflation reached 13.2%.The index of the consumer prices for October 2008 compared to September 2008 is 100.5% and the inflation is 0.5%. The harmonized index of the consumer prices for Bulgaria for October 2008 compared to the previous month is 100.1%, i.e. the inflation is 0.1% on a monthly basis. on an annual it is 11.2%.With a common trend of world drop in the prices, the inflation growth in Bulgaria in October is a “rare phenomenon”, commented for money.bg a financial expert. According to him the traders have already calculated in their prices the appreciation of the gas. The increase in the prices with 0.5% for a month at the background of depreciation of the raw materials on the world markets is serious and shows that the inflation threats that Romania faces are valid also for Bulgaria. Since the beginning of the year till the end of October the life in Bulgaria has appreciated with an average of 8%.

Foreign trade deficit widens 29.5% y/y in Jan-Sep

The pace of foreign trade gap widening narrowed to 29.5% y/y in Jan-Sep from revised 31.5% y/y in Jan-Aug, according to preliminary data published by the statistical office. The gap reached BGN 12.6bn (EUR 6.4bn) for the period, accounting for 19% of the projected full-year GDP as compared to 17.2% a year earlier. The trade deficit with non-EU countries advanced at a faster pace of 34.6% y/y raising the corresponding share in the total by 1.9pps in a year to 51.4% but decelerated from 41.3% y/y in Jan-Aug due to positive effects from the reduction in world oil prices. The deficit with EU trade partners expanded by 24.5% y/y speeding from 21.9% y/y in Jan-Aug. Exports rose by 21.7% y/y in Jan-Sep slowing from 22.4% y/y a month earlier while imports growth decelerated to 24.5% y/y from 25.5% y/y respectively. The projected economic slowdown and even recession in some of the main trade partners of the country and the expected weakening in domestic demand are to push down the widening of the trade gap in near terms.

US Ambassador:Bulgaria needs more agressive strategies, policies for growth

 

"Bulgaria musy apply more aggressive strategies and policies for growth and development. The country should learn from the lessons of the financial crisis," US Ambassador in Sofia Nancy McEldowney said in her statement as a guest speaker at an AmCham Business Luncheon on Economic Partners and Global Uncertainties, organized by the American Chamber of Commerce in Bulgaria on Wednesday.The Ambassador is impressed by Bulgaria's economic performance in recent years, the currency board arrangement and the budget surplus, but she is also concerned by the current account deficit reaching nearly 25 per cent of GDP. "Bulgaria is a successful commercial story, but we are now facing hard times," McEldowney noted.She would like to see Bulgaria as one of the most attractive investment destinations in the region. She argued that, contrary to views that this objective is overoptimistic and even impossible, it is feasible in her opinion.The Ambassador said that, to this end, investments should be boosted by addressing the problems of existing investments and more aggressive programmes to attract new ones, paying greater attention to small and medium-sized enterprises, and stressing innovation.She was particularly emphatic about coping with corruption and organized crime. "I am not talking about action plans and working groups. I am talking about real activities," she specified, adding that this should happen not because the US Ambassador or the Brussels bureaucrats are saying so but for the future of the country and for the sake of the people here.At a time of financial crisis, Bulgaria should not lose money, confidence and international standing, McEldowney said. She is confident that the country has the political will and can make the necessary changes.The diplomat spoke of the need to strike the right balance, of flexibility and the freedom of the market in order to cope with the financial crisis on a global scale.

