불가리아 주요 경제뉴스 (5 – 12 DECEMBER 2008 )

BULGARIAN ECONOMIC TOP NEWS DIGEST

WEEKLY REPORT ( 5 – 12 DECEMBER 2008 )

 

 

 

Sections/headline briefs:

 

 

MACROECONOMY:

 

·        Chinese carmakers to manufacture cars in Bulgaria

·        Energy cooperation with Bulgaria

·        Oman interested in the construction of Danube bridge 3

·        Bulgaria, Armenia keen to boost economic relations

·        Government coalition decides to strengthen 2009 budget

·        Of all new member states Bulgaria has the lowest export to EU

·        Brussels tones down criticism against Bulgaria

·        Bulgaria may lose € 3 B in EU funds

·        Bulgarian CB to further ease reserve requirement to 5%

• Sofia water company wants 14.6% increase of prices

·        Monthly income of BGN 1000 is not enough for a credit

·        Bulgarian Chamber of Construction Entrepreneurs selects entrepreneur of the year

·        Bulgarian banks get free access to Bulgarians' credit history

·        The capital of Bulgarian development bank increased by BGN 330 M

• Bulgaria's trade deficit registers slow growth

·        Industrial production decreases, car sales increase

• New car sales fall 20.9% y/y in November
• Analysts: inflation to fall but drag on into 2009

·        Bulgaria to assign € 75 M desulphurisation units project to Italian-Chinese consortium

·        EBRD to lend € 100 M for nuclear waste storage

·        Bulgaria’s insurance market up 24% year-on-year in October

·        Export of the Bulgarian defense sector totals $US 200 M

·        Bulgarians pay lowest personal tax in EU

 

 

INVESTMENTS:

·        ZBS mulls trade projects for € 200 M in Bulgaria

·        Plovdiv wastewater network rehabilitation gets € 14.4 M

·        Energy Holding to invest € 122.7 M in Sofia Heating Utility

·        Vinprom Peshtera opens new plant for € 2.5 M

·        Israeli company to invest € 5 M in medical centre in Varna

·        Plena's investments in Bulgaria are successful

·        Bulgarian-Austrian company to build wind energy park on Northern Black Sea coast

·        Seven investors submit offers for running Kremikovtzi

·        Megapark complex to be ready in two years

 

COMPANIES:

·        Italian Enel acquires 13 wind generators

·        Actavis agrees to sell Razgrad production unit, no divestiture plans for remaining two sites in Bulgaria

• Holding Patishta wins road construction contracts for € 46.4 M
• Lidl, VP Market eyeing entry into Pleven
• Crisis puts off Eurocom, CableTEL merger
• Nokia dealer flees Bulgaria over global financial woes

·        Sisecam auto glass factory in Bulgaria's Turgovishte stops production

·        Cartier opens boutique in Sofia

·        Another 16 Bulgarian companies join Global Contract

·        Carrefour to move in Bulgaria despite crisis

·        BILLA opens its 34th store in Bulgaria

·        Universal GiftCard present enters Bulgarian market

 

GLOBAL FINANCIAL CRISIS ANALYSIS AND NEWS:

·        Merrill Lynch warns crisis will feed through in Bulgaria

·        Debate on Bulgaria eloping with the euro continues

·        Petar Dimitrov: Introduction of the Euro will relieve pressure on currency board

·        Financial crisis to shrink aviation services markets, Sofia Airport CEO Stanchev says

·        It is dangerous to fight for market share

·        Crisis and how the state can help

·        EBRD official: Crisis may prod eastern Europe companies invest more in energy efficiency

·        Crisis to hit tourism sector around April 2009: Tourism agency chief

·        Bulgaria tourism expects additional € 50 M revenue in 2011

 

 

Articles:

 

 

MACROECONOMY:

 

Chinese carmakers to manufacture cars in Bulgaria

China's largest manufacturer of sports utility vehicles and pick-up trucks, Great Wall Motor, plans to invest 80 million euro ($102.8 million) in a vehicle assembly plant in Bulgaria, the Bulgarian government said on Tuesday. The plant will be built together with local partners and will create 1,500 jobs, the press office of Bulgarian premier Sergei Stanishev said in a statement after he met with executives from the Chinese company earlier in the day. The project is expected to kick off in early 2009, the statement said. Bulgaria's Litex Motors, part of local diversified holding company Litex Commerce, said earlier this year it was in talks with Great Wall Motor and Chinese truck maker Beiqi Foton Motor to start assembling inexpensive vehicles in Lovech, in northern Bulgaria, and marketing them in the region. Bulgaria, which joined the European Union in 2007, has no automotive production. Great Wall Motor (www.gwm.com.cn) owns more than 20 subsidiaries with over 18,000 employees. Currently it has capacity to produce 400,000 units of vehicles a year and it plans to raise it to 500,000 units by 2010.

Energy cooperation with Bulgaria

Iran’s Deputy Oil Minister for International Affairs Hossein Noqrehkar Shirazi conferred with Bulgarian officials, Iran Daily informed. According to the report of Iran’s Embassy in Sofia, Noqrehkar Shirazi pointed to Iran’s high potentials and called for increasing cooperation between Iran and Bulgaria, IRNA reported.Noqrehkar Shirazi welcomed the Bulgarian companies’ presence in Iran’s energy industry.He called Bulgaria a gateway of energy into other European Union countries and expressed Iran’s readiness to accept Bulgarian’s active participation in Iran’s oil, gas and petrochemicals plans. The deputy oil minister said development of economic ties, especially in the field of energy would be beneficial for both countries.Bulgarian Minister of Economy and Energy Peter Dimitrov called security in supplying energy very important and named Iran as one of the important partners of Bulgaria.

Oman interested in the construction of Danube bridge 3

The government of Oman has decided to participate in a competition for the concession of the construction of a bridge over the Danube near Silistra. This was announced by the mayor of the municipality Ivo Andonov, cited by Radio Shumen.He has received a letter from State investment fund of Oman.It announces that a team of international consultants, hired by Oman team, has presented extremely good data for the strategic location of the bridge.The concession procedure should become active as soon as possible.Silistra mayor Ivo Andonov said that he will seek cooperation from the Bulgarian government in the next days.

Bulgaria, Armenia keen to boost economic relations

Economic relations between Bulgaria and Armenia are lagging behind the active political dialogue between the two countries, Bulgarian President Georgi Parvanov said after welcoming his Armenian counterpart in Sofia.President Serzh Sarkisian has arrived on a two-day official visit that seek to boost trade relations and cooperation between the countries in nuclear energy.Parvanov said that Bulgarian goods are traditionally well accepted on the Armenian market but added that Bulgarian business must provide enough diversity in order to regain lost positions.Mr Sarkisian pointed out that the annual trade between the countries during the last year does not correspond to the abilities or the wishes of Bulgaria and Armenia.

