BULGARIAN ECONOMIC TOP NEWS DIGEST
WEEKLY REPORT ( 20 - 27 MARCH 2009 )
Sections/headline briefs:
MACROECONOMY:
· Ambassador Takeda: Japan support for Bulgaria reaches approximately €1B
· Bulgaria foreign minister forges stronger ties with China
· Bulgarian construction projects set to boost steel demand
· Power from renewable energy sources accounts for 7.3 % of electricity consumption in Bulgaria in 2008
· Russia ready to finance NPP Belene
· Compensations for units 3 and 4 under € 900 M
· Moody's affirms Bulgaria at BAA3, outlook stable
· Bulgaria to save its economy through a loan
· EBRD to grant €100 M for big projects in Bulgaria
· Central bank currency reserves hit 18-month low
· Bulgarians’ savings turn into euros
· Bulgaria down 11 slots in Forbes’ business climate list
· Presidents and PMs come for a summit in Bulgaria's capital
· 'Green energy’ prices on the rise
· Bulgaria will import natural gas from Azеrbaijan in 2010
· Bulgaria and Greece sign medical equipment supply contract
· Construction material prices up by 2 to 10%
· Warn about the presence of DMF in some leather products from China
INVESTMENTS:
· Bulgaria's first carmaker to be set up in Sliven
· Spain's Glual opens €3.1 M pneumatic systems plant in Bulgaria
· € 20 M business center to built in Sofia
· Burgas Plaza to open EUR 60 M trade centre by end of April
· Israeli firm to break ground on Mall Stara Zagora by end of 2009
· Bulgarian investors to pump € 25.5 M into PV HPP near Pavlikeni
· Bulgaria's Katex considers investing €8 M in solar park
· Bulgaria to get BGN 2.500 M for investment in water and sewerage sector
· BGN 12.6 M investment in new hydropower stations
· Unipack to invest BGN 3 million in quality
· Germany will continue to be the biggest investor in Bulgaria
· Advertising investments in Bulgaria in 2009 to decline 25%
COMPANIES:
· Kaolin division kicks off solar panel production
· Omnitek Engineering with conversion projects in Bulgaria & Turkey
· Technopolis to open Veliko Turnovo store in November
· Carrefour opens first hypermarket in Bulgaria
· Unprecedented dumping war between hypermarkets in Bulgaria
· Bulgaria to showcase machine building, IT, electronics, pharmaceuticals, real estate at exhibition in Moscow
GLOBAL FINANCIAL CRISIS ANALYSIS AND NEWS:
· Bulgaria chemical industry collapses over global financial crisis
· Bulgaria could face recession, IMF mission chief says
· Capital Economics: Bulgarian economy to shrink 5%
· EU will grant Bulgaria € 105 M over financial crisis
· Sofia faces idle construction sites of over BGN 3 B
· Business urges government anti-crisis plans
ANALYSIS:
· The European Union and Bulgaria: a new colonialism
Articles:
MACROECONOMY:
Ambassador Takeda: Japan support for Bulgaria reaches approximately €1B
Japanese support for Bulgaria in the period of transition reached approximately 1,000 million euro, Japanese Ambassador Tsuneharu Takeda said Tuesday. He gave a public talk on "Japan-Bulgaria: Partnership in the Future" organized by the Atlantic Club in Bulgaria.After Bulgaria's accession to the EU in 2007 Japanese economic aid lessened and Bulgarian Japanese relations entered a new phase in which private initiative has a more significant role, Takeda said. The extent to which Bulgaria attracts Japanese investments is exceptionally important for boosting economic relations between the two countries, he added. He noted that in this respect the support of government structures is exceptionally important for the decision-making process of Japanese investors.Further on, in spite of the cheap workforce and preferential tax system, time-consuming and costly bureaucratic procedures eliminate the advantages and have a negative impact. The lack of transparency and the low degree of predictability make drawing business plans impossible, Takeda said, adding that it was recommended for the Bulgarian government to take these important factors under consideration. He also remarked on the need for japanese business to be sufficiently informed about the economic environment in Bulgaria.In the concrete economic situation, one of the sectors with a potential for Japanese investment is renewable energy sources.Takeda also spoke of the car industry, giving an example with Nissan, which Margaret Thatcher invited to Great Britain in the beginning of the 1980s, the result being a resurrected economy in Northern England and profit for the company. According to Ambassador Takeda, such an idea about a vehicle assembly plant in Bulgaria deserves consideration.Takeda also remarked on Bulgaria's important geopolitical location, bilateral political dialogue at various levels, joint projects and cultural relations.The event was also attended by Atlantic Club Honorary president Solomon Passy, who spoke of the good bilateral relations with Japan. In his words, Bulgaria is so popular in Japan as few countries are popular in others.
Bulgaria foreign minister forges stronger ties with China
Bulgaria's Foreign Minister, Ivaylo Kalfin, visited China Monday to try forging even better economic ties between both countries.Kalfin, who is also Bulgaria's Deputy Prime Minister, met in Beijing with his Chinese counterpart Yang Jiechi and with Vice President Xi Jinping.Both sides expressed their deep satisfaction from the strong economic and cultural ties between the two countries in the wake of the 60th anniversary of establishing diplomatic relations between Bulgaria and China.New forms of cooperation in the light of Bulgaria's membership in the European Union and the global financial crisis were discussed during both meetings.Trade and economic relations between Bulgaria and China will be enhanced through projects in the areas of environmental protection, new farming technologies and the development of human resources.The Chinese officials pointed out that the Chinese government has decided to encourage leading Chinese companies to invest in Bulgaria, especially in the infrastructure and construction of electric power plants using renewable sources. Kalfin is on an official visit to China from March 21-25. Besides Beijing, he will also pay a visit to China's economic powerhouse Shanghai.
Bulgarian construction projects set to boost steel demand
A host of planned construction projects in Bulgaria, funded privately and by the European Union, is set to increase steel consumption in the country over the next few years, Steel Business Briefing learns.Among the projects is a new €80 M, 50MW capacity wind farm in Kazanlak, central Bulgaria. It is being constructed in 2009 and 2010 by Vetrocom, a subsidiary of Swiss energy group Alpiq Holding. Wind turbines for the project will be sourced from German manufacturer Fuhrlnder and will require some 6,000 tonnes of steel. The steel will be sourced from “different international suppliers,” the German company informs SBB.Added to this, infrastructure and finance group General Electric is set to invest €200-800 M in a 150-500MW wind energy park in Mirkovo, near Sofia. While Japan’s Mitsubishi Corp plans to build a €200 M energy park in Pleven, northern Bulgaria, by 2012. Austrian energy firm EVN is also investing €60 M in a 100MW thermal power plant in Plovdiv, scheduled for completion by 2011. Meanwhile, a new €20.5 M passenger terminal at Plovdiv airport, due to be completed next year, will require nearly 1,000 tonnes of steel, which will be sourced from Plovdiv-based Helios Metal Center, sources at the airport tell SBB. Demand for steel from infrastructural projects, such as the Trakia, Sofia–Kalotina, Shipka and Varna-Rousse motorways, as well as railway construction and €6 billion of EU-funded projects, are also expected to increase local steel demand, as previously reported.