 

Heavy industry wrestles with faltering foreign demand

Bulgaria’s exporting heavy industry companies were the first to feel the pressure of a slowing foreign demand spawned by the worst economic crisis in decades.Fertiliser makers Agropolychim and Neochim, steel maker Stomana Industry and cast iron foundry Tchugunoleene all unveiled measures aimed to address the shrinking market.“Conditions in Europe have changed so rapidly inside a single month that we are having to cut jobs,” said Anton Petrov, regional manager of Greek Viohalco, which owns Bulgarian steel maker Stomana Industry though its unit Sidanor.The market is so unpredictable that no one can tell what will happen in the future, Petrov said.Stomana Industry will slash output by some 30%, and Sidenor will lay off some 300 workers from its subsidiaries.The company is shedding non-core operations to shield its main business. Tchugunoleene, which ships some 85% of its production abroad, will trim workforce by 25% as Italian, French and German customers are cutting down on orders. Devnya-based Agropolychim, owned by U.S. company Acid & Fertilizers LLC, will shut down ammonia fertilisers production, said Hristo Petrov, one of the company’s executive directors. Stockpiles are mounting at all major producers as no real deals are struck although prices have almost halved, Petrov said. The deteriorating market conditions have caused Neochim to postpone resuming operations currently halted for renovation, the company said in a filing to x3news.com, the information service of the Bulgarian Stock Exchange.

Bulgaria needs €12 B for the modernization of the water infrastructure

Bulgaria needs 12 billion euro for the modernization of the water infrastructure. This claimed at a seminar in Istanbul Georgi Georgiev, representative of the subsidiary of EVN in Bulgaria WTE, which is an electric energy and infrastructure services supplier. The company deals also with management, financing and exploitation of water supply and sewerage systems.According to Georgiev resources could be received through the ISPA Program and the Cohesion fund as well as from private investors. As a main problem, however, for the private investment he pointed out the lack of normative basis about the ownership on the facilities.Georgi Georgiev claimed that the water resources in the towns and villages were sufficient for the normal water supply of the population provided there was good management and effective use.The water supply and sewerage system in Bulgaria, however, is extremely obsolete. 70% of the infrastructure is 20-30 years old, said also Georgiev.Currently 72 purification plants are built in Bulgaria while their number till 2014 should be over 400.The sector urgently needs a new Water Law, which to stipulate whether the state or the municipalities own the networks and the water facilities.The draft Water Law provides for the establishment of regional council on water supply and sewerage, which to choose projects for network modernization, announce concession competitions and approve the business plans of the water companies. The draft stipulates also the establishment of a national council on water supply and sewerage with 19 members, headed by the minister of regional development and public works. Another amendment is the companies to be able to make joint ventures with foreign firms.

 

 

 

 

 

 

 

 

 

 

 

 

 

INVESTMENTS:

 

Bulgaria is nearing investment heaven

Bulgaria is a good place for making business in 2009, PricewaterhouseCoopers maintains. Bulgaria is ranked 45th in the report "Business in 2009" which covers 181 countries. In 2008, Bulgaria occupied 44th place.PricewaterhouseCoopers compiles a rating list based on the report of the World Bank (Doing Business 2009), examining 10 indices. The business climate in neighbouring Romania is good but the country lags behind Bulgaria occupying 47th place. Bulgaria has significantly facilitated the company registration procedures, which pushes Bulgaria up by 22 places in the rating list for 2009 in this index - from 103rd position to 81st. Experts register a much tighter administrative control over business, which sends Bulgaria to 117th place according to this index. However, Bulgaria is still far away from the definition "tax heaven" ranking 94th in 2009.

 

Bulgarian-Israeli tie-in to build congress hall in Veliko Tarnovo

Bulgarian company CBA Property Investment, the real estate division of discount retailer CBA Bulgaria, has teamed up with an unnamed Israeli investor to raise a five-star congress centre and a shopping mall in Veliko Tarnovo. The news was announced during Israeli ambassador Noah Gal Gendler’s visit to the central town. Veliko Tarnovo offers investment opportunities in construction, transport, tourism and trade, Gendler said.

