BULGARIAN ECONOMIC TOP NEWS DIGEST
WEEKLY REPORT ( 3 – 10 APRIL 2009 )
Sections/headline briefs:
MACROECONOMY:
· Bulgaria – China trade reached $ 1.3 billion
· EU to fund Bulgaria with € 2.8 B for green economy
· UKTI head: Bulgaria is a trade & investment partner of growing importance
· FT: IMF report urges Bulgaria & other East European countries to adopt the euro
· Bulgarian construction sector fears for EU funds
· Projects worth € 2.5 B in a freezer
· Interests on deposits in Bulgaria go down
· Bulgaria’s Minister of Finance: We’d introduce the euro if we have to
· Bulgaria to attract productions closed down in Western Europe?
· Bulgaria's 2008 M&A market contracts 7.9% to $3.5 billion
· Expert predicts 30% drop in Bulgaria new car sales
· Bulgaria’s new car market plummet 53% Y/Y Q1’09
INVESTMENTS:
· Spanish investments in Bulgaria reached nearly €900 M
· German Company N-Vision Invests € 300 M in Bulgaria wind power parks
· Kavarna begins work on new waste treatment station
· Penny to invest € 100 M in Bulgaria
· Swiss company mulls investing € 85-100 M in solar panels plant in Bulgaria or Germany
· Bulgaria's Solarpro solar panel plant to reach full capacity by year's end
· New €250 M investment project for Pirin Mountain
· Investment in IEC amounts to € 20 M
COMPANIES:
· Fifteen companies show interest in digital TV licences in Bulgaria
· Bulgarian Industrial Group seeks € 100 M for cogeneration project
· Romanian IT dealers merger to affect Bulgaria
- UK spirits producer Diageo signs with Bulgaria Avendi
· Russia Reclaims Bulgartabac Again
GLOBAL FINANCIAL CRISIS ANALYSIS AND NEWS:
· Mass bankruptcies of transport companies in Bulgaria
· Decline in some industrial sectors exceeded 50%
· Crisis starts to change Bulgarians’ consumer behaviour
· Bulgaria’s c-bank governor says no need to worry
· Crisis disrupts cash flows to wind power projects
Articles:
MACROECONOMY:
Bulgaria – China trade reached $ 1.3 billion
The bilateral trade volume between Bulgaria and China accounts for $ 1.3 billion. This announced the ambassador of Peoples’ republic of China Zhang Wan Xu who is on a 2-day visit in Silistra, informed BNR. According to the diplomat new forms of cooperation are already being sought – China expresses interest in investment in the field of high technologies and in some traditional Bulgarian sectors.Asked about the measures which China is undertaking to manage the world financial and economic crisis, the ambassador said that the country was emphasizing the stimulation of the internal consumption as well as infrastructural and social projects.Wan Xu claimed that the overcoming of the crisis, however, could only happen with the joint efforts of the international community.
EU to fund Bulgaria with € 2.8 B for green economy
"The EU pays a lot of attention to the development of green economy and will invest 105 billion euro in such projects in the period 2007-2013," said Solomon Passy, MP from the National Movement for Stability and Progress and Chairman of the Parliamentary Foreign Policy Committee. By 2013, Bulgaria will receive 2.82 billion euro from these funds. The money will be allocated as follows: 935 million euro for the water management sector, 764 million euro for the railway transportation sector and 300 million euro for waste management. Mr. Passy said that following Bulgaria's initiative, the European Commission decided to introduce unified mobile phone chargers by 2012. Mr. Passy added that the next step was the introduction of unified remote controls for the different electric devices.
UKTI head: Bulgaria is a trade & investment partner of growing importance
"Among the UK business community, Bulgaria is a trade and investment partner of growing importance, which is clearly reflected by the increase of exports and investment volumes in the last couple of years. UK firms can work together with Bulgarian partners to implement major infrastructure projects being funded by the EU. These include roads, rail and ports; urban regeneration and environment technologies. These are all areas where the UK has world-leading expertise", UK Trade and Investment head Sir Andrew Cahn has said.The British Embassy in Sofia reminds that the UK was the top foreign investor in Bulgaria in 2007 with investments of nearly EUR 850 M. "In the face of a global economic downturn, we must stand together in support of open markets. Trade and investment will be one of the forces that will pull the world's economy toward recovery. The UK highly values Bulgaria as our trading partner within the European Union", the UKTI Head noted further. The role of UKTI is to help UK companies in the global economic environment as well as to attract foreign businesses to Britain.