Government coalition decides to strengthen 2009 budget

Meeting here on Friday, the Political Council of the three-party ruling coalition decided to strengthen the buffers in the 2009 national budget while keeping the principal macroeconomic parameters of the bills the way they have been adopted by Parliament on first reading, the Government Information Service said.Leaders Sergei Stanishev of the Bulgarian Socialist Party, Simeon Saxe-Coburg-Gotha of the National Movement for Surge and Stability and Ahmed Dogan of the Movement for Rights and Freedoms and the three parties' political leadership decided that the duration of payment of the cash benefit for pregnancy and child-care at the rate of 90 per cent of the mothers' wage will be increased from nine months to one year, provided that the beneficiaries have been socially insured on this income for at least one year before the confinement, up from six months at present.To maintain the sustainability of macroeconomic positions, consolidated budget expenditures (excluding the contribution to the EU general budget) will not exceed 40 per cent of GDP, and a consolidated fiscal programme surplus will be kept within 3 per cent of GDP with a possibility to reduce that level depending on the development of the economic situation and on budget revenue performance.Maintaining a budget surplus and substantial fiscal reserves makes it possible to react in case of a downturn in economic development, considering the global economic imbalances and the heightened external risks related to the financial volatility of international markets. A number of mechanisms intended to counter the financial and economic crisis are envisaged in the 2009 budget, grouped into three areas: economic activity, market flexibility, and flexibility of the social safety nets. The idea is to boost the economy, to maintain investment activity, and to cushion the possible impacts of the crisis on the enterprise sector.As another budget buffer, ministries will be allowed to use up to 90 per cent of their allocation, down from 93 per cent so far.Public capital expenditures are planned to increase next year by a substantial 21 per cent from 2008 to nearly 5,600 million leva. Of the additional 400 million leva investment package included in the draft budget, 211 million leva will go for national farm subsidies, 94.5 million leva will be spent on modernization of the railway infrastructure, and the balance of 94.5 million leva will go for socially relevant projects.The health insurance contribution rate will be increased from 6 per cent to 8 per cent in 2009. As from January 1, 2009, the State will step in as a sharer in the social insurance contribution to the Pensions Fund by 12 per cent, with the rest of the contribution being paid by employers (10 per cent) and employees (8 per cent).Unemployment benefits will be increased. A percentage of the benefit will be paid for the children in the family of the unemployed person, depending on their number, provided that they attend school, according to the press release.

Of all new member states Bulgaria has the lowest export to EU

According to the Bulgarian politicians, the currency board shields our national currency against the global financial crisis, while the currencies of the other Southeast European countries are gradually becoming weaker against the common European currency, Euro.
According to a survey of Raiffeisen Research, the currencies of the CEE countries have been losing strength against the Euro since the end of August which, however, is not the case with the Bulgarian Lev. The process of devaluation of the CEE currencies started in the summer, and until then they had been growing stronger. It appears that the devaluation of the CEE currencies is connected with the export rates of these countries to the EU - the most active exporters suffer the greatest losses. Bulgaria, which currently has the most stable currency, has the lowest export rate to the EU - 60.6%.

Brussels tones down criticism against Bulgaria

 

The head of the European Commission Enlargement Directorate Michael Leigh significantly toned down Monday his criticism of Bulgaria's poor management of EU money, noting that progress was still possible towards the unblocking of millions of euros of aid to the newcomer."We have been able to note real improvements in the (EU funds') management structure ... including the recruitement of new staff and a tightening of the control mechanisms," Leigh said after talks with Deputy Prime Minister Meglena Plugchieva.He noted that "these improvements will take time to have their effect" but hinted that Bulgaria still had a chance to unblock some 605 million euros of road, regional development and farming funds frozen in July amid concerns of possible fraud and conflicts of interest."We hope very much that in light of the improvements that have been made and building on these improvements it will be possible next year to take some further steps to improve the implementation and go ahead with a number of projects which had been suspended," Leigh said on a much softer note than the recent harshly critical statements by both him and other EU officials.Sofia has already irretrievably lost some 220 million euros of EU funds after Brussels refused to lift a suspension of payment imposed in July because of concerns about Bulgaria's ability to manage the money correctly, with the deadline to use it expiring on November 30.Brussels has also threatened to cut more of the frozen aid, as well as some of the 11 billion euros in funds earmarked to be handed to Bulgaria by 2013. In a last particularly scorching report to the Commission on Bulgaria's progress, Leigh's directorate pinpointed significant deficiencies in the functioning of two contracting agencies, unclear control and non-respect of the principles of transparency and accountability of funds.Bulgaria's government, dumbfounded by the money cut and Brussels' sharp-edged tone, lashed back that it was not receiving equal treatment from the Commission.But Sofia and Brussels appeared to have restored polite dialogue Monday, with Leigh praising "the appreciation of the European Commission of the government's committment to strengthen the controls on the implementation of EU pre-accession funds in Bulgaria."

 

Bulgaria may lose € 3 B in EU funds

Without any explanations or motives, Brussels may decide to block the three billion euro aid, which Bulgaria is to receive from the EU structural and cohesion funds in 2007-2009. The direct subsidies for the Bulgarian farmers are the only aid that cannot be frozen for the time being. The issue will be discussed at a sitting of Bulgaria's tripartite ruling coalition, in January, when structural and personal reshuffles in the Cabinet may also be discussed.The coalition partners - Bulgarian Socialist Party, National Movement for Stability and Progress (NMS) and the Movement for Rights and Freedoms - said that one of the reasons for the cutoff was strictly financial: there is not enough money in the EU funds, because of the global financial crisis.The second reason, to their words, was political - the difficulties, which EU newcomers Bulgaria and Romania are facing will discourage other European countries from applying for membership in the near future.

Bulgarian CB to further ease reserve requirement to 5%

Bulgarian central bank plans to further ease the reserve requirement to 5% as of January 1, reaching the lowest level of minimal compulsory reserves since the introduction of the currency board arrangement, said central bank governor Ivan Iskrov. Iskrov added that the minimal compulsory reserves will not be imposed on the money attracted by banks from municipalities and the central government. Central bank has already cut the reserve requirement to 10% from 12% in a bid to untie some BGN 1.1 billion of attracted resources given the current level. The decision took effect on December 1. The amendment is brought about as a result of the accomplishment of the targeted aim of last year's increase in MRR from 8% to 12%, namely the cooling down of the loan portfolio expansion, has stated central bank. Meanwhile, Iskrov stated that local banks' profit is seen at BGN 1.5 billion in 2008, up by 30% on the year. Moreover, he asked local banks' not to capitalize their 2008 profit and not to disburse dividend. Iskrov also said that the central bank may also raise the share of Tier 1 capital to a bottom 10%.

Sofia water company wants 14.6% increase of prices

The Sofia water company, Sofiyska Voda AD, has asked the water regulator to approve a 14.6 per cent increase of water prices to 1.40 leva/cu m after VAT as of January 1. The Energy and Water Regulatory Commission discussed the proposed increase on Monday and said it is ready to grant the request. Sofiyska Voda chief secretary Ivan Ivanov told the press that the increase is vital for the company's ability to implement its investment plan, as well as for the absorption of a ISPA loan for improving the water infrastructure in Sofia. Ivanov said that the company's price rate for the period until 2013 envisages annual adjustments by 10-15 per cent. The regulator's decision on the proposed price increase is due next week. Saying that they are willing to approve the requested price increase so as not to thwart the ISPA project, regulator chairman Prof. Konstantin Shoushoulov said that they had received letters from the Ministries of Finance and of Environment and Water, explaining the connection between the new price of water in Sofia and the ISPA loan. The ISPA loan is conditional on the price increase set out in the Sofiyska Voda business plan.In the next five years, the water company plans to invest a total of 240 million leva and a large part of that is to be financed with the receipts for water supply and sewerage services, Ivanov said. Some 50 million leva of that is to be invested in 2009 - half of it from the receipts for water supply and half from a EBRD loan contracted in the last minute before the financial crunch at very good terms, said Ivanov. Much of the investment will be aimed to reduce water losses by replacing water mains and zoning the network in a bid to make sure that the worst zones are addressed with priority. Water losses are set to shrink by 15 per cent over the next five years. The investment programme also includes construction of more than 60 km of sewers and tanks to improve drainage in several of Sofia's residential districts. Commenting an ongoing dispute with the Sofia City Hall over what they see as failure by Sofiyska Voda to honours its commitments under its concession agreement for the Sofia water supply in sewerage, Ivanov said that their non-performance has resulted from a non-performance by the City Hall. The City Hall's claims are currently being reviewed by an independent expert. The dispute will hopefully be resolved by an agreement before the end of January next year to avoid taking the matter to arbitration, Ivanov said.