Lukoil may put off key project in Burgas oil refinery

Russian oil heavyweight Lukoil may trim planned 2009 investments and postpone by one or two years the construction of a waste treatment plant at its Burgas-based refinery if oil prices drop to USD 45 a barrel, the company’s president Vagit Alekperov said as quoted by Interfax. Lukoil Neftochim declined to comment on the statement. The oil giant will squeeze investments to USD 7.5-9 billion from this year’s USD 11 billion in the upbeat scenario. Planned acquisitions will add a further USD 4 billion to this year’s tab. Lukoil plans to back its Bulgarian operations by over USD 1 billion by 2011 spending 10% of it on eco equipment.

Former owner ready to invest € 80M in steel plant Kremikovtzi

The former owner of Bulgaria's largest steel-maker Kremikovtzi Valentin Zahariev is ready to invest EUR 80 M if he is selected to become the new owner of the troubled factory.The news was announced by the millionaire Valentin Zahariev himself in an interview for the Darik Radio Monday morning.Zahariev made it clear that the EUR 80 M would be necessary only for the working capital of the Kremikovtzi steel mill.Bulgaria's Economy Minister Petar Dimitrov has confirmed that Valentin Zahariev was among the potential buyers of the steel factory, which was declared insolvent in September 2008.Zahariev's Finmetals Group bought 71% of Kremikovtzi from the Bulgarian government in 1999 for a token USD 1 along with debts to the state and suppliers standing at USD 420 M.In mid-2005, he sold Finmetals Group to Pramod Mittal's Global Steel Holding Ltd. The Polish magazine Wprost recently ranked Zahariev the third richest Bulgarian (and the 100th richest person in Eastern Europe) with a fortune of USD 680 M.

 

Prof. Steve Hanke recommends investments in big companies, gold

 

The American economist Professor Steve Hanke said Monday that investments in shares of large companies, in gold, and in certain goods were the most recommendable.In an interview for the Darik Radio Hanke pointed out the US stock market had hit the bottom, and was now expected to start to recover because the Federal Reserve was pouring money into the US economy bringing the financial sector under control.The Johns Hopkins University Professor recommended buying shares of large, stable companies with flexible management.Gold was another profitable investment option in his words as it was a way of insurance against the inflation, which was to appear within a year as a result of the funds that the US government poured into the economy.According to Hanke, the third good investment option at present were goods such as coconuts whose consumer price was presently lower than their production price but was expected to rise. Professor Steve Hanke is considered the father of the Bulgarian currency board which pegged the Bulgarian lev (BGN) to the euro.

New textile plant operates in Blagoevgrad

Greek undertaker Hristos Leopulos, owner of Neoknit EAD textile company, has been developing his business in Bulgaria in the last ten years. Two months ago his new plant on 7,000 sq. m opened the doors in Blagoevgrad. The investment is for EUR 3.1 million and offers 600 working positions. The company has 10% income growth for 2008 and the whole production is exported to Europe.

 

New plant opens doors in Sofia

 

Despite all the talks about a global crisis, two days ago Alfacommerce AD opened the doors of the biggest plant on the Balkans for textile advertising. The building is situated on 7,000 sq. m in Druzhba Sofia's residential district. The total amount of the investment is BGN 12 million and the plant is built following European models. The company was founded in 1999 and its annual turnover is BGN 18 million. Half of it is from export.

€ 60 M to be invested in Vidin regional economy while Vidin-Calafat Danube bridge is under construction

 

Some 60 million euro will be invested directly in the regional economy in the form of building materials, fuels, labour etc. while the Vidin-Calafat Danube Bridge is under construction, Simeon Evtimov, Head of the Danube Bridge II Project Implementation and Management Unit, said here on Thursday.Construction of the bridge is due for completion on October 29, 2010, Evtimov said. The field offices of the site and the construction laboratory have been built and a state-of-the-art concrete making facility has been commissioned so far this year.Before the end of 2008, a temporary loading bay for up to 200 t bridge components will be finished, and the procedure for selection of contractors for the adjoining infrastructure in Romania will be completed.The total cost of the Vidin-Calafat Danube Bridge II project is 274 million euro, of which 226 million are provided by Bulgaria.The ground-breaking ceremony for the facility took place on May 13, 2007. The 1,971 m-long cable-stayed ferro-concrete bridge will have a road section with a dual carriageway in each direction, a railway in the middle, a sidewalk, and a bicycle path.

