불가리아 주요 경제뉴스 ( 21 - 28 NOVEMBER 2008 )

BULGARIAN ECONOMIC TOP NEWS DIGEST

WEEKLY REPORT ( 21 - 28 NOVEMBER 2008 )

 

 

 

Sections/headline briefs:

 

 

MACROECONOMY:

 

·        Korean export for Bulgaria in 2007 exceeds USD 191 Million

·        Crisis slashes Bulgarian export by 20 percent

·        2009 ‘Alternative Budget’ for Bulgaria presented

·        Bulgarian business with an anti-crisis plan

·        Bulgaria economists ask cabinet to create expert group to follow global crisis

·        Prices of perishable meat products, dairy products and cooking oil go down

·        Bulgaria has produced twice as much wheat as is locally in demand

·        Drugmakers say new rule to crush market

·        Bulgaria & Romania live long beyond their possibilities and resources

·        Santa Sarah Privat becomes Bulgarian wine of the year

·        Is power exchange possible in Bulgaria

·        First private cigarette brands to appear on the Bulgarian market

·        Austrian Doppelmayr to build the lift between Bulgaria & Romania?

·        Sofia heating utility eyes entry into energy holding

·        EBRD awards for energy efficiency

·        Bulgarian customs expect 8 billion levs income

·        14 000 workers laid off from the textile sector this year

·        Textile industry uses half its capacity

·        Bulgarian business: Replace the national currency with Euro

·        BGN 1 B to be poured into environment protection

 

 

 

 

 

INVESTMENTS:

 

 

·        Belgian DIY chain Hubo enters Bulgaria, plans to open 40 stores in 10 years

·        First solar power plant to generate 1,250 MWh annually

• Cefin Bulgaria starts construction of € 2.1 M production unit for superstructure elements

·        Two highways to be built in Bulgaria by 2011

·        Most modern velodrome in Balkans to be built in Plovdiv

 

 

COMPANIES:

 

 

·        Russian and European companies collaborate on NPP Belene

·        Hungarian company to bring back Bulgarian plant's glory

·        Brazil investor CSN sends scouts to check out Kremikovtzi

·        Avendi, AstraZeneca named best employers in Bulgaria for 2008

·        First Starbucks opens in Sofia

·        Competition watchdog fines Coca-Cola BGN 500 000 for abuse of dominant position

 

 

GLOBAL FINANCIAL CRISIS ANALYSIS AND NEWS:

 

 

·        Bulgaria has enough buffers against the global economic turmoil

·        Crisis to push flurry of Bulgarian firms to the block

·        Crisis sobers up leasing market

·        Investing in gold for vogue's sake

·        Boom of credit cards in times of crisis

·        Export-oriented enterprises in Silistra region start job cuts

·        BAS economists evaluate impact of world financial crisis on Bulgarian economy

·        BNP Paribas: Bulgaria headed for two-year recession

·        European Commission recommends VAT reduction to combat crisis

·        Vladimir Karolev: In Bulgaria crisis won’t come from financial sector

·        Crisis doesn't affect flights to Bulgaria

·        Obviously Bulgaria is too corrupted

·        Will our incomes melt during the drisis?

 

Articles:

 

 

MACROECONOMY:

 

 

Korean export for Bulgaria in 2007 exceeds USD 191 Million

 

Korean export for Bulgaria in 2007 totaled more than USD 191 Million. This was announced during the Korea-Bulgarian forum 2008, a reporter of Focus News Agency informed. According to Korean experts this is significantly more than preceding years. Import consists mainly of technological goods – in particular cars and mobile electronics. one of the main companies involved are Hyunday Heavy Industries, Samsung Electronics and LG Electronics. Economic relations Bulgaria-Korea are particularly intensive and 60% of the Korean investments are aimed at new EU states.

Crisis slashes Bulgarian export by 20 percent

"Bulgaria has got a considerable financial resource and a currency board, but the current account deficit is continuing to grow and will assume threatening sizes by the end of the year," Bulgarian Industrial Association Chairman Bozhidar Danev said at a round-table discussion on the world financial crisis. "In Novermber alone our country's export revenues will diminish by 20 percent as against the same time last year," he pointed out. "Coupled with the slump in foreign direct investments, there might be serious risk for the stability of the Bulgarian economy as a result," Danev stated. He also prognosticated a two-percent economic growth for 2009, but then again added that a zero-percent growth was also possible.            

 

2009 ‘Alternative Budget’ for Bulgaria presented

Calls for state spending to be distributed more efficiently rather than increased, and for the Bulgarian Government to avoid dipping deeply into the surplus because this would scare away foreign investors, were made as think-tank the Institute for Market Economics (IME) presented its “Alternative Budget” for Bulgaria in 2009.At a news conference on November 23 2008, the IME’s Dimitar Chobanov unveiled the Alternative Budget featuring a lowering of taxes. In times of crisis, expenses should be reduced and optimised, Chobanov said.Other provisions proposed by the IME included  four key buffers against the crisis – a bigger reserve of 600 million leva, a five per cent cut in all budgetary expenditure, a surplus of three per cent of gross domestic product and an outlining of non-priority costs to be reduced, the online daily Dnevnik reported.The IME proposed also a zero tax rate on reinvested profit, a cut to 10 per cent of the 15 per cent tax rate for sole proprietors, scrapping the five per cent dividend tax, and a reduction of the social security burden to 10 per cent from the current 33.7 per cent.Chobanov said that additional spending by the Government to support unproductive enterprises and economic sectors would prolong the economic crisis. Measures such as these taken under pressure would be at the expense of all taxpayers, Bulgarian news agency BTA reported Chobanov as saying.Bulgaria ranks bottom in the European Union in efficiency of public spending.Georgi Angelov, senior economist at the Open Society Institute, told the news conference: “The Government is pushing its July budget surplus agenda of when the crisis was not as ugly. As a result, two global agencies lowered the country’s rating”.Angelov said that Bulgaria could join Romania in the junk rating category if the Government did not tighten the purse strings, Dnevnik reported.

Bulgarian business with an anti-crisis plan

The Confederation of the employers and the industrialists in Bulgaria “The voice of the Bulgarian business” will hold a General session of the members of the organisation.
Its chairman Ivo Prokopiev will present a suggestion for an Anti-crisis plan for Bulgaria.The ideas and the measures, set in it, are generated during a round table conducted on 20 November in which more than hundred company' representatives took part. According to the anti-crisis plan Bulgaria can preserve its financial and macro economic stability. The plan stipulates the measures for overcoming the liquid crisis and crisis of trust, improving the tax system and increasing the flexibility of the companies in the real sector, as well as for attracting quality foreign investment, resolving the problem with the inter-company indebtedness and actual acquisition of the EU funds.In the social sphere the Confederation offers a plan for avoiding high and long-lasting unemployment.

