불가리아 주요 경제 뉴스 ( 30 JANUARY – 6 FEBRUARY 2009 )

BULGARIAN ECONOMIC TOP NEWS DIGEST

WEEKLY REPORT ( 30 JANUARY – 6 FEBRUARY 2009 )

 

 

 

Sections/headline briefs:

 

 

 

MACROECONOMY:

 

·        UK trade & investment head visits Bulgaria to promote recovery through trade

·        Parvanov and Medvedev to hold talks over gas

·        Parvanov: Bulgaria will again be energy centre on the Balkans

·        South Stream - an alternative for Europe

·        Stanishev lobbying for Nabucco in Budapest

·        Export through Rousse drops by 25%

·        Environment and Waters Ministry, EC continue dialogue on strategic management of Bulgarian water sector

·        Ecoprojects for BGN 711 M with provided financing

·        Steel production falls 40% last year

·        New Bulgarian nuclear reactors will require steel

·        Belene NPP builder seeks higher construction price

·        Bulgarian budget as clear as Kenya's

·        Bulgaria's economy to revive in 3-4 Years

·        50% of construction workers in Burgas laid off

·        Bulgaria sets aside mere 0,33% of GDP for innovations

·        Indebtedness suffocates BG business

·        EC: We may stop Bulgarian cheese export

·        Bulgaria's largest banks

 

 

 

 

 

 

 

INVESTMENTS:

 

·        Banks, the investing paradise in Bulgaria

·        New real estate complex under construction in Sofia's suburbs despite crisis

·        Eko Zora rolls out biofuel production equipment

·        Kaolin AD opens a new factory

·        Two Bulgarian-Israeli tie-ups invest in Plovdiv region

·        Bulgaria invites Russian investors

 

 

 

COMPANIES:

 

·        Lufthansa and SWISS register record passengers in Bulgaria

·        Printing company Billboard expands activities in Serbia

 

 

 

GLOBAL FINANCIAL CRISIS ANALYSIS AND NEWS:

 

·        Bulgaria Finance Minister upbeat forecasts clash with international experts

·        The Bulgarian economy faces an immense risk, Washington forecasts

·        NYU Professor Roubini: Bulgaria may weaken currency control over crisis

·        Crisis melts commercial space market

·         Economic crisis winds up milk firm Laktis

·        Bulgaria's railway freights down by 40% over financial crisis effects

·        Kremikovtzi, financial crises shatter Bulgaria's 2008 steel output

·        Banks retain 2008 profits to cushion crisis

·        Global Financial Crisis shuts Bulgaria's Svishtov cellulose factory

 

 

 

 

 

 

 

 

 

 

 

 

Articles:

 

 

MACROECONOMY:

 

UK trade & investment head visits Bulgaria to promote recovery through trade

 

Sir Andrew Cahn, the CEO of the international business development organization of the UK government, UK Trade & Investment, is visiting Bulgaria on Wednesday, the British Embassy in Sofia has announced.Amidst the raging global financial crisis, Cahn is going to speak in favor of international cooperation, open markets, and innovation as viable tools for economic recovery. He is going to meet with representatives of major UK investors in Bulgaria."Among the UK business community, Bulgaria is a trade and investment partner of growing importance, which is clearly reflected by the increase of exports and investment volumes in the last couple of years. UK firms can work together with Bulgarian partners to implement major infrastructure projects being funded by the EU. These include roads, rail and ports; urban regeneration and environment technologies. These are all areas where the UK has world-leading expertise", Sir Andrew Cahn has said.The British Embassy in Sofia reminds that the UK was the top foreign investor in Bulgaria in 2007 with investments of nearly EUR 850 M."In the face of a global economic downturn, we must stand together in support of open markets. Trade and investment will be one of the forces that will pull the world's economy toward recovery. The UK highly values Bulgaria as our trading partner within the European Union", the UKTI Head noted further.The role of UKTI is to help UK companies in the global economic environment as well as to attract foreign businesses to Britain.

Parvanov and Medvedev to hold talks over gas

The gas crisis will be the main topic of the talks between the presidents of Russia and Bulgaria - Dmitry Medvedev and Georgi Parvanov, reported Bulgaria's Ambassador to Russia, Plamen Grozdanov. Bulgaria's President will be on an official visit to Moscow from February 4 to 6th. "During the Parvanov's visit to Russia the measures the two countries should take to prevent another such crisis in the future will be discussed. Attention and time will be spent on considering alternative routes for transport of Russian gas for Bulgaria, most of all - South Stream pipeline," the Ambassador added. The Bulgarian Head of State is expected to negotiate compensation for the gas crisis in the form of additional gas supplies at lower prices, the Standart learnt. Georgi Parvanov will have a 1-hour tete-a-tete meeting with his Russian counterpart. While in Moscow, Parvanov will meet Russia's Prime Minister, Vladimir Putin, the Chairman of the Council of Federation of the Federal Assembly of the Russian Federation, Sergey Mironov. Moscow Mayor, Yury Luzhkov and the newly elected Russian Patriarch, Kiril.Georgi Parvanov will take part in the Bulgarian-Russian business forum where Bulgaria's Foreign Minister, Ivailo Kalfin will present Bulgarian economy. The conference will also include presentations from Bulgarian real estate companies, tour operators and wine makers.