AVN to invest € 200 M on the Balkans

AVN Austrian electricity company expressed interest to participate as strategic investor, individually or with another partner, in Gorna Arda project that had to be built together with Turkey, Stefan Shishkovitz, executive director of the company, said. EVN plans to invest EUR 200 million on the Balkans in restorative energy sources projects. Two of them are in Bulgaria for producing power from sun and water.

Assets of Bulgarian investment funds down by 50% in a year

The assets managed by the resident and non-resident investment funds, operating in Bulgaria, amounted to BGN 690.7 million as at September 30, 2008, decreasing by BGN 449.4 million (39.4%) against BGN 1 140.1 million as at September 30, 2007, data of the Bulgarian National Bank (BNB) show. Compared to June 30, 2008 the assets decreased by BGN 211.1 million (23.4%) from BGN 901.8 million.The assets of the resident investment funds amounted to BGN 451.1 million as the end of September 2008, which is a decrease by BGN 450.2 million (50%) compared to a year earlier. Compared to June 30, 2008 the assets decreased by BGN 160.9 million (26.3%) from BGN 612 million.Equity funds assets decreased by BGN 110.1 million (31.3%) from BGN 352.1 million (30.06.2008) to BGN 241.9 million (30.09.2008). Mixed funds assets decreased by BGN 53.5 million (25.2%) from BGN 211.8 million (30.06.2008) to BGN 158.4 million (30.09.2008).Equity funds held the highest share of the overall assets of resident investment funds as at September 30, 2008 (53.6%) against 57.5% on 30.06.2008 and 63.5% a year earlier. Mixed funds held 35.1% as of 30.09.2008 against 34.6% on 30.06.2008 and 30.5% on 30.09.2007 respectively.The largest share among the instruments included in the portfolio of resident investment funds as at September 30, 2008 belonged to shares and other equity (50%) against 55.3% a year earlier, followed by deposits (24.4%) and securities other than shares (19.3%).The currency breakdown of the resident investment funds assets as at the end of September 2008 was prevailed by assets denominated in BGN (76.1%) and EUR (18.2%).As to the geographical breakdown the securities assets were mainly allocated to the domestic market, where 88.6% of the investments of resident investment funds were concentrated as at September 30, 2008, compared to 89% three months earlier.Non-resident investment funds` liabilities to residents amounted to BGN 239.6 million as at September 30, 2008 , decreasing by BGN 50.3 million (17.3%) compared to end of the second quarter.The institutional sector breakdown of investors in non-resident investment funds shows the prevalence of Insurance Corporations and Pension Funds (50.8%) and Households and Non-profit Institutions Serving Households (40.7%).The liabilities of resident investment funds amounted to BGN 451.1 million as at the of September 2008.

 

 

 

 

 

COMPANIES:

 

Toplofikaciya Sofia to be given to the state

At a meeting of Sofia municipality council, 50 members voted for the transfer of the municipality's share of Toplofikaciya to the state. The variants are two: free transfer to the state either of 58% or of 33% of Toplofikaciya Sofia's capital. The government has to choose the variant but with the agreement of the bank creditors. The mayor Boiko Borisov said the property is worth BGN 1 billion.

Bulgartabac with 65% market share

The market share of "Bulgartabac" is over 65%, Emil Dimitrov, chair of the Association of sellers and producers of tobacco and tobacco products at a press conference, a journalist of "Focus" agency reported. In the competition, Bulgarian tobacco production is vital and is able to compete, Dimitrov said. According to a survey carried out by MBMD, "Bulgartabac" has a market presence in 65.3% of the tobacco market.The legal import cigarettes are 20.1%, while the illegal import is 14.6%. In comparison, in other European countries smuggling is 5%, Dimitrov pointed out. The yearly losses from the sale of smuggled cigarettes in Bulgaria are about 150 million levs.