Power from renewable energy sources accounts for 7.3 % of electricity consumption in Bulgaria in 2008
In 2008 7.3 per cent of the gross domestic consumption of power was of electricity from renewable energy sources, says a report on the accomplishment of the national indicative targets for consumption of power from renewable energy sources which Economy and Energy Minister Peter Dimitrov presented Thursday at the regular meeting of the cabinet, said the governments' information service. The indicative target for electricity from renewable energy sources in 2010 is 11 per cent of the gross domestic consumption of power, as laid down in the Treaty of Accession of Bulgaria to the EU. In order to achieve the set goals, different incentives for the use of renewable energy sources were laid down in the Renewable and Alternative Energy Sources and Biofuels. In 2008 about 96 per cent of power generated from renewable sources was produced in hydro-power plants. The first wind farm in Bulgaria with installed capacity of 35 MW was commissioned in 2008. Several small photovoltaic generators with capacity of 87kW too went into operation. Production of electricity by hydro-power plants is expected to increase. In 2010 the Tsankov Kamuk hydro-power facility is to go into operation. Its installed capacity is 80MW and the annual power generation is expected to be 158 GWh. Projects are being implemented for the construction of several small hydro-power plants.
Russia ready to finance NPP Belene
In an interview with the Bulgarian National Radio, Minister of Economy and Energy Petar Dimitrov said the government was searching for alternative sources of financing for the construction of Bulgaria’s second nuclear power plant in Belene (on the Danube.)
According to initial plans, Germany’s energy giant RWE, which won the tender for constructor, was supposed to start pouring money into the project as soon as the joint venture with Bulgaria’s National Electric Company was founded. But it appears that the Germans have altered their conception, probably because of the spreading global financial crisis. They now say they would start financing the project only after it is completely structured, which is expected to happen in 2010 at the earliest. For this reason the Bulgarian government has started seeking alternative sources of financing, including Russia. Last week Minister Dimitrov paid a working visit to Moscow, where he had talks with Russian Energy Minister Sergey Shmatko and Leader of GK «Rosatom» Sergey Kirienko. Minister Dimitrov quoted Russian PM Vladimir Putin who during his last year’s visit to Sofia said that his country could allot 3.8 billion euro for the construction of Bulgaria’s second nuclear power plant. So far Bulgaria has not considered the option of financing the construction of NPP Belene with Russian capital, but the withdrawal of RWE has made such a move necessary. During Mr. Dimitrov’s visit to Moscow it also transpired that Russia firmly supports the realization of South Stream natural gas pipeline project and considers an expansion of its throughput capacity, which currently amounts to about thirty billion cubic meters of natural gas per year. Mr. Dimitrov also said that the Bulgarian government is in negotiations over new contracts for the supply of Russian natural gas without intermediaries. The question about Russia taking the responsibility for possible halts in the gas supplies in the future has also been raised.
Compensations for units 3 and 4 under € 900 M
‘Bulgaria will be pushing for higher recompenses over NPP Kozloduy than what has been negotiated so far’, Minister of Economy and Energy Petar Dimitrov said yesterday. He added the country would be claiming under EUR 900 million for the period between 2009 and 2013. ‘I suppose the EU will provide the new financial aid of EUR 90 million a year’, Minister Dimitrov also said. The President of the European Commission, José Manuel Barroso, could not promise financial aid for Bulgaria, but his words ‘suggested’ a positive answer. ‘These money talks should pass through the European Parliament, and this is rater tough process’, Minister Dimitrov commented.
Moody's affirms Bulgaria at BAA3, outlook stable
Moody's said Friday it has affirmed the Baa3 local and foreign currency ratings of the Bulgarian government. The local and foreign currency bond ceilings are affirmed at Aa3 and A1, respectively. At the same time, Moody's also affirmed Bulgaria's foreign currency deposit ceiling at Baa3, short-term foreign currency bond ceiling at P-1 and short-term foreign currency deposit ceiling at P-3. The outlook on all the ratings and ceilings remains stable. In Sofia, Bulgarian Finance Minister Plamen Oresharski commented that the confirmed rating is satisfactory on the backdrop of the worsening world picture. The Moody's statement quotes Kenneth Orchard, Vice President-Senior Analyst in Moody's Sovereign Risk Group, as saying that Bulgaria "is likely to experience a difficult recession in 2009 as the economy suffers from shrinking exports and slowing inflows of foreign capital". "Nevertheless, many years of prudent fiscal policy and low debt mean that the government is well positioned to cope with the situation." Moody's recognises that the Bulgarian government used the recent period of robust economic growth to strengthen its financial position. Indeed, budget surpluses averaged 2.7 per cent of GDP between 2004 and 2008, debt/GDP declined to 14 per cent, and a significant fiscal reserve was accumulated. Moody's also notes that many years of strong domestic demand growth have left the Bulgarian economy with heightened vulnerabilities. Domestic credit, external debt and the current account deficit all increased at rapid rates from 2005 to 2008. The banking sector presently appears to be in reasonably good shape, with relatively high capital adequacy and liquidity ratios by international standards, but these buffers could be quickly eroded if the downturn intensifies. Moody's expects that foreign direct investment and banking sector capital inflows will decline significantly in 2009 due to the economic and financial crisis in Western Europe. "The decline in foreign financing will probably cause a sharp downward adjustment in the current account deficit, implying declining output and weak government revenue growth," cautions Mr. Orchard. "However, Moody's believes that low wages and a flexible labour market will ease the adjustment and ultimately allow Bulgaria to rebound when the regional economy improves." Moody's notes that public sector financing presents limited immediate risks. Government debt service in 2009-10 is low and the fiscal reserve provides a backstop if the government is unable to maintain its commitment to a budget surplus this year."Moody's believes that a greater risk comes from the large amount of private sector external debt that must be re-financed in 2009," emphasises Mr. Orchard. Moody's rating factors in the prospect of extraordinary financial support from the IMF, EU and related European institutions if the balance of payments were to significantly deteriorate. "Although it is not Moody's central scenario, the Baa3 rating assumes that official financing will be made available to Bulgaria to alleviate pressure on the balance of payments if the situation requires," adds Mr. Orchard. Low debt ratios mean that the government can afford to borrow to support the private sector and the currency board without threatening the government's creditworthiness. Debt/GDP could rise significantly and still remain well below the EU average.