Monthly income of BGN 1000 is not enough for a credit

 

According to CreditCenter statistics in November no loans were approved for persons with a monthly income lower than BGN 750, the 24 chasa Daily informed. Half of the clients who were granted loans had incomes of BGN 2500. Criteria for the remaining income available to customers has increased from BGN 80 per family member to BGN 120 – 140. Bankers and credit consultants advise customers to spend on the loan no more than 40% of the monthly income. We continue granting consumer loans and mortgage loans but not in the same amounts as before, DSK’s violina Marinova explained. According to UniCredit Bulbank CEO Levon Hampartsumyan his bank is still approving household loans but at a lower scale. The time banks competed in granting loans is now gone and will not return in the following 10 years, Hampartsumyan added. For loyal customers it will not be hard to receive a loan, First Investment Bank Executive Director Maya Georgieva said. Alpha Bank stimulates depositors with prizes “Alpha money premium” of Alpha Bank Bulgaria stimulates its depositors and is attracting new ones with 10 prizes of BGN 10 000 each, the Klasa Daily informs. New customers have the chance to make deposits no later than January 31st 2009. Physical persons holding one or more savings accounts denominated in BGN or EUR will receive the chance to compete for the prize. BNB stimulates banks with another BGN 800 million. Things are definitely not looking good with additional reserves being made available for banks, which seem to be struggling with overcoming the troubles, the Klasa Daily analyzes. This year wasn’t that tough on Bulgarian banks with the crisis starting September – October. Next year doesn’t seem to be that promising and how many of the now profitable institutions will hold on to the good results is yet to be clarified.

 

 

 

 

 

 

 

 

 

Bulgarian Chamber of Construction Entrepreneurs selects entrepreneur of the year

The executive director of the investment company "Green Life" Nikolay Pehlivanov was selected as The Entrepreneur of the Year by the members of the Bulgarian Chamber of Construction Entrepreneurs.The Chamber bestows the awards for the third consecutive year.Pehlivanov received the award for his overall influence on the construction sector in Bulgaria and his company's impressive success in the conditions of the global financial crisis.Pehlivanov established the "Green Life" company in 2003 to invest in construction in Bulgarian beach and ski resorts. The company offers Bulgarian vacation properties to individuals and businesses from the UK, Ireland, Russia, Spain and the Scandinavian countries.Two of "Green Life's" newest projects - "Еvridika Hills" in the winter resort Pamporovo and "Paradise View" in the beach resort Sozopol recently won respectively the silver and bronze price in the Best Development Bulgaria category of the contest organized by the prestigious British publication Homes Overseas. In 2007 Home Overseas awarded "Green Life's" project "Paradise Bay" in Sozopol with the gold prize.Homes Overseas has been on the market for over 40 years and is one of the most influential British magazines advising Brits about the best ways to invest all over the world.The annual Homes Overseas Awards are bestowed to the best construction projects and to leading companies in the areas of real estate sales and marketing. Each project is personally visited by a judge in order to determine the best entrepreneur and the best residential properties that would be the most profitable for the British.The Bulgarian Chamber of Construction Entrepreneurs awarded Radostina Markova from the daily "Pari" (Money) as the best reporter of Bulgaria's entrepreneurs and investors.

Bulgarian banks get free access to Bulgarians' credit history

Very soon banks in Bulgaria will be granted free access to the credit history of each Bulgarian citizen. They will know whether you have borrowed from other banks or bought on leasing when you apply for a credit. They will even know if you have availed yourself of the quick loans offered by crediting companies at technology stores. To this end, all contracts for loans and leasing will enter the Central Credit Register of the Bulgarian National Bank (BNB). All above is only part of the changes embedded in the latest draft of the Credit Institutions Act. It was experts from BNB that created the document, which Bulgaria's Minister of Finance Plamen Oresharski is to soon submit to the Council of Ministers for discussion. Access to BNB's Central Credit Register will be available to every Bulgarian bank, leasing enterprise or other credit institution. In other words, credit institutions will be practically aware of every credit move you make. So if you have drawn a credit or bought goods on leasing and managed to settle your scores on time, you will have easy time getting another loan from the same credit institution. The good news is that one of the changes stipulates that all loaning companies have register with the BNB.

 

 

 

The capital of Bulgarian development bank increased by BGN 330 M

The capital of the Bulgarian development bank will be increased by 330 million levs, the cabinet decided. Its increase is one of the measures of the government against the effect of the world financial crisis on the real sector. This is the second increase of the bank's capital. on November 4 2008 the Ministerial council decided that it is to be increased by 100 million levs.Different schemes and scenarios will be developed for aid of entrepreneurs, including an increase of the export potential and competitiveness. As a priority financial instrument, "Bulgarian development bank" will use credit lines offered by commercial banks, which will give credit to small and medium companies in more favorable conditions.The capital of the bank might be increased indefinitely through a decision of the general assembly of shareholders, as the shares of the state, for the amount no less than 51% of the registered to the moment capital, are untransferable.It is possible that owners of shares are the Development bank in the Council of Europe, the European investment bank, the European investment fund, development banks from EU member states.

Bulgaria's trade deficit registers slow growth

Bulgaria's trade deficit for the first nine months of 2008 reached 14,45 billion levs (1euro=1.95levs), which is an increase of 29% compared to the same period of 2007, shows the data of the National Statistical Institute (NSI).In the third trimester of 2008 alone, the trade deficit totaled 4.83 billion levs which is a decrease of 13,3% compared to second trimester - April-June. The annual pace of trade deficit growth continues slowing down - in August it was 31%, in July - 37%. Bulgaria's export (FOB price) increased by 21,7% to reach 23,4 billion levs, while import (CIF price) for the first nine months of 2008 reached 37,85 billion levs, which is an increase of 24,4 per annum.

Industrial production decreases, car sales increase

According to preliminary data in October 2008 the general industrial production is 0,6 per cent bigger compared to September. The general index of industrial production is defined to a great extent by the index of the processing industry, which in October 2008 increases by 0,1 per cent compared to the index for September.On a yearly basis, however, industrial production decreases by 1,9 per cent.The production of tobacco products has increased by 29,7 per cent, while in the printing and publishing industry and the reproduction of recorded media the increase is 14,6 per cent.Income from the sale of cars in October 2008 increases by 1,1 per cent compared to October last year, the National Statistics Institute announces.A 4,4 per cent increase is reported in the trade of automobiles, fuels and repairs, a result mainly of the increase of trade of automobiles and motorcycles - 8,7 per cent. The increase of income from retail sale is 2,8 per cent.

 

 

 

 

 

 

 

New car sales fall 20.9% y/y in November

The number of new cars sold on the local market by the members of the association of automobile importers plunged by 20.9% y/y and 17% m/m in November. In Jan-Nov, the sales increased by 11.9% y/y to 53,716 slowing from 16% y/y in Jan-Oct and 22% last year. The growth of the passenger car segment decelerated to 10.3% y/y (49,811 units sold) during the period from 14% y/y in Jan-Oct. Opel retained its leading position on this segment with a market share of 10.1%, followed by Toyota with 9.7%, and Volkswagen (8.9%). A total of 3,905 buses and trucks were sold in Jan-Nov, up by 37% y/y but slowing from 57.9% y/y in Jan-Oct. The market leader in the truck sector continues to be Mercedes with share of 34.9%.

