BULGARIAN ECONOMIC TOP NEWS DIGEST
WEEKLY REPORT ( 20 - 27 FEBRUARY 2009 )
Sections/headline briefs:
MACROECONOMY:
· World Bank: Bulgarian economy with good chance of growth in 2009
· EU pledges € 3.5 B for alternative gas routes
· Iranian press report Bulgaria interest in natural gas from Iran
· Bulgaria negotiates 2.6 B levs under EU programs
· Mortgage moratorium
· Construction of new terminal on Plovdiv airport starts
· Bulgaria's Foreign Debt Rises to EUR 4 Billion
· Bulgarian emigrants send $ 1.9 billion back home
· Bulgaria, Georgia to have direct ferryboat line
· Bulgarian factories for sale in London
· Bulgaria’s soft drinks mkt passes BGN 1.5 B
· Bulgaria's dairy exports swell a record 30 per cent Y/Y in 2008
· Bulgaria receives 711 M levs from Europe for environment protection
· Development bank to back more SMEs
· € 25 billion assistance for Central and Eastern European banks
· Italians to build the gas connection between Bulgaria & Greece
INVESTMENTS:
· Investments for € 4 B to come in Bulgaria in 2009
· € 166 M to be given for Bulgaria's vine and wine Sector
· Intersnack Bulgaria reports a profit increase of 250%
· Schenker invests 20 million leva in logistics terminal in Bozhourishte
· UK company predicts large Bulgaria manufacturing investments
· Bulgarian Winslow Group to put € 100 M into renewable energy projects
· 120 new hotels open up in Bulgaria in 2008
COMPANIES:
· Bulgarian ICT industry to participate in Hannover's CeBIT
· 60 Bulgarian companies put on sale
· Bulgarian fashion label Ariston S fashion doubles revenue in 2008
GLOBAL FINANCIAL CRISIS ANALYSIS AND NEWS:
· Bulgaria's PM: The cabinet's goal is to fight crisis efficiently
· Bulgaria’s currency board is financially secured
· Economist: Strong euro is a problem for Bulgaria
· The crisis left Bulgarian banks high and dry
Articles:
MACROECONOMY:
World Bank: Bulgarian economy with good chance of growth in 2009
Bulgaria was among six Central and Eastern European countries whose economies could grow in 2009, if only marginally, the World Bank said in a report."Forecasts are subject to very high degrees of uncertainty, mostly on the downside," the bank said, but Bulgaria, the Czech Republic, Poland, Romania, Slovakia and Slovenia could each see up their economies expand by up to two per cent.Hungary, however, would see its economy shrink by three per cent, while the Baltic states' economies could contract by as much as five to seven per cent, according to the report.Lars Christensen, emerging markets economist at Danske Bank, quoted by Reuters, said that the report was overly optimistic: "It looks pretty much a fantasy scenario for the region. In our view no country in the region will see positive growth in 2009. A drop in GDP of seven per cent in Latvia for example would be a miracle."A report by Citibank, quoted by Bulgarian-language daily Dnevnik, said that Bulgaria's currency board would help the country weather the turbulence.The currency board is stable enough to deal with the shocks, since it has enough buffers in the fiscal and currency reserves, the report said. Alternatives like currency devaluation or adopting the euro were not the best solutions, it said.The region faced a dearth of international liquidity, exposure to vulnerable banks, and collapsing export markets. Policymakers' options to deal with the crisis were limited due to monetary and budget constraints that also left little or no room for fiscal stimulus, Reuters reported.Already the crisis has taken the first political casualty in Eastern Europe, as Latvia's Prime Minister Ivars Godmanis resigned on February 22. The country agreed a 7.5 billion euro bail-out in 2008 and expects to be one of the worst hit by the crisis, with Godmanis' cabinet forecasting the economy shrinking by 12 per cent in 2009.With Western European members of the EU making no progress on any initiatives to prop up the economies of member states from the former communist states, forecasts like the one in the World Bank report could prove overly optimistic.
EU pledges € 3.5 B for alternative gas routes
Bulgaria is expecting to receive hefty cash to build alternative gas supply routes out of a total of EUR 3.5 billion of EU money earmarked for energy efficiency projects, Energy Minister Petar Dimitrov said after returning from a meeting with his EU counterparts. Bulgaria needs a total of EUR 250 million in energy spending to secure its gas independence after suffering the heaviest blow from the recent halt in gas supplies from Russia, according to Dimitrov. The country’s top priority is building reverse gas links with Greece and Romania. Together with Austria, Hungary and Germany, it will also take part in the distribution of resources for the Nabucco project, which will carry gas from central Asia to Europe starting in 2013.