Bulgaria economists ask cabinet to create expert group to follow global crisis

Bulgarian economists from the Economy Institute at the Bulgarian Academy of Sciences (BAN) proposed on Monday to the Cabinet to establish special expert group to follow the development of the financial crisis in the country.The economists stated that such crisis was not something familiar to Bulgaria and there was a risk to underestimate its negative effects. They also said they expected a significant increase of the unemployment rate in the country, not to surpass 10%.The expected unemployment increase would be of 1% to 2% due to the return of many Bulgarian emigrants from countries such as Greece and Spain, which are suffering the crisis effects. There is also a forecast of a slowdown of the nominal salary increase in Bulgaria.The effects of the global financial crisis are going to be felt in all sectors of the economy, the Institute Director Mitko Dimitrov explained, adding that the best way to deal with them was to create a group of experts to follow the developments.Professor Garabet Minasyan pointed out that the real estate sector was going to face the most serious problems and consequences.The economists did however say that Bulgaria was not going to fall into a recession and the economic growth would remain positive in 2009.

Prices of perishable meat products, dairy products and cooking oil go down

This week the wholesale price of cooking oil continued going down reaching 2.36 Bulgarian leva per litre, while in August it was over 3 leva per litre, the State Commission on Commodity Exchanges and Wholesale Markets told BTA on Sunday. Sugar is traded at between 1.48 and 1. 49 leva per kilogramme on the wholesale market. Flour, grade 500, appreciated by 0.02 leva and was selling at 0.79 leva/kg. The wholesale price of eggs was 0.18 leva. The price of rice fell by 0.07 leva to 2.37 leva/kg. Frozen poultry preserved prices and was traded at 3.93 leva/kg on the average. The price of perishable meat preparations decreased by 1.4 per cent up to 4.88 leva/kg, while dry larded sausage price went up by 0.13 leva to 9.33 leva/kg.Vitosha yellow cheese depreciated 0.5 per cent and was traded at 9.18 leva/kg. Prices of cow cheese dropped by 2.5 per cent down to 4.28 leva/kg.Cabbage prices went downs and it was traded at 0.33 leva/kg on the average at the wholesale marked. The garlic price went up 10.7 per cent to 3.20 leva/kg.Greenhouse cucumbers marked an increase of 1.7 per cent and were traded at 1.76 leva on an average during the past week. Greenhouse tomatoes appreciated by some 1.2 per cent or the average of 1.75 leva/kg. Potatoes prices went up 5.5 per cent to an average of 0.58 leva/kg. Green peppers appreciated by 5.3 per cent up to 1.39 leva/kg, while red peppers by 27 per cent up to 1.60 leva/kg. The wholesale price of lemons dropped by 10.6 per cent down to 1.68 leva/kg. The prices of oranges and tangerines also decreased, by 11.4 per cent and 12.6 per cent to 1.47 leva/kg and 1.39 leva/kg, respectively.

Bulgaria has produced twice as much wheat as is locally in demand

In the 2008-09 market year the grain output in Bulgaria is the biggest in four years and is nearly twice as much as is locally demanded, according to a survey of the grain market as of November 10, 2008, make available to BTA. The increased supply of grain has pushed prices down. Wheat remains unsold in warehouses and needs extra care to keep it in good condition and competitive in the conditions of oversupply on the European and the world markets, according to the participants in a meeting of an avisory board on grain and animal feed with the Agriculture Ministry. They were quoted by the Ministry press office.On November 12, milling wheat was selling at a per-tonne price of 200-250 leva, feed wheat at 180-220 leva, barley at 210 - 250 leva, maize at 180 - 260 leva and oil-bearing sunflower seed at 350 - 430 leva. The Customs Agency reported that a total of 919,453 t of wheat of the new harvest were exported in July 1 - November 9 at an average price of 355.48 leva. The bulk of exports were to Pakistan (346,000 t), Djibouti (137,000 t), Spain (80,000 t) and Sudan (41,000 t ). Barley exports stood at 306,191 t at an average price of 330.23 leva/t. 102,000 t went to Saudi Arabia, 93,000 to Syria and 34,000 to Romania. Between July 1 and November 9 this year Bulgaria imported only 3,351 t of wheat, mostly from Greece and Hungary. Analysts say that wheat exports this year will beat by far the export in relatively good previous years. In the short term (late 2008 and early 2009), they do not expect any serious deviations of wheat prices from their current levels.

 

Drugmakers say new rule to crush market

Foreign drugmakers operating in Bulgaria warned of a market collapse next year due to a new ordinance requiring all product names to be written in Bulgarian to help users. Up till now, Bulgarian was a must only for secondary packaging. The new regulation will trigger massive losses for foreign drugmakers and may cause them to freeze imports of more than 200 medications, said the Association of Research-based Pharmaceutical Manufacturers in Bulgaria. Market representatives asked Health Minister Evgenii Zhelev to suspend the rule as the requirement had only been adopted in the EU’s big pharmaceutical markets. There is no national language requirement for primary packaging in small markets such as Slovakia, Latvia, Hungary, the Czech Republic and Cyprus, the association argued. According to the ministry, Bulgaria is not a small pharmaceuticals market with annual sales of over BGN 850 million. The bulk of the foreign drugmakers in Bulgaria are registerd in the Latin alphabet and will have to pay further fees to reregister, said ARPharM chairman Deyan Denev. In addition, the new rule will make it impossible for companies to repackage and sell idle batches abroad. The ministry said it has considered some of the demands and will meet with drugmakers.

Bulgaria & Romania live long beyond their possibilities and resources

“Fantasy is dead, long live fantasy” - under this title the Austrian newspaper “Wirtshaftsblatt” published an article devoted to the consequences of the global financial crisis on the investment and development in East Europe, informs BGNES. The newspaper marks that the financial crisis and the recession in the developed industrial states hang as sword of Damocles over Central and Eastern Europe and especially over Hungary, Bulgaria and Romania. Russia is also in a difficult condition after the leading stock exchange index lost in the last two months 60% of its value. Since August the country was deprived of 158 billion dollar investment. So far the most serious “clinical case” is Hungary, whose 190-billion dollar foreign state debt represents 113% of the country's GDP. “Hungary pays a lot for its irresponsibility in the past”, comments for “Wirtshaftsblatt” the expert dealing with Central and East Europe Eric Cotzian. Immediately after Hungary, among the most threated by the crisis countries rank Bulgaria and Romania. “With a total indebtedness, surpassing 100 billion dollars, the two countries apparently live quite a long time above their possibilities and resources”, analyzes Nigel Randall from RBS Capital Markets. "The two countries continue to depend exclusively on foreign investment, while the credits in foreign currency represent – similar to Hungary – between 50 and 55 % of all credits. In addition, Bulgaria has also a very high deficit on the current account because of which the country is in top of IMF's list for a rescue credit."