 

Analysts: inflation to fall but drag on into 2009

While the eurozone may be faced with deflation, Bulgaria is most likely to avert falling prices that would threaten new layoffs as empoyers struggle to sell stockpiles of produce, analysts told Dnevnik daily. All eyes are set on the National Statistical Institute due to release Friday November’s consumer price data tracking inflation in the first month the Government owned up to the crisis having rolled over. The Finance Ministry sees the inflation rate falling to 5.7% next year but macroeconomists decline to make any forecasts. The Bulgarian economy will grow in 2009 although recession is expected to procrastinate in the eurozone because the country offers multiple business opportunities and will keep its appeal as an investment destination as the crisis is expected to roil the world, forecast Lachezar Bogdanov, macroeconomist at local think-tank Industry Watch. Bulgaria may slip into recession after possible negative growth in the first two quarters of 2009, according to Georgi Ganev of the Centre for Liberal Stratgies. The consumer prices index is unlikely to drop with the higher cigarette excise duties due to come into force next year, Ganev said. Inflation will be fuelled in the long-term by brisker economic growth than in Old Europe and rising wages. The biggest exporting industries saw output and sales slide in October and will target smaller sales and costs putting wage growth on hold for some time, forecast Desislava Nikolova, macroeconomist with Raiffaisenbank.

Bulgaria to assign € 75 M desulphurisation units project to Italian-Chinese consortium

 

Bulgaria will assign on Friday a 75 million euro ($98.7 million) project for the installation of two desulphurisation units at the country's largest coal-fired power plant Maritsa East 2 to an Italian-Chinese consortium, the Environment Ministry said. The project is co-financed by the European Union through its ISPA pre-accession programme, a ministry spokeswoman told SeeNews. Maritsa East 2 said last month it has picked a consortium between industrial technology company Idreco and Chinese hi-tech firm Insigma Technology to build desulphurisation units at its block 5 and 6. The European Union, under its ISPA pre-accession programme, will grant 36.165 million euro and the European Bank for Reconstruction and Development will lend 34 million euro to the project, which will be co-financed by the plant with own funds, plant's press relations officer Mirela Bliznakova told SeeNews then. The Idreco-Insigma consortium outbid Poland's Rafako and Italy's Alstom Power. Alstom lodged a complaint with Bulgaria's competition watchdog against the plant's decision asking the regulator to halt the public procurement procedure, pending a review of its lawfulness. "The appeal procedure has already been completed and now the deal could be signed," the spokeswoman said.

EBRD to lend € 100 M for nuclear waste storage

The European Bank for Reconstruction and Development (EBRD) will lend EUR 100mn for the construction of a nuclear waste storage facility. The information is unveiled by Boris Pekov, CEO of the state company responsible for the storage of radioactive wastes. The total investment in the project is estimated in the range of EUR 600mn to EUR 700mn. According to the strategy adopted by the previous cabinet, the facility should be ready by 2015. It will be located at the site of the nuclear power plant in Kozloduy.

Bulgaria’s insurance market up 24% year-on-year in October

The Bulgarian insurance market rose by almost a quarter in the ten months through October, compared to the same period of 2007, data released by the Financial Supervision Commission showed.General insurance premiums topped 1.17 billion leva, and premiums in the life insurance segment exceeded 220 million leva. General insurers paid out almost 500 million leva in claims, of which more than 86 per cent went out to motor insurance policies. Premiums there generated 70 per cent of the sector’s total income.Payments on motor third-party liability insurance gained more than 40 per cent from the ten months of last year as premiums grew 38 per cent.Premiums posted more than double gains on sickness, legal cost and railway vehicles covers.Bulstrad cemented its place at top of the market in terms of premium revenue with a 16 per cent market share, followed by DZI with 13 per cent and Allianz Bulgaria with 11.6 per cent of the market.Bulstrad and DZI were first and second also by paid claims, where BulIns ousted Allianz Bulgaria from the third spot.

Export of the Bulgarian defense sector totals $US 200 M

Export of the Bulgarian defense sector totals 200 million dollars, Prof. Stefan Vodenicharov, co-chair of the Bulgarian Defense Industry Association announced. The entire output amounts to 400 million levs (1 euro = 1.95 levs). Ninety-six percent of it is meant for export. "We send most of our produce to the countries of the Middle East and Central Asia. For now there are no indications that the crisis is affecting their military budgets, so I don't expect a slump in orders", Prof. Vodenicharov added. Producers do not plan downsizing - the number of workers in the sector will stand at over 20,000. "But we would introduce more flexible working hours as a preventive measure in case the crisis deepens," Cherno More PLC Director Petar Milkov said.

 

 

 

 

Bulgarians pay lowest personal tax in EU

The Bulgarians pay one of the lowest personal income taxes in Europe, according to KPMG's Individual Income Tax Rate Survey 2008. The KPMG report places Bulgaria on the second place among the countries with the biggest cuts in individuals' income taxes. This is the first cross-border survey with historical data from 2003 to 2008 which looks at how people have been taxed in different parts of the world, and how different governments approach the difficult task of raising funds for necessary public services without the losing support of their citizens.Covering 87 countries, the report concentrates on the highest level of personal tax payable to the central government. Of the 87 countries surveyed, 33 have cut their rates in the past six years and only seven have a higher top rate in 2008 than they did in 2003.The picture that emerges is of a slow global decline in top rate personal income taxes, from an average of 31.3 per cent in 2003 to 28.8 per cent in 2008, says a commentary in the report. The highest personal income taxes in the world are paid by citizens of the European Union. But it is here where the steepest falls in average tax rates, from 41.5 per cent in 2003 to 36.4 per cent in 2008, have been seen. The report describes as the most significant new development in 2003 to 2008 the introduction of flat rate taxes in Europe, often introduced at a much lower level than the highest variable rate. So far, it has been mainly Eastern European states that have taken this step, notably Estonia, where rates have fallen from 26 per cent in 2003 to a flat 21 per cent in 2008, Slovakia which has gone from 38 per cent to 19 per cent, Lithuania, which in 2007 fell 6 points to 27 per cent and this year a further 3 points to 24 per cent, and Romania where rates have gone from 40 per cent to 16 per cent. In 2007 this was the lowest rate in the EU. But Romania has since been overtaken by the Czech Republic which this year introduced a flat rate tax set at 15 per cent, an by Bulgaria whose new flat rate of 10 per cent gives it the lowest personal tax rate of the 27 EU member states. The effects from the rate cut in Bulgaria are partly compensated by the higher maximum social insurance income and the increased insurance burden to persons. Nevertheless, Bulgaria is among the top countries where it is possible to post one of the highest net incomes (on an annual base of 100,000 U.S. dollars) where it is preceded by only OPEC member states such as Kuwait, Saudi Arabia, etc., says the report. Kalin Hadjidimov, a partner in KPMG Bulgaria, says that the reduction of personal income taxes will hardly prove a leading factor in investment decision-making but will surely have an impact. He noted that there has been growing interest among foreign individuals to obtain Bulgarian residence for tax purposes which is a sure indicator of this country's attractiveness in terms of personal taxation.

 

 

 

 

 

INVESTMENTS:

 

 

ZBS mulls trade projects for € 200 M in Bulgaria

 

The British-Bulgarian ZBS plans to build trade centres in the country for a total of EUR 200mn. The company has already acquired land plots in the southern district centres of Pazardzhik and Haskovo. ZBS recently presented a EUR 30mn project for open air mall in the southern Black Sea city of Burgas . The company will finance 65% of the investments with bank loans and part of them is already contracted. ZBS is negotiating with a local company to take over the management.