Iranian press report Bulgaria interest in natural gas from Iran
Bulgaria is allegedly in negotiations with Iran to import natural gas and invest in a LNG production plant in the oil-rich country according to Reza Kasaizadeh, the Managing Director of the National Iranian Gas Export Company, cited by Iranian Press TV.Kasaizadeh stated "In these negotiations, Bulgaria announced its readiness to invest in the liquefied natural gas (LNG) sector and purchase gas via the ninth pipeline ... to improve its energy security," Mehr News Agency reported.Kasaizadeh added that a delegation from the Bulgarian company Bulgargaz negotiated with Iranian officials over the country's gas projects during a two-day visit to Iran. Iran sits on 16 percent of the world's natural gas reserves, second in the world only to Russia. In a related development, Kasaizadeh said that Tehran and Ankara have signed an agreement to transfer Iranian natural gas to Europe via Turkey. "Under the new agreement, Turkey can transfer up to 35 billion cubic meters of gas from Iran to Europe," he said. Turkish President Abdullah Gul said in December that Ankara could buy natural gas from Iran and Iraq to feed the Nabucco pipeline.
Bulgaria negotiates 2.6 B levs under EU programs
Bulgaria has signed contracts for BGN 2.6 billion (about 1.3 billion euro) under various EU programs, Deputy PM Meglena Plugchieva said in an interview with the national radio, quoting statistical data of the last month. In May last year, the government signed contracts worth only 93 million levs (about 46.5 milion euro) EU money. Mrs. Plugchieva said tight control would be exercised on the implementation of the projects. The Deputy PM is concerned about the re-equipment of the country?s food processing sector envisioned under the Sapard program, as irregularities were found in sixty-four out of the seventy projects scheduled for implementation. A team of experts from Bulgaria?s Finance Ministry is currently working out a mechanism that will allow the municipalities to directly apply for funds from the European Investment Bank. The bank?s Vice President will come to Bulgaria to open an office under the JASPERS (Joint Assistance to Support Projects in European Regions) program.
Mortgage moratorium
If it was meant to win construction entrepreneurs a modicum of public support in the face of the impending crisis, their most recent initiative looks more likely to backfire.The announced intention of the construction, architects’ and notaries’ chambers to petition the Cabinet to impose a two-year moratorium on mortgage interest rates for households that have mortgaged their only residence have found few sympathetic ears.The reasoning behind the industry’s demands is the ubiquitous forecasts that the sector would suffer the most from the slowing down economy both domestically and globally. In 2009 alone, according to participants in a seminar organised by the three chambers in Plovdiv on February 15, as quoted by mediapool.bg, construction companies would lose two billion leva worth of custom because of the economic downturn.A Cabinet moratorium on mortgage interest rates, coupled with an interdiction on banks foreclosing on mortgage loans, would help stabilise the real estate market and help the construction sector weather the crisis.Despite the construction and lending boom in recent years, property prices have gone steadily up to levels perceived as inflated, for which construction companies are often, rightfully or wrongfully, blamed.But while the general public is at best indifferent to the plight of the construction entrepreneurs, or even cheering on their downfall, macroeconomists have branded the initiative as dangerously counterproductive. Given that the overwhelming majority of mortgages are taken by households for their primary residence, such a measure would cause further cash flow problems for banks, already reeling from low liquidity."It is complete madness and is in the top five worst ideas, which could wipe out all the advances made by the Bulgarian economy over the past 12 years," macroeconomist Luchezar Bogdanov from think-tank Industry Watch told Dnevnik daily. A state intervention of this kind would distort the market and send the message that meeting contract obligations is far from mandatory, with terrible consequences, he said.Former Bulgarian National Bank (BNB) board member Garabed Minasyan argued that the general public would not benefit in the least from such a measure: "Who will pay the difference if interest rates are frozen by an administrative decision - taxpayers. Why should taxpayers pay for the losses of one industry?"
BNB governor Ivan Iskrov wasted little time in adding his voice to the chorus."The attempts to put debtor rights ahead of creditor rights are unacceptable," Iskrov told a forum dedicated to Bulgaria’s economic prospects during the current crisis. "There are proposals being made by non-governmental organisations and members of Parliament in that sense, but if that is allowed to happen, it would cause a serious negative impact and Parliament should reject them.""The economy will adapt to the new conditions on its own, as long as there is enough financial stability. Some sectors that relied not on balanced growth, but on over-optimism, outright greed if you will, will hurt more while they adapt". Bad loans: Bulgarian bankers, predictably, have countered any initiative of this sort, including an earlier attempt to increase grace periods for overdue interest payments, by saying that there was no need to resort to such drastic measures because the ratio of bad loans remains low.Bulgarian lenders have so far been fairly accommodating in restructuring mortgage debt, extending the repayment period and lowering monthly payments in exchange for higher interest, Teodora Dimitrova from the Bulgarian office of Era real estate advisory told journalists on February 16.On top of that, European Mortgage Federation data showed Bulgaria had one of the lowest ratios of household mortgage debt at 12 per cent of gross domestic product (GDP), compared to an average of 50 per cent in Europe. only Romania and Slovenia had lower ratios.A much bigger cause for concern, according to bankers surveyed by Dnevnik, was a potential jump in unemployment, which could drastically affect a lot of households with outstanding mortgage debt.