Bulgaria to save its economy through a loan
Bulgaria is seeking a 200 million US dollars loan from the World Bank mainly for social reforms, as well as for the creation of new workplaces and growth of the labor productivity, writes reporter.gr.The government believes that through the loan the stability of the local economy on the background of the global economic crisis will increase. The loan which will be withdrawn in euro, is part of the coordinated loans of the World Bank aiming at support of the balance of payment of the country. The loan will be with a 19 year term of payment with 7-year gratis period. The interest rate will be determined by the 6-month LIBOR in euro. To remind, in Friday it became clear that Bulgaria will probably suffer a difficult recession in 2009 after shrinking of the export and delay in the incoming flows of foreign capitals. However, the many years of reasonable fiscal policy and the low level of the debt mean that the government is well positioned to manage the situation. This believes Kenneth Orchard, vice president and leading analyst in Moody’s Sovereign Risk Group. His words were cited by the Bulgarian ministry of finance at the publishing of the credit rating.
EBRD to grant €100 M for big projects in Bulgaria
The European bank for reconstruction and development (EBRD) will allot around 100 million euro for big projects in Bulgaria. This announced Anton Kobakov, senior banker in the credit institution during a meeting with representatives of the German-Bulgarian industrial – trade chamber. The overall sum, with which the bank will support the Bulgarian business is 250 million euro. The remaining part of the funding will be absorbed by the small and medium enterprises through the Bulgarian banks. A priority will be given to projects related to the increase of the energy efficiency, the introduction of renewable energy sources and information technologies. Usually the local banks get credit lines from EBRD, which they grant in the form of target credits, reminds Dnevnik.bg.Only companies with big projects can apply for direct funding from the bank. The received credit should be at least 10 million euro with this being 35% of the project for which the company applies. This year priority will be given to support for the enterprises to overcome the consequences of the world economic crisis. “So far we offered mainly investment credits, but now we will help the companies to secure circulation funding”, explained Kobakov. The approval of a direct credit from the bank takes around 3 months. The company needs to present a business plan for the development of its project. After it’s being approved, there are negotiations for its granting and the conditions under which the loan is given are defined. “The volume of the granted crediting is not as important as the fact that we will improve the flexibility of our financial instruments”, explained the EBRD representative Maxim Kakareka.
Central bank currency reserves hit 18-month low
The currency reserves of the Bulgarian National Bank (BNB) hit an 18-month low at 22.47 billion leva as of March 20, website investor.bg reported on March 24.The reserves peaked on October 17 2008 at 29.64 billion leva. Since then, BNB's reserves shrunk by almost a quarter, the bulk of which, 4.46 billion leva, was spent by the Bulgarian Cabinet at the end of 2008.The Government spent four billion leva from the Budget surplus, which is deposited at the BNB, on measures that it hopes would stave off the worst of the global economic downturn in the country.The other major outflow, to the tune of 2.78 billion leva, was caused by the central bank's decisions last year to relax monetary policy. BNB lowered the mandatory reserves on deposits that banks have to keep at BNB from 12 per cent to 10 per cent, cut the mandatory reserves on funds attracted from abroad from 12 per cent to five per cent and said that banks no longer had to keep any mandatory reserves on Government funds. It also allowed banks to count liquid cash as reserves.The reserves of BNB's bank supervision department over the same period grew by 700 million leva to 3.48 billion.
Bulgarians’ savings turn into euros
People in Bulgaria are rapidly switching to euros when it comes to keeping money in the bank. Household savings in euros in this country have for the first time since the appearance of the common European currency surpassed those in levs (1 euro = 1.95 levs). “In terms of savings, the ratio between the two currencies in the entire banking system of Bulgaria is 43:42 percent,” D Commerce Bank CEO Stoyan Alexandrov announced. What is more, Bulgarian National Bank January data shows that this process is rapidly gaining momentum. In the first month of this year, short-term euro deposits (1-12 months) have amassed an equivalent of 1,147 billion levs against 937 million levs of local currency deposits. The amounts in the one- to three-month deposits seem to grow quickly. In January 2008, the volume of the lev deposits of this kind amounted to 108,4 million. January 2009 brought a nearly fivefold increase, or 518 million levs. The situation with the euro deposits is quite similar: an equivalent to 220 million levs a year ago set against a current sum of 625,4 million levs.
Bulgaria down 11 slots in Forbes’ business climate list
Corruption and red tape dragged Bulgaria 11 places down in Forbes magazine’s 2009 Best Countries For Business list. The country was placed at number 55 out of 127 by criteria collected from research and methods by the World Bank, Heritage Foundation, the World Economic Forum, etc. Bulgaria fared worse in attracting investment than close rivals Macedonia, Romania and Croatia. The country gave up much of the ground it held last year due to worsening investment and business environment indicators such as corruption, bureaucracy, innovations and tax burden. It was ranked 105th in terms of bureaucratic bottleneck. Forbes estimated Bulgaria has made progress in technologies and property protection and topped the table in terms of investor protection. The latter criterion examines the recourse held by minority shareholders in cases of corporate misdeed and is one of the conditions for favourable business climate, according to Forbes. Bulgaria held up better in terms of free trade and personal freedom.
Presidents and PMs come for a summit in Bulgaria's capital
Bulgaria's capital city of Sofia will bring in one place the Sultan of Oman Qaboos ibn Sa'id and Hamad bin Khalifa Al-Thani, who are among the 15 heads of state and government leaders who will attend the energy summit on April 24-25. The idea for the forum, headed Natural Gas for Europe: Security and Partnership, came from Bulgaria's President Georgi Parvanov. A week ago Bulgaria's PM Sergey Stanishev received European Commission President Jose Barroso's support on the proposal that Sofia be 'appointed' as the annual venue of a forum, that would make it something like the Balkan Davos on energy. Analysts expect that the forum would become a battleground for gas exporters, middlemen and consumers. After the January gas crisis, the Bulgarian diplomacy is gaining ground by assembling countries that command the "blue fuel" deliveries to Europe.The table in the National Palace of Culture will gather the Prime Minister of the Russian Federation, Vladimir Putin, the presidents of Ukraine, Victor Yushchenko, of Turkey - Abdullah Gul, of Turkmenistan - Gurbanguly Berdimuhamedov and also the heads of state of Uzbekistan - Islam Karimov, of Tajikistan Emomali Rahmon , of Kyrgyzstan - Kurmanbek Bakiyev. The Bulgarian President's Office still waits for a confirmation for the visit of France's President Nicolas Sarkozy and the special envoy of Germany's Chancellor, Angela Merkel. The US President has not appointed his representative to the mega forum in Sofia yet. The main task of the forum is to engage the main partners of the European Union into energy cooperation. The leaders of Europe and Asia will discuss the increasing needs of natural gas supply to Europe. The politicians will discuss the development of a new generation of legal cases for "mutual energy dependency". Sofia's Mayor, Boyko Borissov will start polishing the capital from the beginning of April.