 

26 Bulgarian firms take part in London's "World Travel Market" Tourism Expo

 

Twenty-six Bulgarian tourism companies are participating in the traditional tourism expo of the UK capital London "World Travel Market", which is taking place between from November 10 till November 13.This year's is Bulgaria's 28th participation in the forum; the 26 Bulgarian firms have a total exhibition area of 252 square meters.During World Travel Market 2008 Bulgaria's representatives are going to emphasize rural, environmental, adventure, and cultural tourism. Their motto is "Bulgaria - Nature Welcomes You".For the first time the tourist services of the Bulgarian firms are going to be presented according to geographic regions such as Sofia, the Black Sea coast, the Rila and Pirin Mountains, and according to their specialization - environmental, cultural, spa, etc.The head of Bulgaria's State Tourism Agency Aneliya Krushkova is going to take part in the annual meeting of tourism ministers, which in this year's forum is dedicated to climate change.

 

More Bulgarian companies financed with EU funds

With the world economic crisis gripping Bulgaria ever tighter, with fewer loans being given and with direct foreign investments flows to Bulgaria diminishing, European Union funds were becoming increasingly important sources of investment in the economy.And with the increase of demands for credit release in the last months, European funds provide a good alternative for financial injections in order for the local Bulgarian companies to meet their obligations to banks and clients alike. Bulgarian-based companies can receive from 30 per cent up to 65 per cent of the total value of the project in the forms of subsidies, according to Best Credit Bulgaria, quoted by Stroitelstvo Gradut weekly.In order to qualify for the allocation of such resources, the companies must pass a competition by presenting a project which is subjected to approval from the European Commission. The approved projects will then be executed with bank credits, but in contrast to the traditional business credit, the loans of approved projects are released faster and are usually negotiated with a lower interest payment.“To receive the desired financing, a company must be well acquainted with the conditions which are expected from the European Commission. Accordingly they have to contemplate their project and its execution thoroughly and submit all the details to the commission” said Plamen Peichev, head of Best Credit Bulgaria.“It is vital for those companies to assert the situation properly and use professional assistance not only in creating the project itself but also when it comes to negotiating the deal and exerting the best possible credit deal” Peichev added, as quoted by Stroitelstvo Gradut.Until the end of 2015, Bulgaria is due to receive over seven billion euro in EU funds. The main source for the allocation of the aforementioned money are the European structural funds who currently have open procedures for project recruitment under operative programmes in the fields of competition, development of human resources and rural development, among others.Best Credit Bulgaria is one such company offering credit consultation for companies seeking EU funds.

Builder GBS eyes Rila highway project

Glavbolgarstroy (GBS), one of Bulgaria's biggest construction companies, is gearing to build Rila motorway, which will provide speedy access from the capital to the winter resort of Borovets and tie it to Struma, Trakia and Hemus highways.The news was announced by the holding company’s executive director, Kalin Peshov, at a public-private partnership conference held by Utilities Services and sponsored by Holding Patishta.GSB has expressed interest with the ministries of finance, transport and regional development. Under a contract with Deutsche Bank, the company has prepared a geological report on the track and is now preparing an environmental impact assessment report, traffic analysis and forecasts.The project cost is seen at some EUR 500 million of which the investors will secure 30%, said Peshov.The concession procedure can open once the national road infrastructure agency has approved and checked the project, said Tsveta Kamenova, the agency’s acting supervisory board chairwoman.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GLOBAL FINANCIAL CRISIS ANALYSIS AND NEWS:

 

 

There won’t be Recession in Bulgaria

 