Construction of new terminal on Plovdiv airport starts
The construction of a new terminal on Plovdiv airport starts today. The start of the project will be announced by the Bulgarian prime minister Sergei Stanishev. The minister of transport Peter Mutafchiev will also attend the ceremony. The overall project for the modernization of the airport provides for the extension of the platform with six stopping places, the setting up of a new electric supply system, for which additional 2.7 EUR are to be granted. The total value of the investment is 20 million euro and the funding comes from the national budget. The extension of the airport will allow its capacity to reach 500 000 passengers per year. In addition its service quality, security and flights’ safety will increase. The modernization of the airport will create the necessary conditions for opening of new destinations and regular lines to the countries in Western and Eastern Europe and Russia. The airport will also implement cargo transportations, which is a prerequisite for the development of the economy and the opening of new work places.
Bulgaria's Foreign Debt Rises to EUR 4 Billion
According to data of the national bank, Bulgaria's gross foreign debt amounted to 36,648 billion euro at the end of 2008 which makes 108,4% of the country's GDP. In other words, this is an increase by 7.79 billion euro (27%) in a year alone. The debts of the banking sector account for the greater part of the country's foreign debt increase, as they rose by 3.3 billion euro (57,3%) up to 9 billion euro. Over the same period, the Bulgarian companies drew bank loans in the size of 13 billion euro, which is an increase by 2.894 (28,5%) billion euro in a year alone. Currently, Bulgaria's Cabinet has accumulated a gross foreign debt in the size of 2.719 billion euro (8% of the country's GDP), which is a decrease by 379 billion euro (12,2%) in a year.
Bulgarian emigrants send $ 1.9 billion back home
Nearly $US 1.9 billion has been wired back home by Bulgarian emigrants, according to a 2007 World Banks report, cited by Mila Mancheva from the Centre for Migration Analyses and Practices, a Kardzhali BGNES correspondent has reported. The abovementioned amount sufficed quite well to place Bulgaria at the world's 6th place in terms of absolute emigrant money transfer volume. Before Bulgaria is Romania with ($US 6.8 billion), Poland ($US 5 billion), Serbia ($US 4.9 billion) and the Russian Federation ($US 4 billion). In the conditions of a global crisis more and more Bulgarians flee abroad in search of better payment. The importance of emigrant money transfers for the countries of the region is proved by the fact that these resources are the second largest source of a country's foreign funding after the foreign direct investments to local economies, Mancheva points out in her survey. The role of the Bulgarians living abroad was presented in a Kardzhali-held discussion, which gathered politicians, businessmen as well as representatives of Kardzhali's district and municipal authorities.
Bulgaria, Georgia to have direct ferryboat line
By June 2009, Bulgaria and Georgia could sign an agreement on launching a direct ferryboat connection in the Black Sea, Bulgaria's Transport Minister Petar Moutafchiev was quoted by Bulgarian news agency BTA on February 23 2009.The ferryboat will link Bulgaria's Varna with Georgia's Poti and Batumi. At present Varna has a ferryboat link with Ukraine's Ilichovsk, which has ferryboat routes to the two Georgian ports.Within the next two weeks Bulgaria will draft the agreement and will present it to the Georgian side who has already agreed on the project.On March 3 2009, the day when Bulgaria was liberated from Ottoman rule as a result of the 1877/78 Russo-Turkish war, Varna will launch a ferryboat connection with Russia's port Kavkaz on the Kerch Strait that connects the Black Sea with the Azov Sea.
Bulgarian factories for sale in London
Nearly 60 Bulgarian businesses have been announced for sale on the Financial Times webpage, investor.bg reported. Among them various plants, factories, hotels, farms and even mineral springs. The most expensive offer is for a brand new Best Western hotel, located in the centre of Sofia; the price is $US 23,3 million. one of the cheapest proposals is for a call centre in Plovdiv, worth only US$ 32,000. A transport firm owner is willing to sell his TIR-trucks and his license for transportation services within the EU for the humble $US 360,000. A hunting and sport bullets producer would sell his business for a price of $US 1-5 million.“They will hardly get a good price. The world economy is in a state of serous crisis.Investors have no extra money to put in new undertakings,” Bulgarian Industrial Chamber Chairman Bozhidar Danev commented.