'Green energy’ prices on the rise
Renewable energy producers would have their buy prices raised as of 1 April, as it was discussed at an open session of the State Energy and Water Regulatory Commission (SEWRC) yesterday. Green energy producers claimed higher price increases because of the surge in interest rates on the loans they’d taken to buy the necessary equipment.
Konstantin Shushulov, SEWRC chairman, said there would be a special line for ‘green energy’ prices as of early April. Renewable sources produced 2.892 billion KWh in March this year or 7.2% of the overall energy output in Bulgaria (39.944 billion KWh).
Bulgaria will import natural gas from Azеrbaijan in 2010
In an interview with The 24 Chasa Daily Dimitar Gogov, Bulgargaz Executive Director, announced that the company wil soon complete an agreement with the Greek Gas Supply and Transmission company DEPA that will come in effect whenever dliveries to Bulgaria from north to south are suspended. Bulgargaz has also held a meeting with the management of the Azerbaijan State Oil Company (SOKAR) and is negotiating the conditions for gas deliveries of up to 1 billion cubic metres starting 2010. Mr. Gogov explained that the company has no intention to reduce the quantity of the Russian gas supply and has almost finished preparing a project agreement to present to Gazprom for deliveries in the next 5-10 years.
Bulgaria and Greece sign medical equipment supply contract
Deputy Minister of Regional Development and Public Works Dimcho Mihalevski signed Tuesday contracts for the supply of medical equipment under three projects financed by the Greek Balkan Economic Reconstruction Plan. The ceremony was attended by Greek Ambassador here Danai-Magdalini Koumanakou, regional governor Peter Fidanov and Smolyan Mayor Dora Yankova.The contracts are for medical equipment for a surgical ward in Kurdjali, the establishment of a cancer treatment centre in Smolyan and the interregional cancer treatment facility in Vratsa.Aid from the Greek government under the economic reconstruction plan exceeds 54 million euro, including 40 million euro for the public sector, Mihalevski said. In his words, projects for more than 10 million euro have already been contracted and approved.
Construction material prices up by 2 to 10%
Construction materials producers have put up prices by between 2 and 10% since the start of the year, it emerged at the Stroiko 2000 construction exhibition, which runs in Sofia until March 31. Xella-Bulgaria, the local subsidiary of the German manufacturer of autoclaved aerated concrete blocks Ytong, has increased prices by an average of 10% from February, said commercial director Kiril Gekov. Bulgarian bricks remained at last year’s levels while prices on Greek imports have been lowered by up to 5%, according to importers. Titan Zlatna Panega cement producer said different types of cement have grown 2 to 4% costlier in February. The prices of door and window framing have not been revised, said Vladimir Zlatarev, owner of local manufacturer Zlatarev Engineering, who added that small firms have even trimmed a bit to lure customers. Prices of reinforced doors have edged up to between BGN 1,400 and 2,400 but bathroom fixtures and accessories have even gone cheaper. The main factors for the increase are the inflation and the soaring energy costs, said Gekov. Imports from countries which have not seen sharp rises in energy bills have pushed Bulgarian producers to the brink of collapse, said Titan Zlatna Panega, pointing out its sales plunged 40% year-on-year in the first half of 2009. Big construction retailers are still keeping prices intact, with prices not changed for around half a year, according to builders. Companies aim to keep customers and turnover at the expense of profits. Prices of construction materials have gone up by an average of 10% in each of the past five years.
Warn about the presence of DMF in some leather products from China
The European Consumer Protection Commissioner Meglena Kuneva warned for the presence of the organic compound Dimethylformamide (DMF), which is dangerous for human life and health, in some leather products made in China and some countries where its use is not banned. Commissioner Kuneva explained for FOCUS News Agency that DMF is banned in the production the European Directive with the Directive for biocides, and European producers do not use it anymore. Traders within the EU were banned to sell products containing DMF as of May 1st, 2008. However, in China it is widely used in the production of leather products that are sold on the European market. It is used mainly for the production of shoes and leather furniture to protect them from moisture and moths. Commissioner Kuneva has already warned the Chinese authorities that they need to check which factories use DMF and to close them. DMF causes allergies and there have already been registered death cases because of it in France and the UK. Many European citizens from France, Finland, Poland, Sweden and the UK have already filed claims over DMF use. only in the UK the number of consumers that have complained amount to 5,000.
INVESTMENTS:
Bulgaria's first carmaker to be set up in Sliven
Bulgarian and Foreign businessmen are discussing the possibilities of setting up a carmaker in the town of Sliven. They are expecting the available hangars in Sliven's industrial area that may house the necessary machinery."At this stage I cannot announce the investor's name, but Bulgarian experts are also involved in the project," Prof. Stanimir Karapetkov told the Standart yesterday. As head of the project "An automobile made in Bulgaria", Mr. Karapetkov has had several meetings with businessmen. Since the end of the project two years ago and the official presentation of the first three prototypes of the Universe make we have received many inquiries, but no investments have been made so far. Prof. Karapetkov says the design of the Universe cars should be upgraded so as to match the latest tendencies on the market. Sliven seems to be the perfect place for setting up a car making business - the three machine-building factories in the town offer perfect conditions for such a process and the engineering potential has also been preserved. Daimler-Chrysler, chief sponsor to the project "An automobile made in Bulgaria", are ready to support the production process with know-how.
Spain's Glual opens €3.1 M pneumatic systems plant in Bulgaria
Spanish hydraulic and electronic systems manufacturer Glual opened a 6.0 million levs ($4.1 million/3.1 million euro) pneumatic systems plant in northwestern Bulgaria, local daily Trud reported on Wednesday. The company built the plant in eight months in the town of Montana. It has created 50 jobs and will open a hundred more, Trud reported. Glual hopes to manufacture high-quality products to be exported to Europe and the whole world, Trud (www.trud.bg) quoted one of the company's owners, Javier Guilbert, as saying. Glual (www.glual.com), set up in 1969, manufactures hydraulic units, hydraulic cylinders, piston, accumulators, distributors and electronic hardware and software. The company has units in Spain, Germany and China.