 

Plovdiv wastewater network rehabilitation gets € 14.4 M

About 14.45 million euro will be invested in the replacement of more than 20km of pipes and the reconstruction of the old Plovdiv wastewater treatment plant, Stroitelstvo Gradut weekly reported on December 8.The bulk of the financing, 11.4 million euro of it, will come from a loan extended by the European Bank for Reconstruction and Development (EBRD). A further 2.5 million euro will be supplied by the Plovdiv wastewater company and 300 000 euro from a joint-programme by the EBRD and the Ministry of Regional Development.The money will have to be spent on the thorough rehabilitation of 11km of the water supply network of Plovdiv and reconstruction of the roads and tarmacs above the network itself following the excavation, Stroitelstvo Gradut said. Additionally, a new parallel outflowing pipe from the pumping station in the northern part of the city and the reconstruction of the waterwaste disposal and management station.Some of the money raised for the major face-lift will not be restricted only to the water sector, but will be allocated to the refurbishment of some of Plovdiv's oldest and most decrepit streets. The company picked for the construction works is the local firm Dragiev&Co. The company was selected after winning an international tender. The company responsible for the overall supervision and quality control is the Bulgarian company Mott MacDonald.

Energy Holding to invest € 122.7 M in Sofia Heating Utility

 

Bulgarian Energy Holding (BEH) plans to invest BGN 240mn (EUR 122.7mn) in the heating utility in the capital city of Sofia after receiving BGN 400mn state aid in the form of a capital hike. BEH also will repay the whole debt of the heating company to state natural gas supplier Bulgargaz to get direct equity control and will thus improve the weak liquidity ratios of Bulgargaz stemming from price distortions. The transfers from the state to BEH, Bulgargaz and the heating utility of Sofia are booked in a way designed to meet the EU regulations on state aids but the government is likely to face significant sanctions from the European Commission due to cross-sector transfers that will distort the energy market. BEH was set up three months ago succeeding the company registration of Bulgargaz Holding with equity capital of BGN 1.9bn. It holds full stakes in natural gas supplier Bulgargaz, natural gas transmission utility Bulgartransgaz, and telecom arm Bulgartel. The government’s full stakes in several big energy companies (National Electricity Company, nuclear power plant in Kozloduy, thermo-power plant Maritsa East II, and coalmine Maritsa East) are deposited as in-kind contributions to the share capital of BEH.

Vinprom Peshtera opens new plant for € 2.5 M

 

Vinprom Peshtera, Bulgarian producer of wine, has realised projects for over BGN 76 million in the last years, Ivan Papazov, executive director of the company, commented for Pari daily. The leading principle of the plant is to re-invest in the business. Despite the crisis, the company invested EUR 2.5 million in a new plant and opened another 100 working positions. It will open new local and foreign markets.

Israeli company to invest € 5 M in medical centre in Varna

 

Israeli company Electra Investment will invest 5 million euro in a state-of-the-art medical centre in the marine city, Israel's Honorary Consul to Varna Prof. Krassimir Metodiev said Tuesday.The centre will be located on an area of 2,500 sq m in a business building, which the Israeli company will construct in the city's centre. According to Metodiev, the construction will start in the beginning of 2009 and will be ready after 18 to 24 months. It will also include a hospital unit with 10 rooms. The complex will have a modern iris diagnostics sector.The medical centre will include also day surgery, modern clinical laboratory, dental medicine sector among others, Metodiev added.The investors plan the centre to serve both citizens of Varna and patients from abroad.

Plena's investments in Bulgaria are successful

 

Plena Group, founded in 1980, made the first investment in Bulgaria with Ytong Bulgaria and continued with Ogniyanovo-K AD, which is one of the leading limestone manufacturers nowadays. The company is successful due to the developing construction and metallurgical industries and good knowledge of the market. Bulgaria has qualified workforce and attractive corporative tax policy, the owner of the company John Sjoberg said for Pari daily.

 

Bulgarian-Austrian company to build wind energy park on Northern Black Sea coast

 

The Bulgarian-Austrian consortium "Wind Energy" presented on Thursday a project for the construction of a wind energy park near the northern Black Sea town of Shabla.The news was announced by the Shabla City Hall press center. The project was presented before the Shabla mayor, his team and the local municipal councilmen.The project to build 125 wind generators fully complies with European standards. The total investment amount is estimated at EUR 300 M. The investors are further prepared to build on their own expense an energy distribution center in order to include the wind park in the country's energy distribution system.During the presentation, representatives of the joined stock company, including two Bulgarian and two Austrian companies, explained that the consortium would be registered with the local Court in Shabla, meaning their taxes would go into the municipality's budget.The investors would offer other assistance to the municipality for the realization of different local projects and activities. They would also use only local businesses and employ local workers.

 

Seven investors submit offers for running Kremikovtzi

 

Bulgaria's Economy Ministry has received seven offers with bids for the purchase or the operation of the troubled steel-maker Kremikovtzi, the Trud Daily reported Thursday. The paper points out that the most serious bidder is the Ukrainian company Smart Group which offers an emergency plan for saving the factory, and a longer-term recovery program by restructuring and acquisition of new assets. It is expected to present its demands about Bulgarian state guarantees for Kremikovtzi within several days.The Czech company ML Moran offers to finance Kremikovtzi enabling the plant to buy raw materials, and manufacture and sell its production. The bulk of the revenue, however, would go to the creditor so the main advantage of this plan would be to keep the factory running.Each of two other foreign companies - the Russian Prominvest, and an unnamed Italian company - are offering to provide raw materials, and working capital for Kremikovtzi in exchange for guarantees by the Bulgarian state.The former owner of the steel mill Valentin Zahariev, who sold the plant to the Indian tycoon Pramod Mittal in 2005, has offered to run the plant after setting up a new firm for the purpose. In the event of liquidation of the factory, however, he is asking to be allowed to buy out the assets on sale.The Bulgarian metal wastes trader Econmetal Engineering, whose facilities are located nearby Kremikovtzi, is offering to provide 60 000 tons of raw materials for the steel-maker in exchange for being allowed to realize the manufactured products on the market after that. A group of bond holders is offering the factory a credit of EUR 345 M in exchange for Bulgarian state securities with a redemption date in 2013.

Megapark complex to be ready in two years

 

Megapark complex is the newest project of Soravia Group Austrian company and will be built on Tzarigradsko shosse in Sofia in two years. It will offer over 50,000 sq. m office spaces for rent from the type flexible open space fitting the needs of leaseholders, 3,500 commercial areas, over 1,000 parking lots as well as a three-star business hotel with 220 rooms. The project is of Brunner/A&GP International architectural bureau from Vienna and is financed by Bank of Austria.

 

 

 

 

 

 

 

 

 

 

 

 

COMPANIES:

 

Italian Enel acquires 13 wind generators

Enel Green Power Bulgaria, the local subsidiary of Italy 's energy company Enel, has acquired full control of 13 wind generators of a total installed capacity of 39 MW located at the Black Sea Coast near to Shabla and Kamen Bryag, the company said.The Competition Protection Commission has approved the transaction between Enel Green Power Bulgaria and Global Wind Power Bulgaria, a subsidiary of Danish Global Wind Power for acquiring the wind capacities.The transaction is expected to be finalized by end-2008, and the turbines to start operation in the beginning of 2009, Enel said.Enel's Regional Manager for Bulgaria John Clark said that this acquisition is an evidence of the commitment of the Italian company to the production of energy from renewable energy sources and the development of this business in Bulgaria.Despite the current difficulties on the global financial markets, Enel is still willing to implement its development strategy to achieve a balanced energy mix of its portfolio in Bulgaria, Clark added.The company is the majority holder of Enel Maritsa East 3 thermal power plant, which is operating in compliance with the European environmental standards. The company has also signed agreements for the development of projects in the field of renewable energy sources with the municipalities of Gourkovo and Sevlievo (Central Bulgaria).