Main reason for the world crisis is that in the capitalistic system has been put communistic elements. There is a retreat in the postulates of the classical capitalism, economist Vladimir Karolev said to Nova TV. He reckons that Bulgarian financial system is very steady, due to the crisis in 1996-1997 and the fact that Bulgaria hadn’t let out people linked to the power to privatize banks. The banks are very good capitalized. He said that the privilege of Bulgarian banks over Angle-Saxon is the fact that most part of the credits that Bulgarian banks grant are based on citizens’ deposit.The economist prognosticated that the most affected by the financial crisis would be construction brunch and the respective fields. He said further that there wouldn’t be a recession in Bulgaria. There would be reducing of the export, however the internal consumption will not be decreased.

 

Joseph Stiglitz: Financial crisis to strike the Balkans

 

The global financial crisis is going to inevitably strike the Balkans, according to Joseph Stiglitz, American economist, 2001 Economic Sciences Nobel Prize winner and Professor at Columbia University.Stiglitz made the prediction in a special interview for the Greek newspaper Imerisia.In the interview Stiglitz states that the crisis is going to be especially difficult for small and medium enterprises, developing economies and countries that have invested in the region.Stiglitz believes that the Balkans have very strong reasons to worry an bout the crisis and its certain future implications due to the domino effect and not so much as a direct consequence of the crisis in the U.S. Joseph Stiglitz is also a recipient of the John Bates Clark Medal (1979) and the former Senior Vice President and Chief Economist of the World Bank.Stiglitz is known for his critical view of the management of globalization, free-market economists (whom he calls "free market fundamentalists") and some international institutions like the International Monetary Fund and the World Bank.In 2000 Stiglitz founded the Initiative for Policy Dialogue (IPD), a think tank on international development based at Columbia University. Since 2001 he has been a member of the Columbia faculty, and has held the rank of University Professor since 2003. He also chairs the University of Manchester's Brooks World Poverty Institute and is a member of the Pontifical Academy of Social Sciences. Stiglitz is the most cited economist in the world, as of June 2008.

Global financial crisis causes credit crunch in Bulgaria

Experts have told the Standart that the global financial crisis has made some of the banks more cautious when it comes to granting loans to their clients.Applications for consumer or housing loans are not turned down, but the applicants are investigated more thoroughly.
"A banks profit comes mostly from crediting, so we cannot just stop granting loans to our clients, but because of the crisis we carry out more thorough checkups on each applicant, crediting inspectors say.The higher monthly installments on bank loans have driven some of my colleagues almost to bankruptcy, general practitioner Dr. Videlina Mollova says.

 

 

The crisis affects insurance business

 

The financial crisis affected the segment of credit insurance as banks limited drastically the crediting, Hristo Borissov, CEO of AON Brokers commented for Pari daily. Profits are expected to drop by 20% in 2008 and may be the situation will be the same in 2009. There is decrease of interest from foreign investors. on the other hand, there is growth of investments in production capacities of small and medium-sizes enterprises and insuranes of small plants in the country situated on 100 sq. m.

 

Unions, employers, government discuss 2009 draft national budget

 