Santa Sarah Privat becomes Bulgarian wine of the year

Santa Sarah Privat, vintage 2006 has won the Bulgarian Wine of the Year 2008 award and title, which were officially awarded at a ceremony held on November 21.Santa Sarah Privat also won the Best Bulgarian Red Wine 2008 award.Winners in other categories, awarded by an international jury, include: Best Bulgarian White Wine - Chateau de Val Cuvee, 2007, Best Bulgarian Sparkling Wine - Edoardo Miroglio Brut Metodo Classico, 2005, Best Bulgarian Rose - Gorchivka Rose, 2007, Best Bulgarian Dessert Wine - Santa Sarah Snow Wine, 2005. Santa Sarah Privat, vintage 2006, has been produced in a 4,300-bottle series. Despite the fact that the Santa Sarah company does not own vineyards they have been creating excellent wines for over ten years, using twenty Bulgarian brands.Privat is considered the best Santa Sarah wine. Since 2004, it has been a combination of the traditional Bulgarian mavrud and cabernet sauvignon. The wine's unique taste is created by the slow fermentation process in German oak barrels, followed by a 10-month maturing in new French barrels.The Bulgarian Wine of the year contest is organized by the Bulgarian Bacchus magazine and it is the first such competition having the goal to encourage production, trade and consumption of Bulgarian wines.According to Emil Koralov, Special Projects Director for the Bacchus magazine, the selection has been very difficult and the competition tense. An additional arbitration wine tasting by the international jury had become necessary in order to select one of the two top contestants.The top ten Bulgarian wines for 2008 are: 1. Santa Sarah Privat 2006, 2. Terra Tangra Roto 2006, 3. Solitaire Elenovo Merlot 2006, 4. Maxxima Private Reserve 2003, 5. Logodaj Nobile Rubin 2006, 6. Terra Tangra Cuvee 2006, 7. Katarzyna Question Mark 2007, 8. Bessa Valley Enira Reserva 2006, 9. Terra Tangra Grand Reserva 2006, 10. Vinissimo American Barrel 2006.

Is power exchange possible in Bulgaria

 

Since the summer of 2007, the power market in Bulgaria has been fully liberalised but any attempts so far to create power exchange have been in vain. In September 2007, a commission was formed by the exact order of the prime minister Sergey Stanishev. The report the commission wrote after meeting ten times was not accepted by the prime minister. The reason was lack of specific proposals how to organise the power exchange in the country. The founding of power exchange will be beneficial for trade of electric power and will place it on market foundations, Lyubomir Velkov, CEO of National Electric Company, said. It will help the return of investments. The structure of the power exchange is not clear yet as well as the question whether only electric power will be traded there or other products too. Experts are not unanimous about the structure of the power exchange. Some think that the exchanges in Prague or Leipzig could be taken as a model, others believe it is better to be part of Ministry of Finances or of Bulgarian Stock Exchange.According to some experts, there is not sufficient quantity of electric power to be traded on the free market and others think that power market is with low liquidity. Power exchange under the conditions of regulated market will not be effective, Rumiana Georgieva, manager of Vivid power, said.

 

First private cigarette brands to appear on the Bulgarian market

 

The first Bulgarian cigarettes made by a private company will soon appear on the local market as the denationalised Stara Zagora and Plovdiv plants, former property of Bulgaria's state-owned and only cigarette producer, Bulgartabac, are launching two new brands - Armeets (Army Man) and Marilyn and hope to achieve market success thanks to low prices. Armeets is a well-known brand name in Bulgaria. Behind it is a well-established insurance company. The Armeets cigarette brand has already been registered and will be presented officially on Wednesday. A soft pack of 20 Armeets filter cigarettes will cost 2,30 levs (1 euro = 1.95 levs). A pack of ten will sell at 1,20 levs. The Stara Zagora tobacco processing plant is now property of Chimimport. There are rumours in the city that the owners are negotiating the purchase of Nevada, the best selling brand the plant used to produce under Bulgartabac. The Plovdiv plant has also registered a new brand of its own, Marilyn Slims. The price for a pack will sell at 2,60 levs.

Austrian Doppelmayr to build the lift between Bulgaria & Romania?

The Austrian consortium “Doppelmayr” shows interest in the construction of the cable car facility over the Danube connecting the Bulgarian town of Ruse with the Romanian town of Giurgiu, informs dnevnik.bg.The company has submitted a written statement to the municipality of the Romanian town. This announced Michail Milchev, director of the Agency for sustainable development of Ruse and the region. The Austrian company has representative offices in more than 30 countries, in which it constructs and maintains similar facilities.The municipalities in Ruse and Giurgiu have decided to apply with two project proposals regarding the idea for a cable car connecting to two Danube their towns.
The first will aim at the funding of the complete technical design of the lift while the other will seek resources for the actual building. The projects will be in compliance with the requirements and the procedure under priority 1 of the Functional program “Transborder cooperation”.

 

Sofia heating utility eyes entry into energy holding

The Sofia heating utility may enter the newly-founded Bulgarian Energy Holding after the ministry was granted a 58% municipal share in the ailing company, deputy minister Galina Tosheva told Dnevnik. The ministry and Deloitte Bulgaria, which advised the creation of the holding structure merging major power generation assets, are weighing different rescue options including a capital boost at the holding company to lend cash to Bulgargas, Tosheva said. Under the scheme, the holding company will buy into Toplofikatsia Sofia against paying off its debts to the gas company. The Government is due to vote on a BGN 80 million capital hike next week. The money will be sourced from the state budget. Tosheva said this did not violate EU law as confirmed the ministry’s legal experts. Another option on the table is giving Bulgargas a loan to guarantee supplies from Russian major Gazprom. Consumers owe the struggling utility more than BGN 300 million.

EBRD awards for energy efficiency

For the first time this year in Bulgaria the European bank for reconstruction and development (EBRD) will give awards for exceptional achievements in the field of energy efficiency. The official ceremony starts at 10 am today in Hall “Royal” in Sheraton Sofia Hotel Balkan. Among the special guests of the event are James Hislop, EBRD director for Bulgaria, the deputy ministers of economy and energy Galina Tosheva and Valentin Ivanov, the chairman of the energy committee Ramadan Atalay, the chairman of the Bulgarian agency for energy efficiency Tasko Ermenkov and others.

Bulgarian customs expect 8 billion levs income

Customs Agency expects over 8 billion levs income in 2008. This was announced by its Director Hristo Kulishev during a discussion. For the period January - October the income of the Agency is over 7 billion levs.Only from taxes the customs have gathered over 3 billion levs, while from VAT tax from import - over 3,5 billion.The increase of income from fuel taxes is 22 percent, from cigarettes - nearly 25 percent, from alcohol - 55 percent and from automobiles - 56 percent. As a result of the control activity of customs, 71 cases of contraband of narcotics and ingredients for the production of narcotics have been discovered.

 

 

 

 

14 000 workers laid off from the textile sector this year

The purchasing power decreases and markets are shrinking. This leaves a number of firms and their employees jobless. This was announced by Tzonko Nedyalkov, Chair of the Bulgarian Clothing and Textile Association, cited by BNR.Only for a year 14-15 000 people have been discharged from the sector, which is roughly equal to 40% of all workers.Nedyalkov pointed out that the Association hopes to keep the bulk of the workers, who are qualified and experienced."Each firm in the textile sector must have a goal to keep the best workers during the crisis", Nedyalkov emphasized as a direct condition for the survival of firms in the next months.The association offers a reduction of the tax and insurance weight in the conditions of a crisis, modernization and reorganization of the sector.Otherwise, the textile sector will remain with the lowest salary level - 65% of the average work salary in the country, low productivity and bad labor conditions.