€ 20 M business center to built in Sofia
An “A” class business center is going to be constructed in the central part of Sofia. Some days ago the project was presented at the world real estate forum MIPIM in Cannes. Investment companies, final beneficiaries and agencies from Russia, Greece, England, Italy, Belgium and USA have shown interest in it, informed the investors from “Prime Property BG”.The business center is with a ground unfold built-up area of 18 650 sq.m and an underground one of 9 370 sq.m. The construction of the building will start this year and is expected to be finished in 2011. The building will be offered for renting. The investment in the business center amounts to 20 million euro. The office areas in the broad center of the Bulgarian capital will preserve their price levels. The reasons for this are the lack of free lots for construction in the center, the insufficient number of luxury business buildings and the convenience of this region for the companies. The offering of office spaces in Sofia is overall big. However, most of the places are concentrated in the city’s suburbs. According to research of real estate agencies, the center of Sofia remains preferred location for the companies. The interest in it is formed by companies, whose activities need them to be close both to the institutions and their clients. The office areas in Sofia are still with higher profitability compared to the other EU markets, show a research of “CB Richard Ellis” consultancy company.
Burgas Plaza to open EUR 60 M trade centre by end of April
The local company Burgas Plaza is to open its EUR 60mn trade centre in the southern Black Sea city of Burgas by the end of next month. The total built-up area is 39,000 square metres, 66.7% of which comprises the retail space. The facility will host cafeterias, restaurants, more than 90 shops and the first hypermarket of Carrefour, which is to open this week. The local Bridgecorp and Netherland’s Gort Holding own Burgas Plaza .
Israeli firm to break ground on Mall Stara Zagora by end of 2009
Real Estate Services Bulgaria (RESB), wholly-owned by Israeli Cinema City International, will start the construction of a big-box shopping centre in Stara Zagora, southern Bulgaria, by the end of the year, said RESB PR and marketing coordinator, Anelia Goryanova. The project, which is currently pending approval and building permits, will swallow over EUR 72 million (USD 98.4m) under preliminary estimates. This is the fourth Bulgarian mall project of the investor, which operates over 600 cinema theatres across Europe and Israel, after the ones in Sofia, Plovdiv and Rousse. RESB unveiled its EUR 52 million mall in Bulgaria’s second largest city of Plovdiv a few days ago. The construction of such sites usually takes 18 months, according to Stara Zagora news portal. Mall Stara Zagora will have a floor space of 56,600 sq m including 21,000 sq m of retail space. The centre will offer 500 parking slots and create over 1,000 jobs. The malls in Stara Zagora and Rousse will be completed according to schedule despite the tough economic conditions, RESB executive director, Petar Dudoleneski, told news outfit econ.bg upon the opening of the Plovdiv site.
Bulgarian investors to pump € 25.5 M into PV HPP near Pavlikeni
Bulgarian-registered firms Rusgas and Helios Watt plan to build a hydro power plant (HPP) and a photovoltaic (PV) capacity, respectively, for a combined EUR 25.5 million (USD 34.8m) in Pavlikeni, central Bulgaria. After a heated debate on Friday, the local government cleared the plots for the new power units. The mayor, Angel Genov, dubbed the projects the first sizable investments in the region amidst the global economic and financial turmoil. Rusgas, managed by local entrepreneur Dimitar Rusatov, will construct a hydro power capacity with an annual output of 1.7 million kWh and built-up area of 250 sq m. The planned investment of EUR 460,000 will open five jobs. Construction works will take 12 months once the investor obtains a building permit. Pavlikeni-based Helios Watt will spread PV panels on a four-hectare plain, sun-kissed plot near Stambolovo to generate up to five MWh of electricity with an option to double the output on a 10 ha area. The construction will take 12 months and will create about 20 jobs. The capacity will devour EUR 25 million that will largely come from Swiss funds.
Bulgaria's Katex considers investing €8 M in solar park
Bulgarian textile company Katex is considering investing 8.0 million euro ($10.85 million) in a solar park, aiming to cut energy costs and diversify its operations, the company's executive director said on Thursday. For this possible future investment we will apply for financing from the European Union ," Ilia Vandov told local Pari daily (www.pari.bg) in an interview. He gave no timeframe. Last year Katex put into operation its first solar park worth 1.0 million levs ($694,600/511,900 euro) located on 1.3 hectares at the site of the textile plant in the town of Kazanlak, in southern Bulgaria. Katex has a contract with Austria's EVN, which operates the power grid in the area, to distribute electricity generated by the solar park, Vandov said. If this production is profitable we have another 6.5 hectares and we are ready to install more solar panels," Vandov said. We also have plans for public-private partnership with the town for the installation of solar panels at kindergartens, schools and public buildings," Vandov said without elaborating. Katex plans to invest just 200,000 levs in the thermal and hydro insulation of the plant building this year, well below last year's investment of 1.2 million levs, due to the global financial crisis, Vandov said. The company has reported sales of 14.2 million levs in 2008, 14.5% down from 2007. The 2008 net profit was up 28.4% to 19 million levs. Katex exports 95% of its output to Western Europe and Russia. Vandov expects orders from Russian partners to halve this year, while sales to Western Europe will fall by a quarter as a result of the crisis, which will traslate into a minimum or no profit. The two biggest shareholders in Katex are BOST consultancy and Express Project 2003 with stakes of 42.47% and 46.56%, respectively. Katex, listed on the Bulgarian Stock Exchange, was last traded on March 18, when its shares closed at 2.24 levs, up 9.5%.
Bulgaria to get BGN 2.500 M for investment in water and sewerage sector
By 2015, Bulgaria will receive 2.500 million leva for investment in its water and sewerage sector, Karsten Rasmussen, Deputy Head of the unit responsible for Bulgaria in DG Regional Policy of the European Commission, is quoted as saying by the Office of Deputy Prime Minister Meglena Plougchieva who is in charge of EU funds management. Rasmussen attended the presentation of the Bulgarian national position on the water and sewerage sector held at the Council of Ministers.The EC representative expressed satisfaction with the important compromise made in the document. It was drawn up and discussed with the participation of Plougchieva, Environment and Water Minister Djevdet Chakurov, Regional development and Public Works Minister Asen Gagaouzov, representatives of the National Association of Municipalities in Bulgaria and MPs.Plougchieva said she was going to send the national position on the water and sewerage sector to Brussels on Wednesday, March 25.Talking to the media, Rasmussen praised the Bulgarian government for progressing along the right track by making efforts to guarantee investments with a long-term effect such as the ones to be made in the water and sewerage sector."This is an example from which we can see that the Bulgarian government reacts very rapidly to a small crisis, a speed of reaction we have not seen so far," Rasmussen said.Plougchieva said that the single national position contains several key questions, raised in the Commission's letter to her, to which Brussels expects clear answers, so as to guarantee the operation of OP Environment. These are questions, related to the planning, management and ownership of the water supply and sewage network, the guaranteeing of a uniform tariff as well as the operation of the water supply and sewage facilities, said Plougchieva.The national position on the water sector also envisages a series of legislative changes, including amendments to the laws on waters, concessions and regional development as well as to the Commerce Act. This is done not only to give a reply to Brussels but also to enable the Bulgarian municipalities implement duly the projects within the operational programme, Plougchieva stated. In this context the Deputy Prime Minister told Rasmussen that the office of the Jaspers instrument will be unveiled in Sofia on April 3 and it will provide consultations to the municipalities, mostly, on OP Environment and OP Regional Development.