Actavis agrees to sell Razgrad production unit, no divestiture plans for remaining two sites in Bulgaria

 

Iceland-based generic drug maker Actavis said on Monday it has agreed to sell one of its three manufacturing units in Bulgaria for an undisclosed sum.Actavis has signed a letter of intent to sell its manufacturing subsidiary Balkanpharma-Razgrad to Antibiotic-Razgrad, a company set up by the representatives of current management at the plant in Razgrad, northeastern Bulgaria, Actavis said in a statement."Actavis will simultaneously, on closing, enter into a contract manufacturing agreement with the new company so that Actavis can continue to have security of supply for its current portfolio of products manufactured by the plant," the statement said.The deal, subjects to regulatory approval, is expected to be closed within the next two months, Actavis said. The Razgrad plant, producing antibiotics, is the smallest of three Actavis manufacturing sites in Bulgaria.Actavis has no plans to divest its Bulgarian manufacturing sites at Dupnitsa, and Troian, which are of strategic importance for the Actavis operation, the Icelandic company said. Last month the Sofia-based Capital weekly reported that Actavis was preparing to sell its Bulgarian drug distributor Higia, the third largest in the Black Sea country. Actavis, operating in some 40 countries, has a staff of some 11,000. It has development and manufacturing facilities in Europe, the U.S. and Asia.

 

 

 

 

 

 

 

Holding Patishta wins road construction contracts for € 46.4 M

 

Subsidiaries of Bulgaria ’s largest road construction entity Holding Patishta have won contracts for building two road sections, Burgas-Elhovo and Kiustendil-Dupnitsa, for a total of EUR 46.4mn. Both projects should be completed in 24 months. The projects are financed by the state budget and the European Investment Bank. Holding Patishta is specialised in road, railroad, bridge, and underground construction. It comprises 20 road construction companies. Holding Patishta projects revenues in the tune of BGN 202.2mn (EUR 103.4mn) this year, which will represent a 33.3% increase to the consolidated revenues last year. The net profit is expected at BGN 37.4mn.

 

Lidl, VP Market eyeing entry into Pleven

Germany's hypermarket giant Lidl and Lithuanian discounter chain VP Market plan to set foot in the northern town of Pleven in 2009, the municipal authorities said. Lidl has purchased two land plots in a bid to build a wide network of at least 15 stores on the Bulgarian market by 2010. VP Market will add three stores in Pleven to the 27 it already has throughout the country. German retailers Kaufland and Billa as well as local company Rocco Barocco also have stores in Pleven.

Crisis puts off Eurocom, CableTEL merger

Eurocom Cable and CableTEL, the nation's two biggest cable operators, have postponed by an indefinite period their planned merger soothing fears of a monopoly on the Bulgarian paid TV segment. Capital weekly reported that the deal has been cancelled for financal reasons after the buyer, U.S. investment fund Warburg Pincus Private Equity, failed to secure the fundng. Although no official price tag has been announced yet, the deal is reportedly worth no less than EUR 100 million. Petyo Staykov, Eurocom management board chairman, confirmed the delay of the merger but denied that it had been cancelled and said talks will resume next year. CableTEL executive director Dimitar Radev said the deal is unlikely to be wrapped up by the end of the year due to the global financial deterioration but the two parties have not shelved their plans. The merger of Cable and CableTEL got the green light of the regulator in early October after a two-month anti-trust probe. Staykov said back then that the deal would earn the two companies a quarter of the Bulgarian paid TV segment but was tight-lipped about financial parameters.

Nokia dealer flees Bulgaria over global financial woes

Greek Alpha Copy, the authorised Nokia distributor for the market, is pulling out of Bulgaria under the weight of the worldwide financial fallout, reported Greek business newspaper Imerisia.The publication quoted as saying Alpha Copy’s Southeast Europe manager, Greig Williams, and the company’s president, Stavros Konstantinidis. The shake-up is aimed at cutting operating costs in response to partners’ requirements. Alpha Copy operates in Bulgaria via its local subsidiary, Alpha Copy Bulgaria, Nokia’s first authorized dealer for the market. Later on the Finnish tech giant picked Total Telecom to be its second official distributor. None of the two companies was available for comment until Dnevnik went to print. Velizar Sokolov, manager of Arsis Consulting, the Finnish firm’s local law partner, said it has not received an official statement about a forthcoming restructure of distribution channels. Market insiders said on condition of anonymity they were surprised by the move given Nokia’s robust sales on the market and Alpha Copy’s recent job announcements.Unofficial reports claim Alpha Copy supplies handsets to Globul, Germanos, 2be and Vivatel, and Total Telekom works with Mobiltel and M World.

Sisecam auto glass factory in Bulgaria's Turgovishte stops production

 

Sisecam's automotive glass factory in Bulgaria's Turgovishte - Trakiya Otocam - stopped its production over the decreased demand in Europe caused by the effects of the financial crisis.The news was by the factory leader of the Podkrepa Labor Confederation Yuksel Yumerov as quoted by the Pari Daily.The Turkish glass producer Sisecam has four factories in the northeast Bulgarian city of Turgovishte. Yumerov explained none of these was threatened by closure even though the company had already closed three of its plants in Turkey over the consequences of the global financial crisis.The unionist is also quoted as saying Sisecam Bulgaria was not planning to lay off any workers. The company management, however, could reduce the working time, relocate workers to some of its other plants in Turgovishte, or ask workers to take an unpaid leave.The Sisecam factories in Turgovishte are the largest investment abroad of the Turkish glass producer, and one of the largest green field investments in Bulgaria since 1989.

Cartier opens boutique in Sofia

 

Renowned French jeweller and watchmaker Cartier has opened a store in the heart of the Bulgarian capital. The boutique in Sofia was designed in the standards of the rest Cartier stores around the world. The two-storey structure was designed by prominent architect Bruno Moinard, the man responsible for a number of Cartier boutiques worldwide. Sofia's Cartier is in the style of the so-called bronze concept of Moinard. "The display cases as well as the tables where the client meets with the jewellery are made of bronze, a material favoured by Cartier, so that I called the idea of the interior bronze," Moinard tells the "Dnevnik" daily. "The aim was to create a precious small universe embodying in the best possible way the notion of Haute Joaillerie, or high jewellery," says the architect. Moinard works on various other projects, among which auction halls for Christie's in New York, the Roland Garros museum of tennis, and the still ongoing restructuring of the Chateau Latour wine estate in Pauillac, France.

Another 16 Bulgarian companies join Global Contract

 

Bulgarian network of Global Contract, an international initiative of UN for encouraging social responsibility among private business, increased its number by another 16 companies. Their certificates were handed personally by the UN coordinator in the country Henry Jacklin. Thus, the total number of Bulgarian members exceeds 130. The membership is free and the only requirement for the companies is to make the reports of their activity public. Global Contract unites over 5,000 companies and NGOs in more than 80 countries.