 

Textile industry uses half its capacity

 

Due to the world financial crisis textile companies in Bulgaria are working using only half of their potential, the Zemya Daily informs. Orders have dropped by 20% and lying offs are reaching 10%. According to the Bulgarian Association for Textile, this is the hardest crisis for the sector because it affects its basic markets. Largest part of production is exported within Europe, where purchasing capacity is currently shrinking and so are markets. That has lead the Association to insist for a reduction of the tax and insurance burden.

Bulgarian business: Replace the national currency with Euro

Bulgaria should introduce the common European currency to abate the world financial crisis, the Confederation of Employers and Industrialists in Bulgaria (CEIBG) proposes. Yesterday, the business organization adopted an anti-crisis plan for Bulgaria, which they insist to be introduced by the Bulgarian cabinet. According to CEIBG, the only way to keep the economic stability in Bulgaria during the world financial crisis is the unilateral introduction of the Euro. This should happen very soon even if Bulgaria does not meet the criteria for the accession to the Euro zone. CEIBG insists on the establishment of a group within Bulgaria's PM administration comprising representatives of the economic and financial sectors who will analyze the development of the crisis processes and recommend measures for overcoming the crisis.

BGN 1 B to be poured into environment protection

"A total of 1.05 billion levs (1euro = 1.95 levs) will be distributed under Environment Operational Programme for treatment of water and waste management," said Bulgaria's Minister of Environment and Water, Djevdet Chakarov at the sitting of the programme's monitoring committee. This money accounts for 30% of the sum total that is envisaged to be absorbed by Environment OP till 2013. "By March 2009 we have the ambition to have approved projects for further 30% of the total sum," said Minister Chakarov. He said that by now there were approved projects for the construction of a water treatment plant worth 860 million levs and for technical help - 157 million levs.  Projects worth other 24 million levs were endorsed for technical aid in the waste management sector.

 

INVESTMENTS:

 

Belgian DIY chain Hubo enters Bulgaria, plans to open 40 stores in 10 years

Belgian do-it-yourself (DIY) hypermarket chain said on Monday it will set foot on the Bulgarian market and open 40 stores in the European Union member in the next 10 years. The company will open the first store, worth 3.5 million euro ($4.4 million), in the capital Sofia on Friday, its Bulgarian unit, Hubo Bulgaria, said in a statement. The hypermarket covers a total area of 2,500 square metres and will sell more than 20,000 items. Hubo Bulgaria plans to build three more hypermarkets in Sofia and to expand to other big cities in the country, like Plovdiv, Varna, Burgas and Stara Zagora, business daily Pari reported last week. Hubo's competitors on the Bulgarian market are Germany's Praktiker, Bulgarian-based Doverie Brico and Austrian do-it-yourself chain bauMax. Doverie Brico is the franchisee of French do-it-yourself retail chain Mr. Bricolage for Bulgaria, Serbia, Albania and Macedonia. Belgian Hubo (www.hubo.be), set up in 1972, runs a network of 100 hypermarkets across Europe.

First solar power plant to generate 1,250 MWh annually

The first solar power plant in Bulgaria will generate a minimum of 1,250 MWh of electricity annually. The design of the plant was presented at the BTA National Press Club Wednesday by the building contractor SunService and the consultant, the German company IBC Solar. The owner of the solar power plant is the Bulgarian company InterSol.The plant, unveiled on Wednesday, is located at Paounovo, Ihtiman Municipality. It is situated on 4.5 hectares of land and includes 13,365 solar modules and 159 invertors. The solar modules were made in Japan, and the invertors in Germany.According to Roumen Hristov, Executive Director of SunService, the thin-layer modules will ensure maximum productivity in the summer season and with the availability of diffused light during the winter season.The building of the plant lasted almost a year, and the investment totalled under 4 million euro. A leading motive for the investment in the solar power plant was the effective installation, which will allow a prompter return on the investment, said InterSol Board of Directors Chairman Ventsislav Petrov.

 

 

 

 

 

 

 

 

Cefin Bulgaria starts construction of € 2.1 M production unit for superstructure elements

Cefin Bulgaria, the leading dealer of Italian commercial vehicle manufacturer Iveco in the Black Sea country, on Wednesday kicked off the construction of a 2.1 million euro ($2.7 million) production unit for superstructure elements for the automotive industry. The plant, to be built on the western outskirts of the capital Sofia, will have a built up area of 2,100 square metres, Cefin Bulgaria said in a statement. The production unit is expected to be completed by next June and to become operational in September.Cefin Bulgaria is part of Cefin Holding, which has been active in central and eastern Europe since 1995 and has created networks in Hungary, Romania and Bulgaria. It sells the Iveco, Irisbus and Farid brands in Bulgaria. Cefin entered the Bulgarian market in 2000 and since 2003 it has been manufacturing superstructure elements.Cefin Bulgaria sees turnover rising to 52 million euro this year compared to 29.8 million in 2007.

Two highways to be built in Bulgaria by 2011

Bulgaria's tourism and construction were the first sectors hit by the global financial crisis. Word about downsizing of personnel, closures of hotels and outflow of foreign investments started spreading rapidly. What measures is Bulgaria's government preparing to avoid the looming bankruptcies in the building sector, The Standart asked Bulgarian Minister of Regional Development and Public Works, Assen Gagauzov. Mr. Gagauzov, how will the global financial crisis influence the construction sector in Bulgaria?The sector saw a rapid development over the past six or seven years, but now we expect a cool-down. Some construction projects taken up by foreign investors will remain unimplemented, but the construction of apartment buildings in Bulgaria's cities will keep its pace, although the buyers from West Europe may withdraw a little bit from the market, but the ebb will not be too significant. The investors in huge construction projects like malls and hotels at the seaside will be the most affected by the shrinking markets, because these entrepreneurs rely mostly on buyers from abroad. However, the financial crisis also has a positive effect - it will introduce some order in the now chaotic construction sector in Bulgaria. Do you expect a wave of bankruptcies and layoffs in the sector? No, I do not expect anything like that. The big construction companies will survive the unfavorable financial conditions. Together with the Bulgarian Construction Chamber, we will try to compensate the crisis by entering foreign markets. For example, we expect Bulgarian companies to win projects for the construction of facilities for the winter Olympics in Sochi. We have also received construction offers from other countries, which we have to check out. We can make up for the ebb of foreign investments in Bulgaria's construction sector by efficient absorption of the funds allotted under the EU operative programs. For instance, last year we negotiated the implementation of construction projects worth over 1.2 billion levs. The implementation of these projects starts at full steam in 2009, which means that a large part of the funds can be efficiently absorbed. Which foreign markets do you hope to make a breakthrough on? During my visit to Middle Asia I found out that the demand for constructors in Uzbekistan and Azerbaijan is really great, because these countries are unaffected by the mortgage crisis. We also plan to take up construction projects not only in Sochi, but in the whole region of Krasnodar. Also, big projects are to be launched in Bulgaria's energy sector. I mean the construction of NPP Belene and Bourgas-Alexandroupolis pipeline. When will Bulgaria see its first fully constructed highway? The construction of the Trakia and Maritsa highways will be first completed and these may be Bulgaria's first highways. I hope they will be opened in three years time.