Bulgaria’s soft drinks mkt passes BGN 1.5 B
Non-alcoholic drinks consumption in Bulgaria continued its uptick, rising 10.8% year-on-year in 2008, under data by the industry association. The growth was fuelled mostly by iced teas, up 48%, and light and energy drinks, which gained 57%, accounting for around 2% of the market altogether. Carbonated drinks consumption increased by 10.4%. Cola drinks remained the main engine of the segment, making around 33%. The Bulgarian Soft Drinks Association (BSDA) said 1.8 billion litres of non-alcoholic drinks were sold last year, generating BGN 1.5 billion in annual revenue by retail prices. Per capita consumption grew to 94 litres from 85 litres. Low-sugar-content drinks made a big jump of 42%. Consumption of bottled mineral and table water surged 11.6%, or 106 litres per capita, and juices rose 15.5%.
Bulgaria's dairy exports swell a record 30 per cent Y/Y in 2008
Bulgaria's exports of milk, yoghurt, cheese and Feta cheese surged by 30 % year-on-year in 2008 in spite of scanty supplies of raw material, according to official statistics. The increase was the next of a string of successful years, when exports picked up about 25 per cent annually.By the end of November 2008, Bulgaria shipped abroad 30 400 tons of milk, cheese and Feta cheese.The association said the volume zoomed to a record-breaking 35 000 tons by the end of December, the highest in 20 years. Exports totalled a little more than 23 100 tons in 2007.Producers said the sector benefitted from dairy farm overhauls and the new niches tapped in the European Union, mostly in flavoured yoghurt and milk, which were only a trickle of 200 to 300 tons four years ago. Now, exports top 5000 tons annually.Cheese and Feta cheese exports almost touched 20 000 tons by the end of November, compared to 16 000 tons for the full-2007. The biggest market was the EU, which purchased nearly 65 per cent of the produce.As US consumers tighten their belts, businesses are shifting focus to the Arab markets, where Bulgarian Feta cheese has built a name. However, the crisis is likely to hit sales.Companies are also trying out for new markets. A month ago the association of Bulgarian milk processing firms won a contract to promote Bulgarian products in Russia and Ukraine in partnership with Italian producers.
Bulgaria receives 711 M levs from Europe for environment protection
"For the last few months contracts for total 711 million levs (1euro=1.95levs) have been concluded on the programme for environment protection," reported Bulgaria's Deputy PM, Meglena Plugchieva at the inauguration of a conference on the water sector in Bulgaria. The sum to be allotted till 2013 is 1.8 billion levs. However, the money necessary only for the modernization of the water sewerage system in Bulgaria totals 10 billion euro."The money from the EU funds will cover 30 or 35% of the necessary investments," Plugchieva said further. She believes the gap could be compensated by public-private partnerships.The two procedures of Competitiveness programme envisage 19,5 million levs, according to Plugchieva. one of the programmes supports the start of innovative enterprises and the other is for installment of innovative products and services in the micro, small and medium corporate companies.
Development bank to back more SMEs
Bulgarian Development Bank (BDB) will fund small and medium-sized firms with at least EUR 80 million following a guarantee line agreement with the European Investment Fund of up to EUR 60 million. The direct guarantee line from the EIF and the European Commission should be absorbed by February 13, 2011. The first guarantee line provided long-term loans worth EUR 42 million. BDB is EIF’s first financial intermediary for Bulgaria under the Competitiveness and Innovation Framework Programme (CIP) (2007-2013).
€ 25 billion assistance for Central and Eastern European banks
Global development banks have launched a co-ordinated two-year plan to lend up to 25 billion euros to shore up banks and business in crisis-hit Central and Eastern Europe, Reuters has reported.The plans were signed by the World Bank, the European Bank for Development and the European Investment Bank. According to the document outlined by Reuters, the banks will offer short term crediting for large amounts to assure access to capital for local companies.The development banks are to co-operate with Western European financial institutions in order to help prop up their Eastern European affiliates.
The European Bank of Development is expected to allocate six billion for 2009 and 2010. The European investment bank has said it will release 11 billion euro, of which 5.7 billion euro will be available immediately. The remainder should be approved by the end of April 2009.The World Bank has said it will offer guarantees for assets up to 7.5 billion euro. Moreover it has said that it will invest in infrastructure projects. All banks are trying to co-ordinate their activities with the International Monetary Fund.