The Economic and Social Council Tuesday hosted an open meeting at which representatives of the trade unions and employers' organizations, the executive and legislative branches of government discussed the 2009 draft national budget."Fiscal policy is not an adequate instrument for quick reaction to a change in the business climate and cannot shield the economy against external impacts, but we must try to preserve the macroeconomic and fiscal framework," Finance Minister PlamenOresharski said at the discussion."Pressures in Bulgaria are still at an acceptable level, the financial and, already, economic crisis is far more serious in the rest of the countries of old Europe," Oresharski said. "The Government is ready to apply all measures which have been taken by the countries of old Europe but hopes that this will not be necessary."He stressed that the financial sector in Bulgaria has not been affected by the crisis but a number of leading economies on the Old Continent have already been affected, which depresses demand, including demand for Bulgarian products. With the shrinkage of investments due to a reduction of liquidity and the blocked financial system on a global scale, investments in Bulgaria will also probably recede and, combined with a slacker demand, this will slow down economic growth and exports, Oresharski predicted.Presenting the key parameters of the draft national budget, he listed an expenditure ceiling of 40 per cent of GDP, a budget surplus of 3 per cent, investment expenditures of at least 7 per cent of GDP, and a maximum level of subsidies for non-financial enterprises of 0.6 per cent of GDP.The draft budget also plans for an increase of the monthly national minimum wage from 220 to 240 leva, an increase of the health insurance contribution from 6 to 8 per cent, and an increase of the minimum monthly contributory income for self-insured persons from 240 to 260 leva. The contribution to the Pensions Fund will be shared among employees, employers and the State in a ratio of 8 to 10 to 12 per cent, and the contribution to the Factory and Office Workers' Guaranteed Claims Fund will be decreased from 0.5 to 0.1 per cent. As from April 1, 2009, each year of contributory service will carry a weight of 1.1 per cent in the calculation of the amount of pension, up from 1 per cent now. Pensions will be adjusted for inflation by 9.7 per cent, effective July 1, 2009."For the first time in years, we have had to prepare the budget facing a greater uncertainty, which necessitated some very careful factor analyses to forecast the adverse impacts on the fundamental economic processes," the Finance Minister said.He noted that the draft budget sets a higher inflation than the EU average, the current account deficit is expected at some 22 per cent of GDP, and the economic growth at approximately 4.7 per cent."Despite the crisis we resisted the temptation to raise the tax rates, contrary to certain European countries like Ireland, cited as a role model for Bulgaria," the Finance Minister said."We are only increasing some excise duty rates, and then according to the pre-announced timeframe," he added, noting that the excise duty on fuels will remain unchanged.Podkrepa Confederation of Labour President Konstantin Trenchev said that once the State admits that the crisis will affect Bulgaria, the contributions to the Factory and Office Workers' Guaranteed Claims Fund should not be decreased as provided for in the draft budget. "The crisis may lead to bankruptcies, including numerous fraudulent bankruptcies of companies which will not be held to account," Dr Trenchev said. He noted that only the business and not workers benefit from tax incentives. "The good thing is that the 2 per cent increase of the health insurance contribution will provide more money for health care, but health care must first be rehabilitated and the reformed," he argued.He called on the Government to find a way to make the over 1 million people who do not pay social insurance contributions to do so."Why don't you set at the same level the minimum wage and the minimum contributory income, which are set at 240 and 260 leva, respectively," Dr Trenchev asked. He called on the Finance Minister to plan next year's budget with a broader time horizon. "The world does not end in summer 2009, when the [parliamentary] elections will be held," the Podkrepa leader argued.Confederation of Independent Trade Unions in Bulgaria President Zhelyazko Hristov warned that experts are quitting the National Revenue Agency structures on a massive scale. He said that the tax administration, which is vital for the State, must be provdied with higher salaries so as to ensure its effectiveness and immunity to corruption. Dr Hristov argued that the minimum wage is not pegged to any specific parameters and has not been discussed with the social partners.Bulgarian Industrial Association President Bozhidar Danev proposed that the 2009 budget be revised to include far stronger anti-crisis and restrictive measures. "We are already in the midst of a crisis, and agricultural produce prices have collapsed as well," he argued.According to Danev, next year's economic growth will not exceed 2 per cent, inflation will be lower due to the worldwide slump of prices. Foreign direct investment will be at best 4,000 million leva, rather than the 5,300 million targeted, he added.Danev acknowledged that the Ministry of Finance is making a "grand gesture" to business by keeping the tax rates: this will give industry a breather. If the Kremikovtzi iron and steel works are closed down, a number of product lines will be ruined and Bulgarian exports will shrink, he warned.Danev notes that the increase of bank lending rates implies an appreciation of working capital and a blocking of investments."The State must invest in the construction of transport infrastructure. Business parks are unnecessary, they remain empty even now," he commented.