 

Parvanov: Bulgaria will again be energy centre on the Balkans

Bulgaria will regain its position as the energy centre on the Balkans, just as it was before Units 3, 4 of the Kozloduy nuclear power plant were decommissioned. This will happen after the construction of the new nuke in Belene is completed, Bulgaria President Georgi Parvanov said during the premier of his book "Bulgaria in the Global World" in Moscow. The President arrived in the Russian capital for a three-day official visit yesterday.
Parvanov reminded that before the two units were closed in compliance with the EU accession treaty Bulgaria made up for 50 percent of the power deficit in the Balkan region. He also said that the Belene project involves Russia, although it is also a pan-European project because Bulgaria is an EU member and several European companies will take part in its implementation.Hopefully after the talks in Moscow the South Stream pipeline construction will be stepped up, the President said. We will also do our best for the Nabucco pipeline implementation, Parvanov added. According to him, after Bulgaria's gas transit network is linked with those of Greece and Turkey the country will regain its position of an energy power on the Balkans. The President underscored that Bulgaria was among the direst sufferers from the gas conflict. "In spite of being a good partner to Russia, we bore the consequences of a gas shortage, which caused the temporary closure of schools, kindergartens and entire enterprises," Parvanov said.
Russia's former Prime Minister Yevgeny Primakov, who wrote a foreword for the Parvanov's book, also attended the presentation. "Bulgaria's membership in NATO does not make Russia very happy," the ex-PM underscored. Parvanov's reply to this statement was that the equivalent of the US military bases in Bulgaria can be the Russian oil and gas pipelines. He added that Bulgaria has been a reliable and predictable partner to Moscow as much as it has been to Brussels or Washington.Toasts at the event were raised with Winner, selected red wine produced by Vini Sliven winery. 

South Stream - an alternative for Europe

The recent gas crisis has clearly shown how important is the diversification of natural gas supplies to Europe. Within the coming 10-20 years the demand for natural gas will grow substantially, various prognoses show. To meet the higher requirements Gazprom of Russia and ENI of Italy have proposed the construction of the South Stream pipeline that will link the Black Sea coastal region of Russia with Southern and Central Europe.
According to rough estimates, the supply of natural gas to Europe will have to gross 70-100 B cbm/year by 2020 to meet the increasing demand.To boost the supply capacity and diversify the transit routes Gazprom and ENI initiated the South Stream project that would transit up to 31 B cbm/year. Its implementation will allow expanding the gas transit network of the EU and make the system more flexible. The pipeline will enhance the energy security of Europe and make supplies more reliable. It is also noteworthy that the rich Russian gas deposits provide for the necessary volumes of supplies. Intergovernmental agreements concerning the construction of the land sectors of the South Stream pipeline have already been signed between Bulgaria, Greece, Serbia and Hungary. These agreements posit the establishment of joint ventures participating in the implementation of the project. "The South Stream project will bring many economic benefits to the South and Central European countries, including the opening of new job positions and revenues from transit fees.Bulgaria's Bulgargaz and Russia's Gazprom will be equal partners in the company that will build and exploit the Bulgarian section of the pipeline and they will have equal rights as owners of the pipeline itself. In case of emergency, the direct supplies of Russian gas through the pipeline will fully meet Bulgaria's demand for this fuel.

Stanishev lobbying for Nabucco in Budapest

 

After the gas crisis new opportunities are opening up for the implementation of the gas pipeline Nabucco as an alternative route to diversify the natural gas supplies for the European Union said Prime Minister Sergei Stanishev, drawing attention to this at the official opening of the Budapest summit, dedicated to this large-scale energy project. Stanishev noted that Nabucco, in which Bulgaria is a key participant, should be implemented as soon as possible since it will facilitate the access of the Balkan countries and the EU to the gas resources in the Caspian Region and the Middle East“ an alternative of enormous significance, especially in the context of the gas conflict between Russia and Ukraine that led to an unprecedented crisis in supplies. The Prime Minister assured the participants in the forum that Bulgaria would continue to contribute towards guaranteeing the energy security of the Community and the development of Europes energy policy. During the coming months specific work will be done and the countries which participate in Nabucco have committed to deciding upon an intergovernmental agreement on the projects implementation by the summer. The Budapest summit gathered as participants, governmental officials and heads of state from the countries which produce, use and offer transit pipelines for gas. In the Hungarian capital Stanishev and the President of Azerbaijan Ilham Aliyev agreed for the gas operators of the two countries“ Bulgargas and SOCAR“ to start negotiations by the end of January on the annual supply of one billion cubic metres of gas. In talks with Czech Prime Minister Mirek Topolanek, whose country is now holding the rotating presidency of the Council of Europe, PM Stanishev expressed his gratitude for the support and solidarity of the EU with Bulgaria during the gas crisis, as well his gratitude to Topolanek for his personal commitment and energetic action. Interest was demonstrated in Stanishevs proposal for the construction of a liquid gas terminal near Kavala in Greece and its connection to the Bulgarian gas pipeline network at Dimitrovgrad.According to Topolanek, the implementation of such a project would contribute greatly to the energy security not only of Bulgaria, but also of the West Balkan countries.On the following day exactly, in Brussels, an announcement was made that Bulgaria would receive just a portion of the 20 million Euro stipulated in the European Reconstruction Plan for the construction of the gas link between Haskovo and Komotini, and after a comment made by the Bulgarian European Commissioner Meglena Kuneva, the link to Romania was added as well. How much Bulgaria will receive for the second project is, however, not clear because its addition at the last minute means a financial reconsideration of the rest of the investments approved.