The Bulgarian president Georgi Parvanov was received on official ceremony in the Italian palace “Chigi” by the Italian prime minister Silvio Berlusconi, informs Novinar newspaper. We accept with satisfaction the suggestion of the Italian company “Edisson” to take part in the construction of the important for us transit connection between the gas transport systems of Bulgaria and Greece from the town of Dimitrovgrad to the town of Comotini. This claimed yesterday president Parvanov after a working lunch with the Italian PM Silvio Berlusconi in Rome.A day earlier Berlusconi’s sister Maria Antoaneta Berlusconi passed suddenly away in Milano and yesterday the Italian PM attended her funeral. However, his meeting with the Bulgarian head of state continued more than the scheduled. Silvio Berlusconi has confirmed to Georgi Parvanov his participation in the International energy forum, which is organized by the Bulgarian president on 24-25 April in Plovdiv. Italy’s readiness to participate in the forum is especially important, claimed Parvanov. During the meeting the two officials have discussed also the problems, which arise from the financial crisis and have agreed on a more active dialogue between the two countries.I am happy to see that the Italian investment interest in our country is not decreasing, said Parvanov. Berlusconi added that they had discussed a range of international problems an had shared their opinions on them.At a working breakfast Georgi Parvanov and representatives of the Confederation of the Italian investors have agreed on regular meetings between the Italian investors and their Bulgarian partners. The countries which invest mainly in Bulgaria’s energy and infrastructure, want to keep their high level of exchange with Bulgaria and even to increase it. According to them Bulgaria is an attractive place for foreign investment because of the good tax environment and the simplified administrative procedures. Although now Italy is 10th among the foreign investors in Bulgaria, Parvanov has claimed that the country could get to a higher rank.
INVESTMENTS:
Investments for € 4 B to come in Bulgaria in 2009
Some EUR 4 billion direct foreign investments are about to come in Bulgaria in a few months, deputy minister of economics Yavor Kuyumdjiev announced at BalREAct, the anti-crisis real estate forum in Sofia. He forecast that foreign investments in the country in 2009 will be on the levels of those in 2007 when they reached EUR 5.7 billion.
Kuyumdjiev did not mention specific candidates but envisaged companies in the area of pharmacy, chemistry, power engineering and automobile makers from EU and China. The plan of government is to draw the attention of export-oriented companies with developed markets that do not rely on domestic consumption. They will be attracted in special state industrial zones in order to save them all bureaucratic procedures and problems. The first such industrial centres will be built on the place of the recent zones for free trade in Rousse, Vidin and Svilengrad. They belong 100% to the state.
The primary tasks for Bulgaria now are to build infrastructure and improve business climate in order to be competitive and attract investors.
€ 166 M to be given for Bulgaria's vine and wine Sector
The Bulgarian government has granted EUR 166 M to the National Program for Support of the Vine and Wine sector.This was announced by the Deputy PM, Meglena Plugchieva, and the Minister of Agriculture and Food, Valeri Tsvetanov, at the official opening of the program Monday.The program will continue until 2013, and the farmers who participate in it must have at least 1 decare of vineyards. They must declare participation in the program until June 1 every year.The funding is stipulated in three measures, Plugchieva explained. The first measure is for restructuring of vineyards, which is not a new measure for the vine and wine sector in the European Union.The second measure is connected with promotion of Bulgarian wines in other countries. Plugchieva also added that the Bulgarian wine producers would have the chance to take part in numerous international fairs, and advertise their products.The third measure will allow financing for insurance of the harvest. "It is about time for Bulgarian farmers to develop tradition in insuring their harvest", Meglena Plugchieva said.
Intersnack Bulgaria reports a profit increase of 250%
The company plans investment of over 25 million levs in 2009. The turnover of the company for 2008 is 35% higher, as the company has sold 3 thousand tons of production.Intersnack Bulgaria plans to invest over 25 million levs in 2009 in new production bases, new products, education and development of the personnel, as well as programmes for stimulation of the Bulgarian agriculture.The company plans to invest 16 million in the construction of a factory for chips production in Ihtiman and over 50 000 levs in the development of manager and commercial skills of its personnel."Another 2.5 million levs will be prepared for a programme, supporting local producers of potatoes and sunflower", Ms Iliyana Nikolova, financial director of Intersnack Bulgaria, said.The major brands, which Intersnack Bulgaria offers in Bulgaria, are CHIO, Pom Bar, Maxi Mix, Stickletti and Party Mix.