 

 

Carrefour to move in Bulgaria despite crisis

France's Carrefour, Europe's biggest retailer, has not given up on the planned rapid expansion in Bulgaria in spite of the global economic slump, said sources close to the company. The chain has inked a contract to open a 10,000 sq m outlet in Ruse’s Grand Plaza shopping mall, which should be finished in 2010. Carrefour has been prepping for Bulgarian entry for a couple of years now planning to debut in 2009 and build a 30-strong network of supermarkets and hypermarkets over the next five years. on November 18 Carrefour sacked CEO Jose-Luis Duran over tepid sales and said it will focus on emerging economies expansion. Carrefour sold a retail centre under construction on Sofia’s eastbound Tsarigradsko Shose boulevard to Greek fund Assos Capital to follow up with a Bourgas shopping mall unloaded to Gort Holdings and Bridgecorp. The chain will own Carrefour supermarkets in both complexes. Carrefour, which has almost 15,000 hypermarkets and supermarkets in 30 countries worldwide, reported over EUR 82 billion in sales for 2007.

BILLA opens its 34th store in Bulgaria

 

The German-owned supermarket chain BILLA opened Thursday its thirty-fourth store in Bulgaria's in the southeast town of Svilengrad. This is fifth store that BILLA opens in Bulgaria in 2008. The ribbon was cut by the CEO of BILLA Bulgaria Emil Stefanov and the Deputy Mayor of Svilengrad Mariya Kostadinova. The total area of the new store is 1 338 square meters. It has a parking lot with fifty spots, and employs 42 people.

 

Universal GiftCard present enters Bulgarian market

 

For the first time in Bulgaria, a universal GiftCard would be available for those who wish to make an appropriate and impressive present to their friends, relatives and co-workers. The new product, introduced on Thursday, just in time for the Holidays, includes 20 different designs for various occasions. The card can be charged with amounts anywhere between BGN 10 and 500.The GiftCard package includes a blank greeting card and a festive envelope for the gift giver to personalize.The new cards can be ordered on the website www.giftcard.bg from Bulgaria and abroad.The card can be used in all stores in the country accepting Master Card or in commercial chains whose logo is preprinted on the GiftCard - the Private Label GiftCard.GiftCards can be used only inside the country and expire two years after their date of issue. They are serviced without taxes and commission up to 6 months after being purchased. The card can be used multiple times until its limit is reached."The GiftCard as a present is something new to the Bulgarian market. It is not a voucher for your neighborhood store, it is a true gift, with its own style and message. It would be very suitable for the busy person, and can help avoid purchasing useless items or several identical gifts for one person. GiftCard is the prefect present for every recipient and occasion," Mina Kraicheva, Executive Director of GiftCard explained at the special event organized in Sofia on Thursday for the official launching of the new product.

 

 

GLOBAL FINANCIAL CRISIS ANALYSIS AND NEWS:

 

Merrill Lynch warns crisis will feed through in Bulgaria

The young east European economies are the most vulnerable to the aftermath of the global financial crisis of all emerging markets due to wide current account gaps, according to Merrill Lynch. In a bid to avert the repercussions of the worst financial crisis in decades which triggered an almost USD 1 trillion (EUR 777bn) loss to the banking system, investors are fleeing emerging markets forcing Ukraine and Hungary, where the impact was most severe, to seek help from the International Monetary Fund against liquidity shortage. Latvia will be the next in the line to knock at the IMFs door with Fitch saying it is tipped to plea for no less than EUR 5 billion (USD 6bn). The Romanian government has not yet said whether it would go to the global financial institutions, while Bulgaria and Lithuania have rejected any possibility to resort to the fund.Michal Dybula, chief economist with BNP Paribas, has also pointed to the big current account deficit as a major threat before the Bulgarian economy together with the hard access to funding for east European banks. Most Bulgarian economists, however, are conservative about the impact of the global economic crisis.Lachezar Bogdanov, macroeconomist with local think-thank Industry Watch, said Bulgaria had healthy macroeconomic indicators. Dimitar Chobanov of the local Institute for Market Economics said Bulgaria does not need help from abroad.

Debate on Bulgaria eloping with the euro continues

As realisation began to sink in that the global financial crisis could have a significant negative impact on Bulgaria, in recent weeks some voices in the country’s political and private sectors began to argue for unilateral adoption of the euro. An attempt by Brussels to throw cold water on the debate has not succeeded.After its financial meltdown in 1996/97, Bulgaria set up a Currency Board arrangement fixing the exchange rate of the local currency, the lev, to the Deutschmark and subsequently to the common European currency, the euro. In 1999, the lev was revalued, moving its denomination a few decimal places, but the principle of a fixed exchange rate has remained in place and the message from the Government and central Bulgarian National Bank has been consistently that the Currency Board will remain until Bulgaria adopts the euro.As the 21st century began, there was optimistic talk that Bulgaria would adopt the euro simultaneously with joining the European Union. However, failing to meet the criteria for the common currency – and not forgetting that Bulgaria joined the EU in January 2007 having missed out on the 2004 expansion wave – has left it unclear precisely when the Government in Sofia will lead the country into the eurozone.The global financial crisis has changed the shape of the debate. Before it grabbed international headlines, a crisis of the current scale was unforeseen in Bulgaria and the euro debate was limited to the process of Bulgaria joining the ERM II mechanism, a prelude to moving into the eurozone. In the past 12 months, various months and years for adoption of the euro has emanated from within official circles, generally circling around the 2010 – 2011 period.A number of voices in the past weeks have emerged as proponents of adopting the euro, among them some organised business associations, and notably the Bulgarian Socialist Party’s Petar Dimitrov, the Minister of the Economy and Energy, and elsewhere from within the ruling tripartite coalition, State Administration Minister Nikolai Vassilev, a senior member of Simeon Saxe-Coburg’s National Movement for Stability and Progress, and someone who, unlike Dimitrov, has relevant experience in the private sector in the West.As the debate gained momentum within Bulgaria, on December 5 Bulgarian National Radio and other Bulgarian media reported that the European Commission had let it be known that it could not support any unilateral decisions with regard to the single European currency.Amelia Torres, spokesperson for Joaquin Almunia, EU Commissioner for Economic and Monetary Affairs, told Bulgarian news agency BTA that the euro could be recognised as the official currency in a state which is yet to join the Eurozone only after strictly determined requirements are met by that particular state.The attempted intervention did not stop the debate.On December 7, Bulgarian mass-circulation daily 24 Chassa reported Vassilev as saying that Bulgaria could approach unilateral adoption of the euro and risk "several days of difficult telephone talks with Brussels and Frankfurt" (a reference to the headquarters of the European Central Bank) rather than having Bulgaria be shattered by a crisis.Vassilev told 24 Chassa that what he meant was not introducing the euro as a parallel currency right away but being ready to do so. Economy Dimitrov said that he did not think that there would be a quarrel with Brussels if the euro was introduced in Bulgaria despite the opinion of the EC that this was impossible before Bulgaria fulfilled the requirements.On December 4, Bulgarian mass-circulation daily Trud reported that Bulgaria’s Cabinet was divided on the euro issue.At a round table on the informal economy, held on December 3 by local think-tank the Center for the Study of Democray (CSD) and the Friedrich Ebert Foundation, some Government ministers argued over the idea of an early introduction of the euro in Bulgaria. Dimitrov suggested the adoption of the euro as a parallel legal tender from 2009 as a measure against the financial crisis. "This may bring a lot of disadvantages," Finance Minister Plamen Oresharski countered. The same day, Vassilev said: "Between 2001 and 2005 we believed that Bulgaria will enter the eurozone in 2009. However, the situation now has changed so much that we do not know when and whether this will happen. Economists suggest that Bulgaria adopt the euro unilaterally, even without the formal consent of the European Central Bank.“If we do so, this would be an unexpected precedent for an EU member state. They would probably wonder and get cross with us for awhile, but they can hardly stop us. In this way, any opportunity for a future change of the exchange rate would be avoided," Vassilev said.