Export through Rousse drops by 25%

For December 2008, the customs in Rousse report severe drop in export of Bulgarian production for countries outside EU by 25% year on year due to the financial turmoil. For January, the slump is expected to be 15%. Probably the figures are similar about export for EU but it is not registered by the customs. Export from the country to non-EU members in 2008 reached BGN 1 billion and exceeded import, which was BGN 789 million.

Environment and Waters Ministry, EC continue dialogue on strategic management of Bulgarian water sector

 

The Environment and Waters Ministry and the European Commission (EC) will continue their dialogue on the strategic management of Bulgaria's water sector, it emerged after the meetings Bulgarian Environment and Waters Minister Djevdet Chakurov had at DG Regional Development and with Danuta Huebner, Commissioner for Regional Policy.Chakurov told Dirk Ahner, Director-General for Regional Policy, that his Ministry is ready for a dialogue on its water supply and sewerage project, which will make it possible to take into account the positions of all parties concerned - the Regional Development and Public Works Ministry, the Environment and Waters Ministry and the European Commission.Admitting that the law on the management of the water and sewerage sector is imperfect, Chakurov said the imperfections should be removed so as to meet Bulgaria's needs of an adequate water sector, improved water supply services and higher environmental protection. He suggested that the EC should present different models of water sector management applied successfully in other EU countries."To us, it is important to absorb every single euro given to Bulgaria, having in mind that our gross domestic product is of the lowest value in the EU," Chakurov told the officials of DG Regional Policy and to Huebner. In his view, the EU funds would be utilized more efficiently if the timeframe for their absorption is extended until 2013.Responding to the fears expressed by EC official regarding the control over the projects to be implemented under Operational programme Environment, Chakurov said that his Ministry would continue to monitor strictly their implementation and the spending of funds, and that it would be very exacting in the evaluation of new projects.

 

Ecoprojects for BGN 711 M with provided financing

 

Advance payments for absorption of funds under Environment Operative Programme will be increased from 20% to 30% of the project value, vice-president Meglena Plugchieva announced. Ecological projects for BGN 711 million have approved financing by the programme, which is 20% of the whole EU funding. Work is being carried out on all projects under ISPA programme that have been seriously delayed over the last months.

 

Steel production falls 40% last year

 

Steel production in the country declined by 40% to 1.33mn tons last year, according to information of the line association. The contraction is due to the bankruptcy of the country’s largest steel mill Kremikovtsi and worsened results of the other producers in Q4. All companies but Kremikovtsi posted production hikes in Jan-Sep. The sales volume remained flat at 1.7mn tons of steel and products last year as compared to 2007. Exports declined by some 50% but were compensated by higher sales on the domestic market. However, sales value was by some 30% lower in relation to one year earlier due to the plunge of steel prices. Steel production was estimated at BGN 6.5bn (EUR 3.3bn) in 2007, including BGN 5.9bn exports.

 

 

 

 

New Bulgarian nuclear reactors will require steel

 

Construction of Bulgaria’s new € 4 billion ($5.2bn) nuclear power plant, Belene NPP, is expected to begin in May 2009, Steel Business Briefing learns from a government statement. The project will require steel, SBB notes.The plant will consist of two 1,000MW nuclear reactors: unit 1 to be built within 6.5 years, and unit 2 which will take 7.5 years to complete. Located in Belene on the border with Romania, the plant is being constructed by Russian firm Atomstroy and should be commissioned in 2014.Atomstroy will now be looking to source construction grade steels, including high integrity stainless and alloy steel pipe, for construction of the reactors and steam generators. It has not yet been announced from where steel for the project will be sourced.The construction of what will be Bulgaria’s second nuclear power plant is considered an important move for Bulgaria’s energy supply, the majority of which currently comes in the form of natural gas from Russia.

 

Belene NPP builder seeks higher construction price

 

Russia's AtomStroyExport has asked Bulgarias state-run power company NEK to raise the cost of the Belene NPP project by the countrys average harmonised consumer price index for 2008, said sources familiar with the matter.The inflation rate hit 7.2% in 2008. The Russian company was awarded the EUR 3.8 billion (USD 4.9bn) building contract more than two years ago.NEK executive director Mardik Papazyan confirmed the news for Dnevnik daily but declined to give any figures. Approached for comment, the Bulgarian office of AtomStroyExport passed the case on to its Moscow headquarters but no answer came until Dnevnik went to print. Building works on the power plant are expected to continue through 2015 and it is normal that the price should be revised, said Bogomil Manchev, manager of GCR, the subcontractor of the projects designer and engineer, Parsons E&C. NEK has discussed with the plants strategic investor, German RWE, imposing a cap on bottom and maximum price increases in the range EUR 4 billion to EUR 5.8 billion. NEK former boss Lyubomir Velkov predicted in June there might be a 20% cost rise, and expert Georgi Kaschiev forecast a double hike to EUR 8 billion. In the meantime, NEK admitted that the global financial crisis is playing out on the project as banks are seeking bigger co-funding by the power company. The Bulgarian government has so far issued EUR 600 million guarantees, but the figure is expected to rise.