Most modern velodrome in Balkans to be built in Plovdiv

The construction of the largest and most advanced velodrome in South Eastern Europe is set to begin in early 2009 in the central Bulgarian city of Plovdiv. The modern facility will be constructed in the picturesque town, over an area of 12 hectares. It will be an Olympic-sized complex, fully covered, and will be located at Iztochen Boulevard and Naicho Tsanov Street, Stroitelstvo Gradut weekly wrote on November 24 2008.Within its complex design, it will incorporate arenas for basketball, volleyball, handball and about a dozen other sports, all of them surrounded by a cycling track 250 metres long and seven metres wide. The complex will have a capacity for 5000 spectators, and underground parking facility for 300 vehicles, a modern press centre, dressing rooms, coaching facilities, a sports-recreational centre, restaurants and a large commercial centre for a wide variety of sports merchandise and kit. The total size of the project will be 26 840 square metres.The author of the technical conception for the multifunctional facility belongs to the Dutch architect Sander Dumas, licensed by the International Cycling Union (UCI). He has created in the past the largest-known velodromes in Europe, notably the facilities in Monte Carlo, Palma de Majorca, and Manchester amongst others. Meanwhile on the designated site, Bulgarian specialists have conducted over the course of a year the thorough preparation for the project documentation.The architectural part of the project was prepared by Archcentre – A EOOD, consisting of architects Todor Abadjiev, Kiril Marov and Nikolai Abadjiev. “We have strived to created a modern sports facility which, on one side, will be fully adequate in accordance to all modern European standards, and on the other to fulfil the international requirements for a covered, all-season velodrome, and to be easily executed at that,” architect Todor Abadjiev said, as quoted by Stroitelstvo Gradut.

 

 

 

 

 

 

 

 

 

 

COMPANIES:

 

 

Russian and European companies collaborate on NPP Belene

Russia's Atomstroyexport said late on Friday it has signed with a consortium comprising France's Areva and Germany's Siemens an agreement for cooperation on the construction of Bulgarian nuclear power plant Belene, estimated to cost some 4.0 billion euro ($5.03 billion). Atomstroyexport has chosen the CARSIB consortium, consisting of the firms Areva and Siemens, to design the plant's instrumentation and control systems, and supply the equipment of heating, ventilation, air conditioning and electric systems, Atomstroyexport said in a statement. Supply of refrigerating machines and additional equipment on securing the NPP safety, such as hydrogen recombiner, is also within the scope of CARSIB Consortium obligations, it added. In January Bulgaria contracted Atomstroyexport to build the 2,000-megawatt nuclear power plant by 2013-2014.The Bulgarian government picked RWE as a strategic investor for 49% of the plant in early October. Bulgarian state-run power utility NEK will hold the majority stake of 51% of the plant. Earlier last month Bulgaria said it gave RWE several more months, until the spring, to make up its mind whether it will become a strategic investor in the project. The German company outbid Belgium's Electrabel for the minority stake in the project.Bulgaria hopes the new nuclear plant will help it make up for the generating capacity it lost after closing down four Soviet-made reactors of 440 megawatts each at its sole nuclear power plant Kozloduy as a condition for joining the European Union in 2007. The closures left Kozloduy operating its two remaining reactors of 1,000 MW each.

Hungarian company to bring back Bulgarian plant's glory

The Hungarian owners of the Stara Zagora-based DZU AD, manufacturer of disk memory-storing devices - Videoton Holding - are moving their printed circuits boards production to Bulgaria, DZU AD CEO Ivan Staev announced. The manufacturing of printed circuit boards is one of the major production lines of Videoton and they will invest as much as 1 million levs in infrastructure alone. The necessary machines are currently being mounted and by the end of the year the first pilot series will come out of the production lines. DZU AD used to be the largest producer of printed circuit boards for the former Council for Mutual Economic Assistance, the so-called COMECON. We hope we would be able to bring back the glory of DZU, the current managers said. Videoton disproved rumours that the relocation has anything to do with the world financial crisis.

 

 

 

 

Brazil investor CSN sends scouts to check out Kremikovtzi

Representatives of the Brazilian company CSN (Companhia Siderurgica Nacional) are arriving to Bulgaria's capital Sofia Monday to inspect the troubled steel-maker Kremikovtzi in view of its declared interest to bid for the purchase of the plant.The news about CSN's investment interest in Kremikovtzi was announced on November 19 when the management of the company had a working meeting with the Bulgarian Minister of Economy Petar Dimitrov during his official visit to the Brazilian city Sao Paolo last week. Representatives of the Kremikovtzi management and syndicates also took part in the meeting from Sofia via video satellite.According to the Technology Director of the Bulgarian steel plant Stoyan Pirlov, the Brazilian company, which is a large producer of iron ore and had really strong positions on the domestic market, was interested in acquiring a plant in Europe.The visit CSN's scouts to Kremikovtzi is expected to shed more light on the plans of the Brazilian company with respect to the plant.According to sources from the plant management, the Ukrainian company Smart Group was still interested in bidding for the purchase of Kremikovtzi.CSN was founded in 1969, and is presently the second largest steel-maker in Brazil. Its main plant is located in the city of Volta Redonda in the state of Rio de Janeiro.

Avendi, AstraZeneca named best employers in Bulgaria for 2008

Fast-moving consumer goods company Avendi and drug maker AstraZeneca were named the best employers in Bulgaria for 2008 on November 21. The annual survey, carried out by human resources firm Hewitt Associates, had more than 13 500 employees and more than 350 top managers participate in it.This year, 84 companies took part in the survey, for 40 per cent of whom it was a repeat participation. The most notable development Avendi's jump from third place in the small and medium-sized companies category to top of the table in the big companies category.Pharmaceutical companies were the uncontested leaders for employment amongst the medium-sized employers. AstraZeneca Bulgaria won the award, whereas Sandoz ranked fifth. Information technologies company Telerik and real estate consultants Colliers International have retained their place in the top five for a second year running, at fourth and third, respectively. Construction company Hilti ranked second.In the big companies category, Avendi was followed by McDonalds Bulgaria, software developer SAP Labs Bulgaria, DHL Express Bulgaria and financial services group TBI Credit.The companies participate not to win the awards, but because they deem important that they receive feedback from their own employees, Hewitt said. “We assist them in receiving accurate and detailed picture regarding their organisation – how engaged they are with business, with the employees, whilst the companies pursue their business strategic plans, as well as which hare additional fields in which the company has to develop and explore, and how to increase the morale and motivation of its employees”, the head of Hewitt's research team in Bulgaria, Irena Boyadjieva, said.“Apart from that, the best employers allows the participants to compare themselves with the other players on the market,” she added.