BGN 12.6 M investment in new hydropower stations
Sofia municipality is planning to invest 12.6 million leva in new energy efficient hydropower stations, "in one of the most ambitious schemes ever contemplated to process resources from structural funds as part of the public-private development programme," said the deputy Sofia construction mayor Irina Savina, reported by Stroitelstvo Gradut. This particular project would entail the construction of eight hydroelectric stations with 10 megawatt capacity each, absorbing a total of 12.6 millio leva. According to the initial analysis from municipality-conducted research, the gross annual output of all stations would be 50019 mWh. By 2012 it is possible that the carbon emissions trade programme under the Kyoto Protocol will be activated; thus, under the most pessimistic scenario, of five euro per ton of carbon, Sofia municipality believe that they can generate a profit of 2.05 million leva annually. The municipality is entrusted with deciding how exactly to realise the investment – through their own financial resources or through a public/private enterprise. The issue of land and equipment ownership must also be addressed. "The project currently is at the planning phase under the long term energy efficiency programme for the period 2009-2013," said Irina Savina. "The energy efficiency document was presented before the commission of engineer infrastructure on March 23. The document also includes a short term phase extending to the period 2009-2011 – the aforementioned paper with both phases will be introduced for approval by the Sofia Municipal Council," she said. Furthermore, the municipality contemplates investing in the installation of water heating systems powered by solar energy in schools, playhouses and social homes. The programme could be expanded to cover other municipal and government institutions. In the future, the municipality will introduce a strategy for alternative energy by installing solar panels on all government and municipal buildings for water heating and electrical production. Such installations would work with an average coefficient of efficiency of about 12 to 14 per cent. The municipality has forwarded a letter to all boroughs in Sofia requesting information for convenient parcels where such alternative energy systems can be installed. one such location is Suhodol, where solar panels and biomass energy can be produced.
Unipack to invest BGN 3 million in quality
Unipack AD-Pavlikeni packager plans to invest BGN 3 million in 2009 to expand production and increase quality. Last year, the company bought tangible assets for BGN 1.4 million. The plant expects 8% growth from sales to BGN 18 million. In 2008, net incomes added 31.5% to BGN 784,000. The company produces packings from paperboard, paper, and aluminium folio. Unipack is the sole producer in the country of paraffin paper.
Germany will continue to be the biggest investor in Bulgaria
Germany will continue to be the biggest investor in Bulgaria. This claimed the minister of finance of the German province Baden Wuerttemberg Willi Staechele. He met the Bulgarian financial minister Plamen Oresharski, informs darik.net. The representatives of the German delegation engaged themselves with the expansion of the German investments in Bulgaria. In addition Willi Staechele announced that the German companies, which had already created workplaces would not close them. Bulgaria will explore the German experience in the strengthening of the audit body at the Ministry of finance, informed on his part Plamen Oresharski. The ministers announced that a proposal had been made to the Bulgarian government for the organization of an economic forum in Germany. The possibilities for the German companies for investment in Bulgaria as well as for expansion of their business in the regions are to be presented at the forum.
Advertising investments in Bulgaria in 2009 to decline 25%
The advertisement market grew only 9 per cent in 2008, compared to 25 per cent in 2007. The figures were released during the annual forum of the Association of Advertising Agencies by its President Krassimir Gergov. He attributed the decline of the growth rate to the world economic crisis, which began to be felt in Bulgaria after August, the online version of the "Dnevnik" daily reported on Thursday. The forecast for 2009 is that a 20 to 25 per cent decline of the market can be expected. It is possible that the decline will reach even 30 per cent depending on when the crisis will be felt to the fullest in Bulgaria.The total volume of advertising investments in 2008 was 518,805,816 leva, according to data of the Association. This includes nearly 21 million leva in investments in Internet advertising, which involves a 62 per cent growth. In 2007, the growth of advertising on the Internet was 89 per cent, and the market was nearly 13 million leva.
COMPANIES:
Kaolin division kicks off solar panel production
Solarpro, a unit of Bulgarian miner Kaolin, has launched production of photovoltaic (PV) solar panels at its factory in Silistra, on the Danube. The first batch was out at the beginning of March. During the fifth International Congress on Energy Efficiency & Renewable Energy Sources, and the specialised energy efficiency exhibition, which will run simultaneously in Sofia from April 6 to 8, Solarpro will have a 504 MWp PV power station in front of Sofia’s National Palace of Culture. Solarpro is the biggest solar plant factory on the Balkans, with a nameplate capacity of 18 MW. The company came into being in end-2007 in line with a strategy of its owner to bolster energy efficiency and reduce dependence on fossil fuels. In March 2009 Solarpro’s capital was raised by BGN 6 million, all of it subscribed by the majority owner. In early 2009 Solarpro won a contract to build and install a 2.4 MWp solar power station in the village of Yankovo, eastern Bulgaria. Many financial institutions offer support to help meet the relatively high initial costs of PV solar systems. For example, UniCredit Bulbank recently rolled out an investment loan for solar power plants, which is also available to start-ups.
Omnitek Engineering with conversion projects in Bulgaria & Turkey
Omnitek Engineering Corporation today announced the appointment of Metan Market, Ltd. as the company's exclusive agent in Bulgaria and an initial order valued at approximately $600,000 for its diesel-to-natural gas conversion systems. The company also said it has signed a similar exclusive agent agreement with Ruston Endustrieyel, based in Ankara, Turkey. The conversion order in Bulgaria is for public buses operated by Sofia Public Transport Company. The conversion project, which recently commenced, is expected to be completed over a two-year period. "Bulgaria and Turkey represent regions with tremendous growth potential, supported by an expanding infrastructure of compressed natural gas refueling stations, and a corresponding government and private-sector commitment to utilizing gaseous fuels. There are approximately 25,000 CNG vehicles operating in Bulgaria today, a figure that has doubled since 2006, and approximately 74 CNG refueling stations in operation to support the growing demand," said Werner Funk, president and chief executive officer of Omnitek Engineering Corporation. He noted Metan Market, Ltd. is aggressively engaged in multiple sectors of the CNG supply chain, including compression of natural gas; delivery of CNG for mobile compressor stations, serving private and commercial customers; production of trailers for the transportation of CNG; CNG bus and truck sales, in addition to managing the conversion of diesel buses and trucks to operate on CNG. Funk also noted that Ruston Endustrieyel has been a pioneer in the conversion of vehicles to operate on liquefied petroleum gas and CNG since 1964. "Our partnership with Ruston Endustrieyel will enable this highly respected organization to offer diesel-to-natural gas conversions, which is more cost-effective than replacing high-polluting diesel powered engines with new natural gas vehicles," Funk said. "Still in its infant stage, there are currently approximately 500 CNG buses and more than 1.2 million LPG vehicles in operation in Turkey," he said.