Bulgarian budget as clear as Kenya's

Bulgaria is close to Kenya s regards budget transparency. Bulgaria occupies a place between Russia and Argentina, according to Open Budget index compiled by International Budget Partnership. Bulgaria progresses in increasing its budget transparency but is still far from the topnotch in the world. The budget transparency in Bulgaria increased from 47% to 57% in the period from 2006 to 2008. According to this criteria Bulgaria is one of the fastest developing countries. The improvement is a result of the ministries' programmed budgets and the often-updated information published on the net. Bulgaria can increase its budget transparency by providing more information about the state budget, including distinct programmes. A possible increase of the citizens' participation in the budget debate would be a booster, too. The budget transparency decreases the ineffective expenses, curbs corruption, encourages economic development and lowers poverty rates.

Bulgaria's economy to revive in 3-4 Years

According to Bulgaria's Finance Minister Plamen Oresharski, the access to bank loans in the country has become more difficult and they have become more expensive. Together with businessmen from the town of Gabrovo, he took part in a discussion on the impact of the global financial crisis. 'Some of the measures we should take involve mobilization of the financial resources, draw-in of partners with capitals and expansion of the on hand capital. Under the conditions of global financial downturn, we should think of consolidation of the business, said Coalition for Bulgaria MP Petar Kunev. The real sector has already been hit by the global economic crisis and in a few months the EU member states will start discussing a crisis in the public finances. According to Mr. Kunev, Bulgaria's economy may see some revitalization in three or four years. 'It will take us between two and four years to come back to the credit comfort we had before,' he addes.'Over ten billion euro in foreign capitals has been circulating in Bulgaria?s banking sector for ten years now,' Mr. Oresharski said.'As a result, the total worth of the bank loans in Bulgaria exceeds the savings of the Bulgarians by over ten billion euro,' he said.

50% of construction workers in Burgas laid off

The mass lay-offs in construction firms in the Burgas region, which already started, will reach up to 50% of all personnel. The economic crisis, which hit the construction business the hardest, is forcing entrepreneurs to optimize their human resources constantly, in order to survive.According to the calculations of experts, the employed in this industry will decrease by 50% by the end of the year.The lack of orders, the decreased crediting and the general stagnation on the market literally kill construction companies.For sure, smaller and not competitive firms will not survive the crisis. only those firms that have a diverse portfolio of activities and work on infrastructure sites with municipalities, the state and on EU projects have a chance to survive.At the same time the turnover of the real estate agencies has decreased 4 times compared to the same period (November-January) of last year. At the moment demand is almost non-existent, while supply is plenty.Experts' expectations are that prices will continue to drop in the entire year and there will be many additional bonuses and extras when purchasing real estate.

Bulgaria sets aside mere 0,33% of GDP for innovations

Bulgaria slated only 0,33% of its Gross Domestic Products (GDP) for innovations, according the latest report about the NationalIinnovation Policy, the Bulgarian Energy and Economy Ministry press center reported.The report had been prepared by the Ministry's experts. The figures are based on data from 2007.The innovation resources have come mostly from public funding while private businesses in the country had insignificant contributions.Science and innovations are still not seen as key factors for the country's economic growth, the report concludes."In order to respond adequately to the European market requirements, Bulgarian businesses must seek new products and markets. There is huge potential for the country in the area of innovations and high-end technologies," Eli Anavi, Director of the "Enterprise Policies" department at the Economy Ministry stated during the presentation of the report.2009 has been declared "European Year of Creativity and Innovations."

Indebtedness suffocates BG business

Economy in Bulgaria faces great hardships due to the contraction of crediting, which was lavishly granted by the banks over the last years. At present, the serious motive force is the money in the grey sector. In the last months of 2008, banks granted only BGN 33.6 million while the average month crediting of the business for 2008 was 626.9 million. This brought problems with liquidity for many companies and increased intercompany indebtedness. Hunger for fresh funds is so great that some firms turned to barter: instead of paying in cash builders offer apartments and office spaces. Lots of projects are frozen an off-plan sales died. We do not have exact figures for the indebtedness in construction sector but for sure it is enormous, Ivan Boikov, executive director of Chamber of Constructors, summarised for Pari daily. By the end of 2008, bad credits of households and firms amounted to BGN 1.18 billion. In this difficult situation, each company acts independently in attempt for salvation.According to analysts, this is the worst course of action and will bring no help in long-term aspect. At present, all hopes are connected with the credit line of BGN 500 million, which Bulgarian government granted through Bulgarian Bank for Development. The credit institution will allow financing to the small and medium-sized enterprises under preferential conditions.