Schenker invests 20 million leva in logistics terminal in Bozhourishte
Schenker EOOD has spent 20 million leva on construction of a new vast logistics terminal in Bozhourishte, said the company's executive Helmut Schwaighofer, as reported by Stroitelstvo Gradut.The facility will spread over a 48 000 sq m parcel of land behind the Sofia-Bankya railway track in the Toleva borough, where, in accordance with the scheme developed by the Sofia Municipalitiy, it envisages the creation of an extensive facility to accommodate large storage sheds, business, trade and commercial offices and administrative buildings and a logistic-distribution-command centre.The project was developed by chief architect Roman Heid and Porsche Concept. Heid has extensive experience of revamping former Schenker terminals and logistics centres in other countries.Permission for construction was signed on December 30 2008, and, according to Schwaighofer, "six to eight Bulgarian companies will be selected from an auction that will be ultimately entrusted with the responsibility of the construction procedures".The terminal will consist of more than 3000 sq m of storage hangars, a 2000 sq m freight procession centre facility and more than 3000 sq m of office buildings as well as an administration centre for the company. The terminal will be built with the capacity to service all destinations within the European Union as well as inside Bulgaria. All auxiliary infrastructure and loading and unloading docking facilities will be built, including hydrolic ramps, cranes and others.Schenker has invested another 350 000 leva in the construction of an extensive encircling drainage system, 445m long.The terminal will be able to handle 20 lorries simultaneously. All storage facilities and office buildings will be fully air conditioned, and the Schenker terminal will boast its own water treatment and purification system.Annual processing freight capacity is predicted to reach 200 000 tons. The facility, which will boost the local economy by creating more than 150 jobs, will be completed by the end of 2009.
UK company predicts large Bulgaria manufacturing investments
According to the UK Growth Partnership Company, Frost & Sullivan (F&S), Bulgaria offers a great potential for growth of electronics manufacturing and contract manufacturing services, a PRWeb press release reported Tuesday.F&S also expect Bulgaria to be one of the largest avenues for Foreign Direct Investment (FDI) in South-East Europe in the coming years.They stated that electronics manufacturers look forward to a positive turnaround with more market opportunities in the country in the second half of 2009, thanks to the Bulgarian government's support.Harish Natesan, research analyst for F&S Electronics & Security group continued; "The Bulgarian government has decided to lower investment thresholds and offer more incentives to electronics manufacturers investing in high unemployment regions in the country. These economic reforms in the wake of the economic slowdown have been an attempt to lower the impact of this crisis on the Bulgarian economy. Hence, Bulgaria is expected to be one of the largest avenues for Foreign Direct Investment (FDI) in South-East Europe in the coming years.on the negative side F&S state that high inflation rates in Bulgaria have been a cause of concern, especially amidst the economic slowdown expected to impact Bulgaria's growth in the latter half of 2009.
Bulgarian Winslow Group to put € 100 M into renewable energy projects
Bulgarian investment firm Winslow Group said on Wednesday it had earmarked over EUR 100 million (USD 128m) for renewable energy projects. one of the projects in progress is a photovoltaic plant that will become fully operational by the end of 2010 in General Toshevo in northeastern Bulgaria. The capacity will rise on a 5.4-hectare plot and will comprise thin-layer photovoltaic panels installed at an angle of 36 degrees with a south-southeastern exposure. An administrative procedure on the project is underway after the sunlight audit proved the area’s ample sun power potential. The company is currently tapping international expertise to develop two wind farm projects near the villages of Boyana and Yagnilo, both in northeastern Bulgaria. Bulgaria has committed to generate 16% of its power from renewable sources by 2020 as part of national and EU’s go-green efforts. The construction of photovoltaic, wind, hydro and combined cycle power plants is funded under the EU measure 312 in support of rural development.
120 new hotels open up in Bulgaria in 2008
120 news hotels opened doors in Bulgaria in 2008, according to data released by the National Statistical Institute.This is an 8% increase bringing the total number of hotels in Bulgaria to 1 646. 43,3% of all hotels, and 63,8% of all hotel beds are located on the Bulgarian Black Sea coast.A total of 3 217 accommodation facilities existed in Bulgaria in 2008, including hotels, motels, camping sites, and lodges.The total number of beds in these facilities increased by 7,3% in 2008 to reach over 293 000 beds.The number of overnight stays in Bulgaria's accommodation facilities grew by 1,2% (or by 215 000) compared to the 2007 figures, reaching a total of over 18,3 million overnight stays.The general trend shows an increase in the number of overnight stays by Bulgarians, and a decrease in the number of overnight stays by foreign citizens.
COMPANIES:
Bulgarian ICT industry to participate in Hannover's CeBIT
The Bulgarian Information and Communication Technologies (ICT) Industry will be on display at CeBIT, the world's largest trade fair showcasing digital IT and telecommunications solutions for home and work environments. The exhibition will take place in Hannover on March 3-8, the State Agency for Information Technologies and Communications (SAITC) said.The Bulgarian ICT Industry Day will be held at Room 13 of the Convention Centre on March 5. At "CeBIT 2009", SAITC is presenting the ICT policy in Bulgaria.The Bulgarian Association of Software Companies (BASSCOM) will outline the role of the national and regional IT associations for supporting competitive development of local ICT small and medium-sized enterprises. An emphasis will be placed on Bulgaria as a software hub in the region.Bulgaria has invited ministers, government officials, Bulgarian and foreign IT companies, which are exhibiting at CeBIT and which have stakes in the development of the IT sector in Bulgaria, SAITC said. Bulgarian students in Germany will take part in the discussions.The Bulgarian ICT Industry Day is traditionally supported by SAITC and the Executive Agency for Promotion of Medium and Small-Sized Enterprises.