 

Maritza Iztok is not afraid of the financial crisis

 

The investments in Maritza Iztok mines will exceed BGN 92 million by the end of 2008, which is by BGN 4 million over the plan. For the next year the investment programme will be for BGN 100 million. The funds will be used for developing the production capacities of the two units Maritza Iztok-2 and Enel Maritza Iztok-3 and for the construction of a new 670-MW AES power station, Ivan Markov, executive director of Maritza Iztok mines and president of the Board of Directors of Bulgarian Energy Holding (BEH), said in an interview for Pari daily. Investments for BGN 6 million will be used in ecological projects in 2008. The plan consists of restoration and re-cultivation of 1.300 million sq. m of land. The annual yield should reach 28 million tons of coals. Last year it was 24 million tons and two years ago it was 20 million tons. We expect to increase the market share by 20% in the next two years.Bulgaria hasn't made use of its beneficial geographic location. Instead, we have been exploited. The country can turn into a Balkan energy centre and the idea of the holding is to unite efforts in this direction.

Bulgarian stocks plunge on economic downturn fears

Bulgarian stocks extended their losses in thin volumes on Wednesday on concerns that the country's economy could be headed for a more severe slowdown than was feared, brokers said. The SOFIX index, which includes the 20 most liquid stocks on the Bulgarian Stock Exchange (BSE), plunged 3.72% to 439.74 points, while the broader BG 40 index, which tracks the 40 most traded shares on the bourse, dropped 6.85% to close at 129.58. Fears of an economic crisis scared away buyers and clients of large funds, Sofia-based brokerage Bulbrokers said in a daily note. The Bulgarian government has forecast a real economic growth of 4.7% next year, down from the 6.5% expected in 2008. However, industry officials said growth may slow down to 2.0% in 2009. on Wednesday, losers on BSE outnumbered gainers by 75 to 18, 14 shares ended flat. All but one of the traded blue chip shares lost ground. The biggest decliner was paint maker Orgachim, which slid 11% to 83.61 levs on a volume of over 500 shares. The only gainer among the SOFIX components was hydraulic equipment manufacturer M+S Hydraulic. The stock advanced 1.92% to 5.49 levs with only 50 shares changing hands. BSE's turnover, excluding block and other pre-agreed deals, rose to 2.6 million levs from 2.16 million levs on Tuesday. Bonds contributed nearly 1.0 million levs to Wednesday' turnover. The BG-REIT index, tracking the performance of real estate investment trusts, fell 1.0% to 52.62 and the BG TotalReturn30 (BG TR30) index, in which companies with a free float of at least 10% have equal weight, sagged 3.94% to 333.33 points. The Dnevnik 20 index, calculated by local business daily Dnevnik from the share prices of the 20 leading companies in terms of liquidity and market capitalisation, lost 3.16% to 65.83 points.

 

The crisis in Bulgaria: small downturn and hard to get loans

 

Economy growth will be around 4,7%, the cabinet expects. Some economists predict growth lower than 4%, others believe it will remain as high as this year’s, the 24 chasa Daily informs. There are different expectations for two other indicators – unemployment rate and labor cost reduction. According to the macroeconomic frame of the budget drastic increase of unemployment is expected. There is also a 10% income growth and 20% increase of pensions. The real sector is already suffering from a shortage of fresh finances because of the tightened credit regulations banks imposed. Numerous or chain reaction types of bankruptcies are not expected, but rather expected are bankruptcies of separate companies. The crisis will affect mostly construction, tourism and real estate market.The amount of guaranteed bank deposits was increased in order to preserve the stability in the banking sector. All analysts are unanimous that the currency board will preserve the stability of the Bulgarian currency.What is expected however is increase in corporate loans and reduction of the amount of consumer and mortgage loans.