EC: We may stop Bulgarian cheese export

The European Commission (EC) may decide on halting Bulgarian cheese exports should the state fail to take action against local dairy producers that lie about the use of vegetable oils. This is what Nina Papadulaki, the spokesperson of the member of European Commission, warned yesterday.The EC may also request a halt in cheese production for Bulgarian markets as well as trigger an infringement procedure in Luxembourg. Papadulaki added the EC had been keeping a close watch on local producers for concealing the ingredients on their products’ labeling. According to the EC requirements ‘cheese’ is a product that consists of at least 50% milk. 24 Chasa Daily reports.

Bulgaria's largest banks

16 Bulgarian banks controlled assets worth more than 1 billion leva at the end of 2008.At the end of 2007 their number was the same. The only difference is that Municipal Bank fell out of the list and ProCredit Bank joined it.Unicredit still tops the chart, according to official data presented by the Bulgarian National Bank. The lender saw its assets grow by 21.5% to 11.01 bln leva (5.62 bln euros).DSK Bank is second, followed by UBB. Top 5 also includes Raifeissen and Eurobank EFG.Number six in the overall list and number one among the publicly traded banks is FIBank, which controls assets worth 4.25 billion leva (2.17 bln euros). Corporate Commercial Bank is 10^th, followed by EIBank and CCB.Bulgarian-American Credit Bank is 18^th in the overall list and fifth among banks listed on BSE with 818 million leva.Emporiki Bank saw the largest hike in assets last year (by 96.6%). Second and third here are Bulgarian Development Bank and MKB Unionbank. Alpha Bank and SG Expressbank both boosted assets by a little over 40%.Assets of the banking system rose by 17.72% to 69.56 bln leva (35.5 bln euros) in 2008.

№	Bank	2008*	2007*	Change
1	Unicredit Bulbank	11014859	9065733	21,50%
2	DSK Bank	8669280	7848685	10,46%
3	UBB	7745809	6129586	26,37%
4	Raiffeissen	6880189	5979390	15,07%
5	Eurobank EFG	5437869	4377303	24,23%
6	FIB	4256134	4205076	1,21%
7	Piraeus	4142232	3566983	16,13%
8	SG Expressbank	2512886	1793256	40,13%
9	Alpha Bank	2144643	1465676	46,32%
10	Corporate Commercial Bank	2105879	1772123	18,83%
11	Eibank	1844058	1982399	-6,98%
12	Central Cooperative Bank	1663314	1565351	6,26%
13	Alianz Bank Bulgaria	1627796	1464071	11,18%
14	Unionbank	1535222	1026150	49,61%
15	Investbank	1118136	1085721	2,99%
16	ProCredit Bank	1005526	846658	18,76%
17	Municipal Bank	995395	1013069	-1,74%
18	BACB	818045	689632	18,62%
19	Paribas	745453	549402	35,68%
20	International Asset Bank	568782	523276	8,70%
21	ING Bank	478526	403820	18,50%
22	Emporiki Bank	470393	239225	96,63%
23	Bulgarian Development Bank	430752	233467	84,50%
24	City Bank	386711	442455	-12,60%
25	Tokuda Bank	340576	301326	13,03%
26	Commercial Bank D	295069	223194	32,20%
27	NLB West East Bank	218344	196601	11,06%
28	Texim Bank	51498	58994	-12,71%
29	T.C. Ziraat Bankasi	48068	40881	17,58%
30	Leumi Bank Romania	9011	0
	Total	69560455	59089503	17,72%

Source: Bulgarian National Bank

*Assets in BGN

 

INVESTMENTS:

 

Banks, the investing paradise in Bulgaria

The high rate of indebtedness in 2008 and the collapse of capital markets melted considerably the net wealth of Bulgarians. For a year, they lost money equal to 14% of the gross domestic product (according to UniCredit Group). Data concerning retail sales in third quarter of 2008 reported decline in consumption and the rate on annual basis dropped to 4.4% against 7.7% a quarter earlier. In this insecure and quickly changing situation with no resources from abroad, big financial institutions like banks, insurers, mutual and pension funds fought for the available funds. For several months, BGN 5.2 million of the population evaporated due to the financial slump. Households redirected all savings into bank deposits. The cut-throat competition among banks in Bulgaria turned the deposit not only in a safe place for money but also in a profitable investment. Interests jumped twice for a year and at the beginning of 2009 reached nominal 10%. Household deposit share increased to 68% by the end of third quarter. Analysts from UniCredit forecast about 71% of all household savings to be in credit institutions by the end of 2010. In times of downfall, security becomes the most important thing. My opinion is that in foreseeable future households and business will continue to prefer the safety of the bank deposit, Momchil Andreev, CEO of Raiffeisenbank, commented.