60 Bulgarian companies put on sale
The Bulgarian owners are searching a way out for their investments and are using the portal of “Financial times” for sale of the own business. This shows a check up in the internet site of the business edition in the section Business for Sale.At the moment over 58 objects are put on sale, among them mainly hotels, textile, bottling and transport companies, as well as enterprises in the light and the processing industry.Among the objects that are on sale are several bigger hotels in Sofia, Golden sands, Bansko and the South Black sea, with the prices varying between several to 25 million US dollars. The real estates dominate the “sale” offers.Two larger mineral water bottling companies are also on sale – one around the town of Plovdiv, the other in Northeast Bulgaria.The reasons for the sale are different –from assets’ liquidation, which aims at funding other more strategic for the owners businesses to personal and family reasons.
Income from the four labels of Bulgarian fashion house Ariston S - Ariston S, a'smove, a's fashion for living and Bobo Zander - reached 5.87 million leva for 2008, an increase of 118 per cent over 2007, according to an official press release from the company, quoted by Investor.bg. The indicated revenues are only from proceeds and do not include income from other company activities.Last year, Ariston S increased its market network by 14 stores and hired another 58 staff. Personnel were primarily employed in the marketing department and product development. Towards the end of 2008, the company employed 642 people.In the period 2001/08 the company has invested more than 17 million leva in the city of Rousse alone.Investment for 2009 is estimated to exceed 1.78 million leva. The company is planning to pay special attention to updating its Information and Telecommunications technology and manufacturing technology. Part of the investment will be allocated towards human resources but the highest proportion of investment will go towards the further expansion of the market network and franchising of Ariston S.
GLOBAL FINANCIAL CRISIS ANALYSIS AND NEWS:
Bulgaria's PM: The cabinet's goal is to fight crisis efficiently
The economic crisis comes from abroad and it is not an aftermath of mistakes made by the Cabinet. Our goal is that Bulgaria faces the crisis last and overcomes it first. The main concern of the cabinet is to preserve the incomes of the Bulgarians and to keep the labor market and the fiscal system stable. I cannot accept the thesis that Bulgaria is drifting away from the EU and NATO. one of the strongest points of Bulgaria is namely its participation in the process of decision-making within the EU - as regards the Lisbon Treaty, the Climate-Energy package, regional policy in Southeastern Europe and the Black Sea region and other key for the EU matters. Bulgaria's economy registers an average annual growth rate of over 6% and this is the highest rate since the democratic changes occurred in Bulgaria. In 2007 Bulgaria was ranked first as regards executed tax reform. The direct foreign investments for the last years hit over 20 billion euro which is more than the investments made throughout the whole transition period.The employment rate in Bulgaria has grown by 4% in each of the last 3 years, while the unemployment for 2008 registered a twofold decrease compared with the beginning of the incumbent cabinet?s term of office. The incomes of the Bulgarians grow constantly. After 2005, the Cabinet tightened the fiscal discipline and ensured significant budget surplus. The assets of the banks amount to nearly 35 billion euro end-2008, which is by 17% more compared to 2007. The credit institutions in Bulgaria are among the best guaranteed in the EU - the coverage is 115%.
Bulgaria’s currency board is financially secured
The financial security in Central and Eastern Europe was among the most topical issues last week. World Bank President Robert Zoellick called for coordinated actions on the part of EU in support of these economies. He announced the establishment of a special fund that would raise 25 billion US dollars to buy out the most risky assets of the Central and Eastern European banks. However, Brussels did not seem to support a uniform approach to the financial worries of Central and Eastern Europe. The EU authorities say each separate case should be approached individually. The countries that investors call BELL (Bulgaria, Estonia, Latvia, Lithuania) for short, did not pass uncriticized. We must, however, admit that Bulgaria’s place in this group is not completely deserved, because the only thing these countries share in common is the currency board regulated financial system. If we compare these four countries analytically from the standpoint of certain important financial indicators investors generally pay attention to when defining the degree of stability of a financial system, we clearly see that Bulgaria is in a far better condition technically speaking than the rest of them. For example, Bulgaria’s rate of the state reserve against its liquid monetary mass is 128 percent; the same indicator for Lithuania is 62,5 percent, then comes Estonia with its 56,6 percent and last but not least Lithuania with 83 percent. In other words, Bulgaria’s currency board is much better backed compared to all of these countries when it comes to monetary mass in circulation. According to Citigroup, Bulgaria’s currency board will survive even the financial turbulences that are yet to come.