Technopolis to open Veliko Turnovo store in November
A new Technopolis store will open doors for business by November 2009 in Veliko Turnovo, the medieval Bulgarian capital in northern Bulgaria. This will be the 23rd store nationwide in the Technopolis chain and will cost 10 million leva to build, creating permanent employment for more than 80 people in the town.The Veliko Turnovo store will be perched on the Sofia-Varna motorway just past the railway station. It will be a spacious facility, equipped with an underground parking lot, with a capacity for 90 vehicles, and a further 30 parking spaces located adjacent to the building. The total area will be 14 590 sq m, which Technopolis will share with Yavor, a Bulgarian furniture company, Stroitelstvo Gradut reported.Yavor will offer a wide assortment of house and office furniture, wheres Technopolis will have on offer over 25 000 appliances.The project is owned by Atek EOOD and has architect Yordan Tursankov as general manager. The main construction company is Mateko AD, which has previously built two of the buildings in Business Park Sofia, and is currently also involved in the construction of Residential Park Sofia and Mall Pleven. The consulting company is the Rousse-based Build Consult OOD.Technopolis has another ongoing construction project, a mega store in Sofia, encompassing a total area of 22 500 sq m, whose completition date has not been announced.
Carrefour opens first hypermarket in Bulgaria
Carrefour, the biggest retail group in Europe and the second-largest retail group in the world, officially opened its first hypermarket in Bulgaria. It is located in Burgas Plaza Mall - first shopping centre in the Black Sea city of Burgas. The hypermarket spreads over an area of 13,000 sq. m., of which 8,300 sq. m. is shopping space. It offers more than 50,000 goods and 3,500 Carrefour-branded products. A total of 220 people are employed in the hypermarket.Carrefour works with more than 700 suppliers, most of which are Bulgarian companies. The concept of the hypermarket is to work with local suppliers and the offering of Bulgarian products in order to keep local traditions. A special zone in the hypermarket offers draft wine from Bulgarian producers.Internal team and an audit agency are responsible for inspecting the safety and the quality of the offered goods in the first hypermarket Carrefour in Bulgaria, as well as for ensuring whether the suppliers follow the trade standards and the best business practices.Carrefour Group is the first retailer in Europe, and the second largest worldwide, with more than 15,000 stores under banner in 32 countries and more than 490,000 employees. For over forty years, Carrefour has been a partner in the day-to-day lives of more than twenty million customers in Europe, Asia and Latin America.
Unprecedented dumping war between hypermarkets in Bulgaria
A bucket of yogurt for 7 euro cents, toothpaste for 20 cents and bananas for 50 cents. The miracle happens because of the fierce competition between the big trade chains, informs “Standard” newspaper. The start of the unprecedented dumping was given with the opening of the first “Carrefour” hypermarket. The French giant steps first in the Bulgarian town of Burgas but it is preparing to enter several other towns in the country. The obscenely low prices of the goods in the new hypermarket circulated like a flash Burgas. The oil there will be less than 75 euro cents and flour – only 23 cents, commented people on the queuing in the shops.The other big players on the market immediately responded with even cheaper offers. The opened a week ago “Kaufland” offered bananas for 47 cents. “Billa” offered them for 43 cents. The tickets on the goods are literally been changed every hour, claim the sellers. The big dropping down in the prices jumped from the food over the technics. “Kaufland” is already promising plasma TVs for the symbolic price of 100 euro. “Carrefour” will tempt the clients with unspeakably low prices of fridges, washing machines and video systems. Today in Burgas, tomorrow in the whole country. This is how experts see the development of the dumping war. The crisis is shrinking the consumption and the fight for every client will be merciless, admit the traders. The question is who will endure longest.
Bulgaria to showcase machine building, IT, electronics, pharmaceuticals, real estate at exhibition in Moscow
Bulgaria will showcase articles of its machine building industry, information technologies, electronics, pharmaceuticals, fashion and real estate at a national trade fair in Moscow in April 27-30, Deputy Economy and Energy Minister Yavor Kouyumdjiev said here on Thursday. The aim of the event, part of the Year of Bulgaria in Russia, is to intensify the bilateral commercial exchange, he said. Kouyumdjiev said that Prime Minister Sergei Stanishev is to lead a business delegation on a visit to Moscow in April 26-29. The Bulgarian participation in the trade fair will be funded by the budget to the amount of 1.7 million leva. After Moscow, the exhibition will be presented in Kazan, Yekaterinburg and Hanti-Mansiysk in May and June, Days of Bulgaria are to be organized in Kursk, Vologda, Samara and Sochi. Bulgarian-Russian economic forums are to be held in Moscow and St Petersburg.
GLOBAL FINANCIAL CRISIS ANALYSIS AND NEWS:
Bulgaria chemical industry collapses over global financial crisis
Bulgarian chemical companies have already been hit by the global financial crisis, and have seen a marked fall in profit.This conclusion was made by the Pari Daily newspaper after analyzing the 2008 last quarter financial reports of the five biggest Bulgarian companies in the chemical business.For the last three months of 2008 the total income of the five companies, Neochim PLC, Orgachim, Kauchuk J.S.CO., BG Polymers LTD, and Vidachim JSC, has decreased by 46,2%. The turnover lowered from BGN 159,7 M, for the third quarter of 2008, to BGN 85,9 M, for the October-December period."The chemical industry companies in Bulgaria indeed are the most severely affected by the financial crisis... The first half of 2009 results will be completely different from the results of the same period in 2008", the financial and investment company Bench Mark Group's Portfolio Manager, Konstantin Abrashev, commented.Vidachim JSC, the biggest tyre production plant in Bulgaria, is the only one with positive results. Its turnover for the last quarter of 2008 increased by 63,1% compared to the previous period.The fertilizer production plant, Neochim PLC, recorded a 65,3% decrese of its turnover for the last three months of 2008.Orgachim, a leader on the paints and varnishes market in Bulgaria, lost 54,1% of its overall income for the 2008 last quarter. It is unlikely to expect positive results soon from the company, as the construction and real estate markets have collapsed since last year, Investment Advisor in KD Securities, Razvigor Hristov, said.