New real estate complex under construction in Sofia's suburbs despite crisis

The construction of a new gated detached-housing complex in Sofia's Malinova Dolina ("Raspberry Valley") Quarter, was formally started on Tuesday despite the downturn in the real estate market caused by the effects of the global financial crisis.The first sod of the new real estate project was turned over by Bulgaria's Minister of Regional Development and Public Works, Asen Gagauzov, and by the Director of the Technoexportstroy firm Emil Kotsev. The new complex will contain 41 detached houses with individual yard plots. It is located close to Business Park Sofia on the one side, and to the Vitosha Mountain on the other. The construction will utilize natural materials such as wood and stone in order give the complex a look that would be in harmony with the surrounding nature view. "Despite the global economic recession, and the expectations for serious hardships in selling real estate properties we have decided to go ahead with this complex. We expect great demand because of its prime location and functional characteristics", Emil Kotsev declared. Another of the advantages of the new residential buildings is the fact that each detached house has been projected to have a garage for two cars.

 

Eko Zora rolls out biofuel production equipment

Varna-based company Eko Zora, Ltd launched a EUR 130,000 machine that turns waste into biofuels, methane, electricity, hot water, liquid gas, charcoal and other liquid fuels. The facility has the capacity to meet the electricity needs of a small or medium-sized town or a small company. Eko Zora has not signed any sales contracts yet but is in talks with prospective customers, said manager Slavcho Georgiev. The firm has submitted an application with the local patent office and will seek European funding.

Kaolin AD opens a new factory

Kaolin AD opens new factory for production of ground microproducts in Vetovo. The investment amounts to BGN 3.5 million, the equipment follows the most modern technological tendencies and the new production capacity is 15,000 tonnes of ground kaolin per year. This is the one-of-its kind plant in Bulgaria and on the Balkans, Alexander Prokopiev, CEO of the company, said.

 

Two Bulgarian-Israeli tie-ups invest in Plovdiv region

Bulgarian-Israeli joint venture MD Investment will pump EUR 16 million into the construction of a food and electronics retail centre in the southern city of Plovdiv. The announcement was made by Dimitar Yazov, who holds 50% of the new company. The other shareholder is Israeli businessman Moshe Grelnik. The project will stand on a 3.7 hectares land plot near the city’s ring road. The design phase is expected to be complete by September, with building work set to finish within the next two years. In the meantime, Yazov has partnered with another Israeli entrepreneur to set produce concrete and construction mixtures. The joint company, Dikav Investments, has already purchased a concrete plant in the southern town of Rudozem, which will be outfitted with Italian equipment. The firm is in talks to buy another concrete plant in Plovdiv, said Yazov. Construction company Yazov is majority shareholder of local property developer Sky Buildings AD, which is working on an eponymous project to deliver the city’s first skyscrapers. Yazov commented that the global financial meltdown, which took a serious toll on Bulgaria’s building companies, will not halt or delay retail and residential projects.

Bulgaria invites Russian investors

Bulgaria's President Georgi Parvanov appealed to Russian business community to make bigger investments in Bulgaria as the business climate in Bulgaria is the most favorable in the whole EU. President Parvanov underlined that commodity exchange between the two countries had grown threefold in the last years hitting US$ 5.4 billion in 2008. The main reason for this is the increased prices of energy resources some 92% of which are imported from Russia. The commodity exchange balance is positive for Russia while Bulgaria has a negative trading balance.

 

 

 

 

 

 

 

 

 

COMPANIES:

 

Lufthansa and SWISS register record passengers in Bulgaria

Lufthansa has achieved the record figure of 400,000 passengers in the Bulgarian market for 2008, the company reported Wednesday.The news was announced during a media press conference by Gabor Horvath, Lufthansa's General Manager for Bulgaria and Albania, and Klaus Gorni, Manager of Lufthansa's "Corporate Communications" department.Together with its partner SWISS, Lufthansa transported the 400,000 passengers between Bulgaria and Germany and Switzerland. This represents a growth rate of more than 20 % compared to 2007. These record figures reaffirm Lufthansa's leading position on the Bulgarian market."With 48 weekly flights (7 daily flights + 1 daily by SWISS) to Frankfurt, Munich, Düsseldorf and Zürich, the Lufthansa Group represents the biggest foreign airline in the country. The additional capacity, convenient travel times and our competitive product on board and on the ground have been very well accepted by our business as well as our leisure customers," Gabor Horvath pointed out.Frankfurt, Munich, Düsseldorf, Lisbon and Brussels are among the most frequent European destinations from Bulgaria together with long-haul flights to Los Angeles, San Francisco, New York, Tokyo, Sao Paulo, Hong-Kong, and Beijing with connections from Frankfurt, Munich, Düsseldorf and Zürich. Lufthansa offers convenient connections to more than 190 destinations in 79 countries worldwide. More than 70 million passengers flew with Lufthansa and SWISS in 2008.Based on preliminary projections, the Lufthansa Group expects an operating result of around EUR 1.3 B for the business year 2008 - an upgrade from the initial forecast of EUR 1.1 B.

Printing company Billboard expands activities in Serbia

 

The local printing and publishing company Billboard has set up a joint company with the Nis-registered Advercity in order to expand its activities in Serbia . Billboard will control 51% of the new entity, named Mega Print DOO. Billboard designs and manufactures advertising and promotional materials. It services more than 3,000 customers in the country, including Coca-Cola, Nestle, Shell, KFC, Praktiker, McDonald’s, MobilTel, GloBul, BTC, DZI, and Vinprom Peshtera. Last year, it received first-class investment certificate for its EUR 51.6mn project to construct new printing plant in Kostinbrod, 15km west from the capital city of Sofia.