 

 

 

 

First Starbucks opens in Sofia

For those of you who have long been craving a sip of your favourite Starbucks coffee, the wait is finally over. You can already get your cup in the very centre of Sofia, at 62 General Yossif Gourko Street, right on the corner with Vassil Levski Boulevard.“We are proud that with the opening of our first shop in Bulgaria we will present Starbucks Coffee and the unique Starbucks experience to our clients in a country with traditions and a very rich coffee culture,” Yannis Kalfakakos, executive director of  Marinopoulos Coffee Company Bulgaria, the company holding the license to operate Starbucks coffee shops in the country, said at the November 26 opening. “We are excited to become a part of this coffee tradition and society.”Starbucks will offer its Sofia clients more than 15 types of high-quality Arabica coffee and a big selection of original beverages. The company is also working with local producers to offer foods that use traditional Bulgarian ingredients and best fit the food habits and lifestyle in Bulgaria.“Part of our uniqueness is due to the fact that every client can order their beverage according to their own taste and to enjoy it in combination with a local menu. Everything is offered in an innovative way, which compliments our high-quality coffee served in a pleasant atmosphere,” Bistra Arsova, regional manager of Marinopoulos Coffee Company Bulgaria, said.

Competition watchdog fines Coca-Cola BGN 500 000 for abuse of dominant position

Bulgaria's Commission for Protection of Competition imposed two fines at the total of 500 000 leva to Coca-Cola Hellenic Bottling Company (CCHBC), the regulator said on its website on November 26 2008.The two fines of 200 000 and 300 000 leva, respectively, were imposed because the CPC found that CCHBC has abused its dominant market position in its liaising with distributors. According to the CPC, since 2005 the company has been signing standard distribution agreements by using a network of small distributors. “The analysis shows that the company has applied unfair trade conditions in the signed agreements by transferring the risk of possible damages to the goods and possible non-payment of the client to the distributors” the CPC said. “At the same time, CCHBC did not give contracted distributors the chance to enter into competition with other distributors on the market,” the regulator said.For the period 2005/07, the company, which holds exclusive bottling rights for Coca-Cola products in the country, did not let contracted distributors trade Coca-Cola products among themselves and had obliged them to sell only to Coca-Cola's end-users."The CPC found that the company's behaviour is serious abuse of dominant market position and is in breach with the principles of the Competition Protection Act," the regulator said.The claim against CCHBC was filed by a group of four distributors and producers of non-alcoholic beverages. one of them is Devin, one of leading Bulgarian bottlers of mineral and spring water and other brands of soft drinks. So far the CCHBC has not officially responded to the CPC's sanctions, but this is not the first time the company has had problems with its distributors. As reported by The Sofia Echo in December 2006, eight of the biggest soft drinks distributors entered into conflict with the company and stopped supplying any of Coca-Cola's 12 products in Sofia.CCHBC had recently changed its product delivery arrangements in Sofia by introducing a direct selling system, which has been in effect in other parts of the country for a number of years.The distributors refused to work according to the new pre-selling system introduced by the company. According to the system, orders are received directly by CCHBC and distributors only deliver the ordered quantities. The purpose, according to CCHBC, was to optimise the company’s work.Back then, the company's answer was that “the change, agreed by all parties in Sofia, has been designed to increase efficiency, bring benefits to customers, and provide added incentives and rewards to the agents involved. It has been accepted and has worked very successfully elsewhere since 2002”.CCHBC said that each of the agents in Sofia had signed an agreement to undertake the new delivery arrangements.“Identical systems had been smoothly introduced in other areas of the country and the shift in position by the suppliers in Sofia has come as a surprise.”CCHBC's response to the situation was “to ensure that alternative delivery arrangements were swiftly put in place and product delivery continued seamlessly. Accordingly, there has been no impact on the marketplace”.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GLOBAL FINANCIAL CRISIS ANALYSIS AND NEWS:

 

Bulgaria has enough buffers against the global economic turmoil

Bulgaria has enough buffers against the global economic turmoil and will not need to go to the IMF to solve possible payment troubles, showed a Dnevnik poll among investment consultants and asset manager bosses. In addition, the polled on pazari.dnevnik.bg are strongly against a fresh agreement with the fund, which dictated the economy years on end up to 2007. Analysts of RBC Capital Markets, French bank Societe Generale and London institute Capital Economics said last week Bulgaria and Romania are most in need of urgen funding and should agree buffers for their economies with the IMF after they piled up a USD 100 billion foreign debt combined. Bulgaria’s Finance Minister Plamen Oresharski has reiterated no talks are underway with the IMF because the Cabinet does not need a helping hand. “We don’t need IMF funding at the moment and a funding request with the fund would make foreign investors even warier of Bulgaria,” commented Tsvetoslav Tsachev, analyses head at local investment brokerage Elana Trading. “Foreign analysts seem to be automatically transposing the problems of striken countries into Bulgaria or fearing contagion,“ said Petko Valkov, head of BenchMark Asset Management, which runs the assets of five funds. Bulgaria’s foreign debt is just above EUR 4 billion, or only 15% of GDP.

Crisis to push flurry of Bulgarian firms to the block

The current global economic downturn will set off a wave of sellouts of inefficient Bulgarian companies, experts told Dnevnik. The first to succumb to the new trend will be firms of big holding companies fetching tiny portions of the total profits and revenue. Also on the table will be companies with struggling foreign parents, according to analysts. “About 90 per cent of the revenue of a large part of Bulgaria’s major economic structures is formed by one or two companies out of a 10 or 20 altogether. And if this was not an issue a year ago now managers are scratching their heads about structure,” said Biliyan Balev, managing partner at Forem Consulting, one of the key acquisition consultants on the market. Company shake-ups are already underway, said Asen Hristov, supervisory board chairman of one of the nation’s largest holding companies, Eurohold Bulgaria. It is normal that managers should opt for shedding a business even at a loss if it is bound to bring further trouble, Hristov said. The wave of sellouts is just round the corner but the question is whether the deals will be a success, said Pavel Ezekiev, managing partner of venture capital fund Neveq. The banking sector is one of the juiciest acquisition targets, according to Balev. Telecommunications, energy, pharmaceuticals and the food industry are also likely to draw keen buyers. The crisis and the grim economic outlook are prompting company owners to more soberly assess their businesses, analysts say. Companies are offered at very lucrative prices, and this will give a further push to acquisitions, experts say. The most likely buyers will be the biggest and most efficient players in the respective sectors but also private equity funds, which buy to brush up and sell out in three to five years. Small and medium companies will be hit the hardest by the trend, which is tipped to peak in the first quarter of 2009, said Hristov. Private equity funds have plenty of cash at hand but they snub deals of less than EUR 10 million, said Hristo Valev, investment manager of Bulgaria’s first private equity company, Advance Equity Fund.

Crisis sobers up leasing market

The Bulgarian leasing market is slowing down as companies are rethinking investment policies, UniCredit Leasing CEO Plamen Minev said upon signing a EUR 80 million credit line from the European Investment Bank. Some leasing firms have reduced new leasing contracts and the bulk are putting applicants under utmost scrutiny, Minev told Dnevnik in an interview. Leasing companies have also tightened the co-funding requirement asking companies to pay 20-30% or more compared to 10-20% before the crisis broke. In addition, interest rates have jumped by between 1.5% and 2.5% to some 9-12%, according to market sources. Leasing companies are also revising and renegotiating existing contracts to ease the strains on customers, Minev said in the interview. Some customers have requested contract extensions in order to trim the installments. New leasing contracts signed in the third quarter shrank by BGN 128.4 million from the previous period, shows data of the central bank. New financial leasing contracts topped BGN 586.2 million in the third quarter and BGN 714.6 million in the second. Market representatives explain the slump with seasonal factors and yet the sector has been cooling down from the hefty 50% growth before. The pace is 20-30% in Central and Eastern Europe.