Economist: Strong euro is a problem for Bulgaria
Europe is facing nightmarish problems in its east. With help from the West, meltdown can be avoided.IF YOU mix East Asia from 1997 with Latin America in 2001, do you get eastern Europe in 2009? Already worried, financial markets are pricing in the likelihood that one or more of the ex-communist countries in the region will default on its debt.The biggest weakness lies in a financial system that has combined badly run local banks with loosely overseen subsidiaries of Western ones. During the boom years, this system gobbled up credit from abroad, leading to yawning current-account deficits. Both kinds of banks now have souring loan books—the result of reckless lending, often in foreign currencies. Some local banks have failed; many of the foreign-owned ones now depend on their parents’ willingness to keep financing them—and those parents have plenty of problems at home. The Greek government has told its banks to draw back from their lending in the Balkans. Austria’s lending to eastern Europe is equivalent to about 80% of its GDP.If finance is the immediate worry, the global downturn is causing plenty of other problems. Exports of manufactured goods to western Europe have plummeted; remittances from migrant workers employed there will also surely fall. Ukraine, dependent on exports of steel and coal to Russia, seems to have abandoned the deal it struck with the IMF only three months ago as part of a $16.4 billion bail-out. Latvia, also rescued by the IMF, is expecting a 12% fall in GDP this year. The collapse in output is likely to be as big as Asia’s ten years ago—but with a twist. The Asian countries recovered thanks to export-led growth. Now the whole world is in a mess. What can the governments do? In many places the policy levers look flimsy. Countries such as Poland and the Czech Republic have cut interest rates to help ease the pain—but this has sent their currencies tumbling, increasing the agony for households that have mortgages in Swiss francs or euros. Some countries have an extra problem of big external government debts (in Hungary’s case, the gross figure is near 100% of GDP). Even those that could perhaps afford to run a counter-cyclical policy to offset the effects of the downturn are squeezing public finances—in part because they think that cutting deficits will help them reach the (presumed) safety of the euro zone.For four countries—the three Baltic states plus Bulgaria—the strong euro is a problem; they have pegged their currencies to it. Some fear a repeat of the doomed struggle to keep Argentina’s currency board afloat in 2000-01; or perhaps worse if one currency’s collapse swamps others. As for help from abroad, the IMF can give instructions to individual countries, but it cannot run the whole region. The European Central Bank, which is not a lender of last resort even to banks in the euro zone, has been sniffy about lending to countries outside it. Worse for some, much worse for others. A very nasty recession is inevitable, but regional catastrophe is not. For a start, talk of “eastern Europe” is imprecise. The woes of Kazakh banks or of Ukraine’s public finances have little to do with the countries, mainly smaller, richer and better governed, that are already in the EU. If Ukraine defaults or (more likely) is forced to restructure its debt, it need not hurt others. Though the region has allowed startling imbalances to develop, foreign-exchange reserves are generally stronger than in Asia ten years ago; and there is less light-footed “hot money”. For the new EU members, there is also the prospect of help from the West. Their banking systems are far more intertwined than Asia’s were and the foreign banks are less likely to walk away (see article). The Baltic countries have been bolstered by a Swedish guarantee covering Swedish banks that operate there. Although the EU and the ECB may not want to get involved in bigger bail-outs, they will have to. Even the most short-sighted west European politician will surely not send his neighbours into economic and political anarchy.This is the most perilous period for east European countries since the collapse of the Soviet Union. People there are going to be a lot poorer and (justifiably) crosser. But it would take a bout of wilfully destructive protectionism and the demise of the EU’s main institutions to turn that into disaster.
The crisis left Bulgarian banks high and dry
While banks are fighting for the people’s deposits by raising interests to the heavens, Bulgarian business withdraws the money from its accounts, The Pari Daily reads today. Analyzers think that this is not due to the instability of banks but the firm’s hunger for money. Experts point out that during the last few months banks have practically reduced financing to a minimum (only BGN 240 million in January) and thus, forcing companies to resort to their savings. The other reason for the withdrawal of money from bank accounts is tax preferences in the beginning of the year. Bankers, however, share a different opinion. According to them business is not drawing its money, but only transferring it from one account to another. Petar Andronov, CEO of EIBank, notes that some of the companies optimize their liquid resource by drawing them from the company’s payment accounts and deposit them as a physical person because of higher profitability. only in January the crisis and optimization of busness’s liquidity led to the withdrawing of BGN 550 million from corporate bank accounts and another BGN 170 million from deposit ones. At the expense of this, however, term deposits of physical persons registered a growth of BGN 708,4 million. BNB’s data prove Andronov’s claims.