 

 

 

 

 

 

 

 

 

 

 

GLOBAL FINANCIAL CRISIS ANALYSIS AND NEWS:

 

Bulgaria Finance Minister upbeat forecasts clash with international experts

 

Despite the upbeat forecast of the Bulgarian Finance Minister, Plamen Oresharski, that the bank sector in the country is stable and 2009 would register a 2% economic growth, the International Monetary Fund (IMF) alarms about huge economic risks for Bulgaria.
In their updated economic growth forecast, the IMF last week significantly lowered the numbers - down to - 0,4% for Eastern Europe, making it clear that the global financial crisis has a direct effect on the new markets in Eastern Europe.The Institute of International Finance, Inc. (IIF), the world's leading and only global association of financial institutions, based in Washington DC, also forecasts a substantial slowing in net private capital flows to emerging markets. It said that in 2009 the volume of flows is likely to be USD 165 B, after an estimated USD 466 B in 2008, and the record 2007 volume of USD 929 B."The subdued level of net private capital flows to emerging markets that is in prospect for 2009 is in line with the major slowdown of global economic growth. Indeed, we are now anticipating negative world growth for 2009," the IIF Managing Director Charles Dallara is quoted as saying.The IIF further warns that while declines in net private capital flows are expected for all emerging market regions, the most substantial fall from previous levels will be for Emerging Europe, where the projected volume is seen at USD 30 B only, or just 1% of the Gross Domestic Product (GDP), after an estimated USD 254 B in 2008 and USD 393 B (13% of GDP) in 2007. Such a swing is unprecedented in scale, and helps explain why financial strains have been most acute, and are likely to remain so, across Emerging Europe. Because Eastern Europe is heavily dependant of the foreign investment flow, the region would suffer much more from the flow's "dry-up" than from external financial problems, according to the IIF. Many Eastern European countries would not be able to deal with the crisis without the help of the IMF, which needs to increase their landing capital in order to guarantee rescue loans to Eastern European economies, the IIF points out.The IIF says that the recession and the financial crisis in the mature economies are the prime causes of the prospective declines in net private capital flows to emerging markets. Significant reductions in oil and other commodity prices are also key factors.Analysis of experts from Forbes, Bloomberg, Market Watch and others in the US also predict that many Eastern European countries would end up being fully dependent on financial assistance from the IMF. The "drying-up" of the external capital flow will turn foreign banks, currently dominating the Eastern European bank sector, into the sole source of lending, but they are facing their own serious troubles and would not be able to help with financing. It is even questionable if those banks would remain in the region - if they withdraw, Eastern Europe is going to be trapped by the crisis and IMF would become the only way out, US experts say.Experts, (including IIF) do however predict that while growth in the mature economies will be negative, emerging markets are expected to see further real growth, but with only very slight gain, significant recession and much more dramatic human dimensions of the crisis.

 

 

 

The Bulgarian economy faces an immense risk, Washington forecasts

The risk for the Bulgarian economy, because of the global financial and economic crisis, is enormous. This is written in an analysis of the Institute of international finances with headquarters in Washington.According to the report all emerging economies will be affected by the sharp decrease of the inflow of foreign capital. The speed and degree of this shrinkage will be unprecedented.Eastern Europe will be hurt the most, according to the experts.The Institute of international finances insists that the loan capital of the International monetary fund is increased, so that the disbursement of loans for East European countries is guaranteed.Analyses of leading American business agencies like "Forbes", "Bloomberg", "Market watch" forecast that many countries in Eastern Europe will turn out to be dependent on the financial aid of IMF.

NYU Professor Roubini: Bulgaria may weaken currency control over crisis

 

The New York University Professor, Nouriel Roubini, has stated that the Baltic countries and Bulgaria might weaken their currency controls as the global financial crisis hits Eastern Europe, the Baltic Business News reported citing an interview Roubini gave for Bloomberg in Moscow."If fundamentals are out of line you cannot maintain a fixed exchange rate, you're going to eventually have a currency crisis. The Baltics are under pressure and Bulgaria's currency board is under pressure", Roubini is quoted as saying. The article reminds that Bulgaria's lev is pegged at 1.95583 per euro. The country drained 16 percent of its reserves to $16.8 billion in the second half of last year, according to International Monetary Fund data.According to Roubini, Bulgaria together with the Baltic states is at risk of a currency crisis because of its current-account deficit, which could in turn lead to banking, corporate, and housing crises.

Crisis melts commercial space market

 

A year ago, plans for new malls were announced almost every week and analysts warned about over-saturation of the market. At present, the situation is the opposite: two out of every three projects in Sofia have been frozen, or delayed for indefinite time. At the same time, there is lack of commercial space in the country. Data of Colliers International consulting company show that by end of 2008 there were only 10 working malls in the country with a total renting space of 170,000 sq. m. This makes 22 sq. m trade space per 1,000 citizens, an indicator too low even for less developed countries in Central and Eastern Europe. If the business real estate market is still demonstrating some activity, it is entirely due to the construction inertia, executive director of Colliers for Bulgaria Atanas Garov commented. Observations of the company show that at present construction process is the result of buildings started during the booming 2006-2007 years. Since the middle of 2008, no new sites have appeared and this tendency will soon be felt. In 2009, only two or three malls will open doors in the whole country.The destiny of all other grand plans remains uncertain. Projects of Lithuanian, Dutch, Austrian, Spanish, and German companies fell into oblivion. The official reasons announced by investors are re-negotiations of prices and financial clauses.