Petar Dimitrov: Introduction of the Euro will relieve pressure on currency board

Bulgarian business community is concerned that when Bulgaria is acceded to the Eurozone or to the ERM 2 mechanism (a two-year period preceding the implementation of the common European currency) there may be certain pressure on the currency board and a floating exchange rate of the Euro against the Lev may be introduced. Still the currency board guarantees a fixed Euro/Lev exchange rate, Minister of Economy and Energy Petar Dimitrov told the Nova TV.The board guarantees that the savings of the Bulgarian people will not be devaluated within the near future and the current exchange rate (1 Euro = 1.95583 Euro) will remain intact. This will be a good cushion for business. The idea of a pre-term implementation of the Euro has been debated in the business circles and the general opinion is that such a move will prove healthy to the business climate, the minister said. Practically, the business is using the common European currency even now, because the Bulgarian national currency is pegged to the Euro. So I hope we'll manage to accelerate Bulgaria's accession to ERM 2, he added.
The minister also assured that a pre-term introduction of the Euro will not unleash inflation.

Financial crisis to shrink aviation services markets, Sofia Airport CEO Stanchev says

 

The global financial crisis will lead to the shrinking of aviation services market as a whole and to domination of the big airlines, Sofia Airport Plamen Stanchev told journalists on Sunday. The exact consequences of the financial crisis cannot be predicted, however the airport expects drops in both business and number of tourist flights, he said. A drop in charter flights, from the strong destination of UK in particular, is also expected. one of the reasons for it is the replacement of big airplanes with smaller ones and this will actually reflect on the revenues of Sofia Airport, due to both decreased number of passengers and lower airport fees. The international lines are expected to register a 10 per cent drop.According to Stanchev the crisis will continue for one to two years and after that a sharp increase in aviation business is expected, which will enable an expansion of Terminal 2.

It is dangerous to fight for market share

 

The deposit withdrawals is clearly seen but it is about time that aggressive deposit commercials are stopped, Stoyan Aleksandrov, Chairman of the SB of D Bank said for the Pari Daily. It is abnormal interest rates around the world to be constantly decreasing and in Bulgaria to be so high. Main responsibility for this should be sought from the regulator. In the beginning of the crisis BNB had to meet with all banks and lay out its terms and conditions for improvement the stability of the banking sector. The Central bank has many tools, which could be used effectively even in a situation with monetary board. The problem is that there are shareholders who see the crisis is an opportunity for increasing market share without realizing how dangerous this could be. The banking system is stable at the moment and measures should be taken this to remain unchanged instead of thinking about the bonuses at the end of the year. Perspectives for decline. For a second consecutive week BSE proved that forward movement is possible, Dnevnik Daily informs. on Friday blue chip index SOFIX gained 0,56% and for the week as whole appreciated more than 1%. Despite positive performance brokers remain pessimistic. “I expect further declines in indexes because of the bad news coming across the ocean”, Nikolay Kichukov from “Elana Trading” said. During the last day of the week turnover on BSE reached more than BGN 22,7 million with around BGN 20 million formed by deals with Petrol shares, which is approximately 88% of the turnover of the market.

 

 

 

 

 

Crisis and how the state can help

 

Bulgarian Industrial Capital Association (ICA) suggested a package of measures for opposing the crisis in 2009. Vassil Velev, president of the association, discussed the topic in a special interview for Pari daily. According to him, the crisis is already a fact in Bulgaria and it is deep, all-embracing and very dynamic. It does not result from bad management. It comes from abroad. Two months ago there were no signs for the downturn, but only in a few weeks the picture changed drastically. Unemployment will jump to over 10% by March 2009. That is why adequate measures are necessary. one of these measures is to curtail expenses. If all companies plan a 10%-drop of gross domestic product (GDP), there is no way to register a rate growth. What the state can do is support companies so that instead of cutting staff down they can keep the specialists with half the salary and the other half to be paid by the state. In this way the good specialists in whom a lot has been invested will be preserved for the time when the crisis is over instead of living on unemployment benefits.

EBRD official: Crisis may prod eastern Europe companies invest more in energy efficiency

The ongoing financial crisis may encourage companies in eastern Europe invest more in energy efficiency projects as part of their cost-cutting measures, a senior EBRD official said. It is very difficult to persuade companies to invest in energy efficiency because they always have some other priorities. They have expansion, new markets and products, always have something else to do. Now they will think about reducing costs," Stefania Racolta, energy efficiency and climate change manager at EBRD, told SeeNews in a recent interview. Racolta said EBRD is preparing to increase its investments in energy efficiency in eastern Europe by extending new credit lines after achieving success in this type of lending facilities in Bulgaria. Bulgaria is such a good example that EBRD has started to do similar credit lines in other countries - Slovakia, Romania, Georgia, Ukraine," she said. EBRD has extended to Bulgarian banks three energy efficiency credit lines for on-lending to industrial small and medium-sized enterprises (SMEs), the residential sector and for investment in renewables worth a combined 170 million euro ($218.8 million). The lender is considering expanding one of its Bulgarian energy efficiency and renewable energy credit lines targeting industrial SMEs by a further 55 million euro next year. They've already used 80 out of 100 million and for the other we have a lot of projects in the pipeline and we realised that in a few months we will be running out of money, so it's now a good time to talk about a second phase," Racolta said. EBRD's residential energy efficiency credit line for Bulgaria is worth some 50 million euro. Earlier this year the bank launched a 100 million euro credit line to support industrial energy efficiency in Romania. It's a lot of money still available [in Romania] so we don't have to extend it now," Racolta said. In Romania they are still working on finding and assessing project. We hope before the year ends to be able to mobilise 10 million." EBRD is also considering setting up a 50 million euro facility for funding of sustainable energy projects in western Balkan states. Western Balkans [facility] is now under preparation so we will have next year Montenegro, Serbia, Bosnia," Racolta said. Last month the EBRD said it will raise investments by 20% to up to 7.0 billion euro next year in response to the severe impact of the global economic crisis on central and eastern Europe (CEE). The additional investments will be targeted across the EBRD's countries of operations, with a specific focus on the western Balkans and less advanced countries in the Caucasus and in central Asia.

Crisis to hit tourism sector around April 2009: Tourism agency chief

 

“According to the information provided by the World Tourism Organization, the world financial crisis will hit the tourism business around April, next year”. These are the words of Aneliya Krushkova, chairperson of Bulgaria’s State Agency for Tourism, in interview to Focus News Agency. In her words, it would be the crucial juncture, as it is the time when the winter tourist seasons ends up to give way to the summer tourist season.“In times of crisis, the country must rather re-orientate itself towards advertising in Bulgaria’s neighboring countries and the internal market”, Krushkova added. The advertising in Russia, Germany and England, the traditional markets of Bulgaria, will be preserved.According to Mrs. Krushkova, it is important to keep the regular foreign tourists, who used to choose Bulgaria for their holiday destination over the last years.

 

Bulgaria tourism expects additional € 50 M revenue in 2011

 

The revenues from vacation tourism could possibly increase by EUR 50 M in 2011, the Bulgarian State Tourist Agency reported.The forecast is largely based on the expected results from the implementation of 6 projects under the European "Regional Development" program.The projects' realization would increase room occupancy by 1,2% in 2011, with Bulgarians paying for an additional 24,000 accommodations and foreign visitors - an additional 70,000, which would generate the extra EUR 50 M in revenues.It is expected that by 2011, 10,000 more Bulgarian tourists would chose to vacation in the country, instead of abroad.The newly prepared advertisement campaign to promote Bulgaria as a tourist destination is going to target 310 million people while the funds would be provided by the "Regional Development" program.