Bulgaria could face recession, IMF mission chief says
Bulgaria's economy could contract already in 2009, the head of the International Monetary Fund (IMF) mission to Bulgaria Bas Bakker told Bulgarian National Radio on March 21.Although the Fund has said earlier this week that it expected the country's economy to grow by a real one per cent this year, it was not impossible for it to change its forecast, Bakker was quoted as saying.IMF's forecast, made in a report published on March 17, was the second time the Fund lowered its expectations concerning Bulgaria's economy. In December 2008, when Bakker was in Sofia for a regular Article IV review of Bulgaria's economy, he said that the IMF cut its growth expectation for 2009 from 6.3 per cent to two per cent."If you look at other countries in the region, many of them are going into a recession. The downturn in Western Europe has proven to be worse than expected," Bakker was quoted as saying."Industrial production in the eurozone fell by 17 per cent in February, which hurts Bulgaria. At the same time, the inflow of capital is decreasing unexpectedly fast. It is certainly possible that the Bulgarian economy will contract this year."It all depends on revenues. The lower the Budget revenues, the more spending will have to be cut. The Bulgarian Government will have to decide by how much, but it is obvious that the more you increase pensions and salaries, the less there is left for investment," he said.Bakker's statement comes just a day after credit ratings agency Moody's Investor Service said that Bulgaria was likely to experience a difficult recession in 2009 as the economy suffers from shrinking exports and slowing inflows of foreign capital.
Capital Economics: Bulgarian economy to shrink 5%
The Bulgarian economy will contract 5% this year, London-based research firm Capital Economics said as quoted by Bloomberg. According to the blackest forecast about the Bulgarian economy since the outbreak of the crisis, exports and inward investment will collapse, shrinking the money supply and forcing the government to drain fiscal reserves to restore liquidity. This move will help for no more than 12 months and then reserves will shrink to zero and force the country to line up for help at the door of the International Monetary Fund (IMF). The IMF last week forecast a 3% slowdown of the Bulgarian economy in its worst-case scenario. Capital Economics said East Europe’s gross domestic product will fall 6% on average this year, with a record 15% decline expected in Latvia and Lithuania. Poland, which is the region’s largest economy, is seen shrinking 3% despite the optimistic forecast of the government. “The entire region is likely to enter recession this year, with little prospect of a swift recovery,” said the research firm’s economists Roger Bootle, Jonathan Loynes and Neil Shearing.
EU will grant Bulgaria € 105 M over financial crisis
Bulgaria will receive EUR 1065 million for the development of projects in the field of energy, broadband connections and agriculture, the Pari Daily informed. The money is part of the EU recovery plan. Initial information from Brussels suggested that Bulgaria will receive EUR 20 million for the construction of a gas transit link with Greece. Now for the same project EUR 45 million is provided. For a link with Romania EUR 10 million will be spent. EUR 12 million will be provided for the agriculture sector.
Sofia faces idle construction sites of over BGN 3 B
The global crisis has put on hold construction sites valued at over BGN 3 B just in the Bulgarian capital Sofia .The data was reported by the Chair of the Bulgarian Constructions Chamber, Ivan Boykov, cited by the "Sega" (Now) daily.Despite the staggering numbers, the worse is yet to come, according to Boykov. The negative effects of the crisis are going to be really felt in the summer when all orders would come to a complete halt, he said.Boykov further points out that there are many construction sites with building permits and secured financing, but investors refrain from starting them. The Construction Chamber Chair accuses the Cabinet over their failure to unblock the European ISPA funds, something he believes could greatly improve the situation.Boykov further states that, in addition to Sofia and other big cities, the situation along the Bulgarian Black Sea coast was very dramatic as well with construction works being halted at vacation villages and hotel resorts, where construction shows a 30% decrease.
Business urges government anti-crisis plans
The Confederation of Employers and Industrialists in Bulgaria (CEIB) will push for a concrete government plan against the global financial and economic downturn for different scenarios. “The Cabinet should bang their heads together and come up with measures to counter the crisis that could be applied as soon as there are any negative economic signs and not start thinking what to do,” said CEIB executive director Evgenii Ivanov. Therefore the government should keep a close eye on key indicators such as the rise in the jobless rate, the inflation, the current account gap and a possible contraction of the gross domestic product (GDP). In the meantime, Employment Agency head Sotir Ushev said a further BGN 7 million will be moved to compensations of BGN 120 per employee at companies that have reduced working hours to cushion the blow of the crisis. This is one of the government’s most hyped anti-crisis measures but allocations were drained in the very first round of applications.
ANALYSIS:
The European Union and Bulgaria: a new colonialism
Publication: The Economist print edition
Bulgaria’s entry into the European Union was delayed by worries over corruption, organised crime and slow judicial reform. When it and Romania joined in 2007, the European Commission was given a “mechanism for co-operation and verification” that lets it monitor reforms and impose sanctions. It duly withheld €220m ($320m) of EU money from Bulgaria in 2008. The Socialist-led government responded crossly, accusing the commission of double standards and of using its monitoring mechanism as a political tool. In February advisers to the prime minister, Sergei Stanishev, hatched an extraordinary new plan. Under this the commission and other EU members would get more power to intervene where “weaknesses may be qualified as structural and persistent and…cannot be resolved by the Bulgarian government alone”. The plan proposes that European officials and diplomats should be involved in monitoring implementation of laws, managing EU funds and supervising courts, prosecutors and investigators. They would follow cases of political corruption and organised crime that the judicial system has been slow to tackle. The suggestion is that such a “partnership” would be better than the commission’s mechanism—although that may reflect the fact that it would be directed from Sofia, not Brussels.Mr Stanishev presented this secret plan to the commission’s president, José Manuel Barroso, in early March. The response was cool. A spokesman says that Mr Barroso rejects the notion of a parallel structure to the current mechanism. EU ambassadors to Sofia, who have just been told of the plan, are also sceptical. one senior diplomat says it would be wrong to wrest the carrot and stick away from the commission, which has both political independence and the trust of EU members—unlike the Bulgarian government. Indeed, some ambassadors detect a wheeze by Bulgaria’s Socialists to tell voters that the EU has “newly regained trust” in the government before an election in June. Putting the commission and EU members in charge of reforms might also inhibit future criticism.Despite this negative response, the government is pushing ahead with its idea. It has set the end of March as a target date. The foreign minister, Ivaylo Kalfin, has even suggested a similar scheme for all EU members.A mechanism for joint government of a country may be a first for the EU, but it is not for Bulgaria. Soviet advisers arrived in force after 1944 to make sure that the newly communist country did not stray from the course of nationalisation, industrialisation and building socialism. Yet most Bulgarians would welcome a wider role for EU officials. In one poll, over 80% of respondents said they did not trust the government, parliament and courts. Almost 75% trust the EU, especially the commission, according to Eurobarometer. A bigger European presence in the government may play well with Bulgarians, even if it makes less difference than they would like.