 

 

 

Economic crisis winds up milk firm Laktis

 

Bulgarian milk processing company Laktis, which suspended production on January 12 due to gas supply disruption caused by the Russian-Ukrainian gas row, will not resume operation after restored gas flows, the owner Stoyan Stoyanov told workers today, as cited by state news agency BTA. The closure is triggered by the economic crisis that left the company without orders. Employees have been given two options - either to leave the company by mutual consent or shift to a four-hour working day and get half of their current wages. Workers should decide by the next meeting on Friday. Laktis has a headcount of 60 people. It used to process 130 tonnes of milk a day until 2008 and only 30 tonnes in recent months. The Montana-based company produces powder milk, butter, cheese and yellow cheese.

Bulgaria's railway freights down by 40% over financial crisis effects

 

Bulgaria's railway freights have registered a 40% decrease in their volume in January 2009 compared to November 2008. The news was announced on Saturday by Bulgaria's Transport Minister Petar Mutafchiev in an interview for the Darik Radio. Mutafchiev attributed the freight decline to the effects of the global financial downturn. In his words, the Bulgarian State Railways transported about 50 000 tons of goods per day in November 2008, whereas in January 2009, this figure fell down to 30 000, and even to 25 000 tons per day."We are taking measures to save 3 000 jobs in the transport sector. We are going to create about 8 000 temporary jobs with the investment projects that we have prepared in the repair of railway cars and rehabilitation of the railroads and adjacent infrastructure", Minister Mutafchiev explained. He emphasized that the most important transport projects for 2009 were the construction of the second bridge connecting Bulgaria and Romania over the Danube (Danube Bridge II), and the rehabilitation of the Plovdiv-Svilengrad Railway, which would allow the trains there to reach a speed of 160 km/h.

Kremikovtzi, financial crises shatter Bulgaria's 2008 steel output

 

Bulgaria's steel production was 1,329 million tons in 2008, which is a 40% decrease compared to the almost 2 million tons of steel produced in 2007.This is indicated by preliminary data of the Bulgarian Association for Metallurgy Industry as quoted by the Pari Daily. The significant decrease in Bulgaria's total 2008 steel output comes from the crisis of the country's largest steel mill Kremikovtzi as well as from the effects of the global financial crisis, which were felt in the last quarter of 2008.According to Politimi Paunova, Executive Director of the Association for Metallurgy Industry, with the exception of the bad results from the last quarter of 2008, and of the crisis in the Kremikovtzi factory, the other Bulgarian steel-makers achieved decent results in 2008. These include Stomana Industry (Pernik), Promet (Burgas), Helios Metalurg (Plovdiv), and Precis Inter Holding Jsc (Ruse).Bulgaria's production of long rolled sections actually doubled in 2008 despite the crisis - it grew from 400 000 tons in 2007 to 905 000 tons in 2008, largely thanks to Stomana Industry and Helios Metalurg.Bulgaria's steel exports declined by some 50% in 2008 but this was partially compensated by increased domestic consumption. The expected decline in the total steel production revenue is about 30% largely because of the dropping steel prices globally.Bulgaria's steel industry had a production for BGN 6,5 B in 2007; of these, BGN 5,9 B came from exports.

 

Banks retain 2008 profits to cushion crisis

Bulgarian banks have notified the central bank of plans to retain last year’s profits as an extra measure against the global financial and economic crisis, sources told Dnevnik. The Bulgarian National Bank said in late October it expected all lenders to withhold dividend payouts. A market insider speaking on condition of anonymity told Dnevnik back then that BNB had sent out letters calling on bank shareholders to retain 2008 profits. The combined profit of local lenders added up to BGN 1.387 billion in 2008, reaching a ten-year high, under official statistics. Bankers commented further provisions were needed to offset a potential drop in portfolio quality due to the unfavourable financial and economic climate. Provisions covered 115% of loan defaults in end-December 2008, ranking Bulgaria among the best provisioned countries, the BNB said in a statement.

Global Financial Crisis shuts Bulgaria's Svishtov cellulose factory

 

The cellulose factory "Svilocel", in the Bulgarian city of Svishtov, began closing its production facilities Thursday, Krasimir Dachev, majority owner of the factory announced, cited by BTA.The staged closure has become necessary due to the global financial crisis, which has lead to the collapse of international cellulose prices, accompanied by a price hike of wood in Bulgaria.Dachev said that they were forced to take this extreme measure in order to eliminate further losses for the factory, which in 2008 reached EUR 6 M.Starting next week, part of the 350 "Svilocel" workforce are going to be sent home on paid annual leave, while those remaining on the premises will be working on the facilities' maintenance.At the moment, the company warehouses store 8 tons of cellulose, which would eventually be used if and when the market situation improves.