Investing in gold for vogue's sake

As a result of the world crisis and people's shrinking trust in banking, gold has been sought and bought in all forms in recent months, dealers say. "Diamonds and precious metals are now in higher demand but this is more likely to result from fashion trends than investment," believes Dimitar Alexiev, the chairman of the Union of Bulgarian Goldsmiths. "Those who choose to invest in gold and precious stones should be aware that the price of a jewel includes the price gem-cutting.  Later  they would hardly be able to sell it at the same price.This is still good investment for people with money who do not trust banks," he believes.Alexiev thinks that from now on the price of gold will only increase because it is used not only in jewelry but in other industries, e.g. computers and cell phones, medical and other equipment manufacture.

Boom of credit cards in times of crisis

Bulgarian credit card issuer Intercard Finance reports two times more applications for issuing of credit cards for the last month, the executive director announced. In his opinion, this is due to the strongly restricted bank crediting at present. The company offers icard credit cards with standard cover between BGN 2,000 and 20,000, gold category up to BGN 50,000 and the newest product giftcard for purchases in Mall of Sofia.

Export-oriented enterprises in Silistra region start job cuts

Stomana and Fazerles, two of the leading companies in Silistra Region which export most of their output, are launching job cuts, said Dimitrichka Peikova, Chair of the Silistra Regional Council of the Confederation of Independent Trade Unions in Bulgaria. Stomana CEO Nikola Mitikov admitted that 60 workers have already been made redundant. He argued that the order book of the woodworking machinery manufacturer has been shortening back since the spring of 2008. Fewer orders have been placed by US customers, which buy between 20 and 25 per cent of the company's output. Mitikov noted that Stomana has invested heavily in modernization and now has loans to repay.Fazerles CEO Manol Todorov said that the fibreboard manufactuer will suspend operation of one of its product lines owing to a dramatic contraction of the European market. As a result, nearly 120 workers or some 30 per cent of the total staff will have to be dismissed. He recalled that 85 per cent of the plant's output is exported, and two-thirds is going to EU countries. The 30 per cent appreciation of timber will affect the production cost of the finished products, Todorov said.For the time being, trade unions would not commit themselves to forecasts of unemployment levels in the Silistra Region until the end of the year. In October, the official unemployment rate was 9.29 per cent, up from a national average of 5.85 per cent. Silistra ranks seventh among Bulgaria's 28 regions in unemployment.

BAS economists evaluate impact of world financial crisis on Bulgarian economy

"We should be ready to respond to a possible crisis in the Bulgarian economy, however no gloomy scenarios have to be played in advance," Director of Institute of Economics with the Bulgarian Academy of Sciences (BAS) Mitko Dimitrov told a news conference at BTA Press Club on Monday.A team of economists from the institute gave its evaluation about the world financial crisis and its possible impact on Bulgaria.This a new crisis, which is unknown so far, and there are no known counter measures, which might lead to a result, Dimitrov also said. According to him, Budget 2009 follows the logics of preceding budgets. The allocated funds for the sectors of health care, education and science remain insufficient, the subsidies of state enterprises exceed several times the relative share of GDP of 0.1 to 0.2 per cent. Part of the proposed anticrisis measures were taken before, regarding previous budgets, and some of them have a wishful character. At the same time the Government has taken actions, which are in the right direction, he added.According to Prof. Garabed Minassyan, the consequences of the crisis in Bulgaria would affect the financial possibilities of the non-banking financial institutions. However, in the first half of 2008 investments increased 28 per cent, GDP went up 6.5 per cent; for the nine months of 2008 bank deposits totalled between 17,600 million and 18,000 million Bulgarian leva. Seventy four per cent of the total investments made in the country in the first half of the year were in construction, the real incomes of population grew 3.4 per cent for the nine months. According to Iskra Balkanska, the small and medium-sized enterprises will suffer most from the crisis because of limited crediting. The slowdown of economy will reduce exports of Bulgarian goods, which is supported by data of the Bulgarian Statistical Institute for August 2008, when the level of exported goods were the lowest since 20 years.Plamen Chipev said that the BSE index Sofix fell to the level of 2003. According to him, despite the fact that the indicators of the Bulgarian enterprises until September 2008 have been positive, the capital market is stagnated. on the labour market the crisis will affect the employment, unemployment and the wage dynamics, Vassil Tsanov said. So far, the expected crisis of the labour market affects individual sectors rather than the macroeconomic level.

 

 

BNP Paribas: Bulgaria headed for two-year recession

The Bulgarian economy will be in the depths of a recession in the next two years with dwindling capital inflows and consumption squeezed by the rising jobless rate, forecast BNP Paribas economist Michal Dybula, a co-author of a report on 2009 global economic outlook. Neighbouring Romania is also in for big trouble with GDP set to drop 0.6% next year, according to the French lender. The Bulgarian economy will contract 1.2% in 2009 and 0.3% in 2010. Economic growth will slow down to 2.2% in four-quarter 2009 from 4.4% in the final quarter of 2008. The Bulgarian economy is the most rickety across all Central and Eastern Europe, Dybula said in a separate report on the region. The wide current account gap is the major challenge before Bulgaria in the face of slowing foreign capital inflows. The expected protracted recession in the eurozone will freeze cash flows to the region and slash jobs of Bulgarian and Romanian migrants making it harder to send money back home and rising domestic unemployment if they return. Timothy Ash, head of emerging markets at the Royal Bank of Scotland, told Dnevnik the economy will slow down to 2% and a negative value should not be ruled out either.

European Commission recommends VAT reduction to combat crisis

The European Commission is going to propose the 27 EU member states VAT reduction as one of the measures for emergency stimulus of the EU economy, which is on its way to recession. EC President Jose Barroso will announce the entire 'kit' of measures after consulting them with the member states' heads of government, the Reuters reported.Moreover, Brussels will appeal to the European Central Bank to reduce its basic interest rate, which at the moment is 3.25 percent, the agency pointed out. The EC will also call for VAT cuts for environment friendly products and labour-consuming services. The monetary value of the stimulus package is yet unknown. The final discussions as regards the size will be held December 11-12. The share of GDP each EU country would have to sacrifice in contribution to the emergency package has not been yet defined. This would be controlled and temporary stimuli. To counteract the negative effects of the financial crisis it would be necessary to support the common EU budget. "This would allow the Union recover its economic growth and increase employment rates," Barroso commented.

Vladimir Karolev: In Bulgaria crisis won’t come from financial sector

Part of the measures, envisaged by the European Commission for addressing the financial crisis problem are not suitable for any country, and Bulgaria in particular, the Economic Advisor of the National Movement for Security and Prosperity /NMSP/ Vladimir Karolev said in an interview for BNR. ‘Reducing VAT is absolutely not necessary’, Karolev said. He said that what Bulgaria needs are measures to stimulate export. ‘It is obvious that there can’t be any crisis in the financial sector in Bulgaria. Such crisis would come if there is a serious problem with the export, which is towards EU countries in its major part’, Karolev said.

 

 

Crisis doesn't affect flights to Bulgaria

There is increase of flights to and from our country, Zahari Alexiev, general director of General Directorate Civil Aviation Administration, commented for Pari daily. The reasons are several: first, the ban on Bulgarian air companies was removed and they can fly freely to and from the European Union. on the second place, the financial crisis affects mainly companies with tourist flights to distant destinations while Sofia airport realises mainly business trips that have not reported any drop. According to him, the planes of the national air carrier Bulgaria Air of the middle class with over 150 seats fly full to most European capitals and there is shortage of tickets. This means that aircraft park of that particular type has to be increased. The fact was confirmed by the East European manager of the low-cost easyJet Peter Woets. According to him, the number of passengers to and from Bulgaria occupies 30% of the total number of passengers of the company and this figure in itself indicates the development of air market in the country. Since the beginning of the slowdown, about 30 air companies went bankrupt in Europe and another 30 carriers are expected to follow them. These are mainly chartered companies to far-away destinations. The chartered lines from EU flying to and from Bulgaria do not have that problem, Alexiev commented.

 

 

Obviously Bulgaria is too corrupted

Author: Stephen Castle, IHT

The European Union on Tuesday took the unprecedented step of depriving Bulgaria of €220 million in funds, effectively declaring that the Balkan country was too corrupt and prone to fraud to receive the subsidies.For the first time, a member of the 27-union bloc will completely forfeit money that it cannot be trusted to spend properly, reflecting concern among officials, diplomats and fraud investigators over the ability of the Bulgarian authorities to prevent billions of euros in European grants being siphoned off by organized crime.The Bulgarian government, which had exuded confidence that Brussels would now entrust it with funds, first frozen in July, tried to put a bright face on what amounts to a substantial loss for one of the poorest economies in Europe.Prime Minister Sergei Stanishev, speaking in Berlin, said that Bulgaria - where the U.S. Embassy in Sofia has counted more than 125 contract killings in recent years - was implementing EU programs "in a very ambitious way," and noted tartly that membership "is not limited to justice and home affairs issues."When Bulgaria joined the EU in 2007, many warned that the country was ill-prepared and the European Commission put in place special measures to monitor reforms.Since then, Bulgaria and Romania - which joined the EU at the same time - have been criticized in several reports including one leaked document that said a "criminal company network" was skimming off subsidies.In July, several tranches of EU cash, worth a total of €486 million, were suspended. It was €220 million, or $287 million, of that money - designated to modernize institutions - that was lost for good Tuesday when a funding deadline expired.Millions - or even billions - more could go the same way if the Bulgarian government fails to improve controls. The country is supposed to receive about €11 billion in subsidies by 2013.Meglena Plugchieva, deputy prime minister of Bulgaria, also in Berlin on Tuesday, pointed to "big efforts" and "concrete results" in fighting crime. The EU decision, she said, is "not a good sign to support reforms in Bulgaria."Olli Rehn, European commissioner for enlargement, disagreed. Announcing the EU move, he said that assurances from Sofia had been insufficient. "Many of the measures," said Rehn, "are only promises of future action and have not yet delivered concrete results."Rehn, who championed Bulgaria's membership in 2007, said the announcement was not "pleasant.""It is not a punishment," Rehn said. "This is a decision we have taken in order to respect EU laws and rules."The money involved had been allocated to Bulgaria to help it modernize, shake off its communist past and prepare for EU membership by overhauling its administration.But distribution of the cash halted in July when the EU removed the official approval of two agencies in Bulgaria that process payments from Brussels. The EU has dispatched several different missions to Sofia since, and Bulgarian ministers had expressed confidence that money would now flow again."Time has run out," said a European Commission official who asked not to be identified because of the sensitivity of the issue. "They were given warnings and extensive contact was made with the Bulgarian authorities. But they were not able to deliver on time."Rehn said that "the risk of political interference" had not been fully acknowledged by the government in Sofia, which made it difficult to tackle the problems.Connections between politicians and crime suspects in Bulgaria are well documented, and have recently been the subject of two detailed reports in the International Herald Tribune.The Bulgarian interior minister, Rumen Petkov, resigned this year amid revelations that he had met organized crime figures.In 2003 the finance minister, Milen Velchev, also quit after being photographed on the yacht of Ivan Todorov, who was suspected of involvement in smuggling and kidnapping and who was murdered in 2006.In addition to the lost €220 million, an additional €340 million of pre-accession aid, under the so-called Phare program, is suspended. Agricultural support worth €121 million is also blocked. And €115 million destined for road construction is also on hold.These sums are, however, small change by comparison with the funding that Bulgaria is due to get now that it is a full member of the European Union.While about €11 billion has been earmarked for Bulgaria in regional aid and farm subsidies until 2013, Romania is slated to receive about €31 billion.The Commission says it is determined to ensure that this funding is not lost through corruption. "In terms of the future money," the Commission official added, "we are undertaking more extensive auditing. We are looking to make sure that the structures are in place so that the authorities are able to cope with the significant amount of money that they will receive during the 2007-13 financial period."Speaking to her domestic audience on Darik radio, Plugchieva sounded an angrier note than in Berlin. She said she was deeply disappointed and saddened, but also accused the EU of double standards, the Bulgarian news agency Novinite reported."Which EU country is free of corruption and has solved all its problems?" Plugchieva asked. "This approach of focusing only on the negative in Bulgaria and of negative assessment only of Bulgaria is unacceptable; I do not share it and I do not see it as a reflection of the EU spirit."Worries about Bulgaria and Romania have cast a shadow over future expansion of the bloc. Elmar Brok, a senior center-right German member of the European Parliament said that it was vital to demonstrate to the European public that adequate controls are in place to protect taxpayers' money."You have to show that you are looking into such cases step by step," Brok said. "If money is raised and then it is lost in corruption then we have a problem with public opinion for future enlargement of the EU."

 

Will our incomes melt during the drisis?

Trade unions in Bulgaria predict that the cost of life will not rise dramatically during Q4 of the year. A family of four currently needs about 500 leva to support itself, up from 470 leva in September. Massive lay offs will increase the unemployment rate. Families who rely on members working abroad will see their incomes decline. „Foreign countries are also experiencing problems and this will hurt the incomes of Bulgarians working abroad. Some 2 billion euros enter Bulgaria in that way (declared on undeclared),” CITUB director Luyben Tomov told bTV news. Finance experts, on the other hand, claim that the conservative saving methods Bulgarians use will keep their losses smaller compared to those of Americans and West Europeans. According to latest statistics, Bulgarians keep 88% of their money in deposit accounts.„Bulgarians are not poorer than other Europeans. If the banking system stays stable and the currency board is maintained, there will be no danger for people's savings,” says Severin Vertigov, BenchMark Asset Management portfolio manager. Experts also said incomes in Bulgaria rose faster than inflation. Salaries are up by some 20% for the past year.