FT: IMF report urges Bulgaria & other East European countries to adopt the euro
Crisis-hit European Union states in central and eastern Europe should consider scrapping their currencies in favour of the euro even without formally joining the eurozone, according to the International Monetary Fund.The eurozone could relax its entry rules so countries could join as quasi-members, without European Central Bank board seats, says the fund."For countries in the EU, euro-isation offers the largest benefits in terms of resolving the foreign currency debt overhang [accumulation], removing uncertainty and restoring confidence."Without euroisation, addressing the foreign debt currency overhang would require massive domestic retrenchment in some countries, against growing political resistance."Disclosure of the confidential report, prepared about a month ago, could reignite a fierce debate over strategies to assist central and east Europe.Even though global leaders hailed last week's G20 summit as a success, eastern Europe's challenges remain. Amid deepening recession, Ukraine and Latvia, two states already in IMF programmes, have in recent days balked at approving IMFmandated reforms. A third, Hungary, is struggling to create a government capable of implementing reforms.The IMF report was compiled to support a campaign by the fund, the World Bank and the European Bank for Reconstruction and Development to persuade the EU and eastern European states to back a region-wide anti-crisis strategy, including a regional rescue fund. The campaign failed amid widespread opposition from both west and east European states.Eurozone members also oppose easing the eurozone's entry rules, as does the ECB.The IMF, which forecasts a 2.5 per cent decline in regional gross domestic product in 2009, estimates that "emerging Europe" - including Turkey - must roll over $413bn in maturing external debt in 2009 and cover $84bn in projected current account deficits.The report estimates that "the financing gap" - money needed from international financial institutions, the EU and governments - will be $123bn this year and $63bn next, or $186bn in total.Much could come from the IMF. But the report says "up to $105bn" could be needed from other sources, including the EU.
Bulgarian construction sector fears for EU funds
Bulgaria's crisis-hit construction sector fears that many EU-funded infrastructure projects will be mothballed as the general election approaches and EU aid remains blocked over corruption concerns."The government must urgently seek ways to unblock the (EU) money so that the big infrastructure projects can get off the ground as soon as possible," Nikolay Mihaylov, chairman of the transport section of the construction industry association, told AFP."Companies are nervous. The crisis has left 75 percent of them without work and these projects are now a matter of survival for a sector that used to be a major driver of economic growth," said Veliko Zhelev, executive director of the road construction industry association.Both Mihaylov and Zhelev were pessimistic, however, about getting any big projects started by end-2009."Don't forget the election is coming. If the EU money isn't unblocked, tenders aren't called and contracts aren't signed before the election campaign starts, things will stall until the next government is office," Zhelev said."Then winter will be upon us and the sector will be in big trouble," he added. Bulgaria's outgoing government, strapped for infrastructure cash, had been counting on EU money to finance major and most costly road building projects, including the country's first border-to-border Trakia highway.Poor road maintenance, patchy repair and only occasional new building since the fall of communism in 1989 has left two-thirds of the country's 19,425 kilometres (12,070 miles) of roads in serious need of repair, according to data by the national road agency.For a country that wants to become a major tourist destination and a centre of foreign investment, Bulgaria has only 418 kilometres of motorway, with none of the five planned EU corridors yet completed.Until the global economic crisis caused the property market to go bust, building companies had been flourishing thanks to a boom in resort and holiday home construction.Regular building companies were lured into the road construction business by the promise of EU money once Bulgaria joined the bloc in 2007."Road companies reinvested profits to develop capacity, hire more qualified workers and buy heavy equipment in order to be ready to undertake major projects," said Mihaylov, who also heads one of Bulgaria's biggest construction companies, Trace Group Hold. But "the big EU bucks" stalled last year amid concerns over corruption and conflicts of interest.At the national road agency, which was to be the main beneficiary of the programmes, work was virtually frozen by a series of scandals and management changes.In addition, the agency cancelled the results of tenders for two major and dozens of smaller road stretches in a bid to clean its record with Brussels.That meant the winning companies, some of which had already started on the projects, were left high and dry and in doubt as to whether they would ever be compensated. The workers of one of the companies staged a series of road blockades this week to demand their pay.Brussels still has to issue a report on progress at the road agency. None of the government or company officials contacted by AFP were willing to predict when EU money will be unblocked and new tenders called."Companies need clarity - set deadlines and a plan. Billions of much-needed money is at stake here," Mihaylov said.At a recent congress in Sofia, construction industry association chief Simeon Peshov begged a top EU official to "unfreeze the money so that the major tenders can go ahead." Bulgaria "needs help now, not after the elections," he said. But the EU's regional development chief, Carsten Ramussen, was unbending. "Bulgaria has to some extent got off on the wrong foot and won a rather bad image in a short period. If there is something I cannot promise you, it is to leave the road agency alone," he said.
Projects worth € 2.5 B in a freezer
In Bulgaria, construction works worth over 2.5 billion euro are at a standstill because of the crisis. The big projects, for which financing is not a problem are few, explain construction sector experts. Fearing bankruptcy and lack of free money makes investors en mass give up their plans for large-scale construction or sell part of their business to provide financing. The Bulgarian investors again pin hopes on Russia. The developers who are not discouraged by the crisis have discovered a perfect opportunity to meet the partners they need at the business forum in Moscow on April 2. The Bulgarian businessmen promoted all kinds of projects - construction sites, plants, villas, office buildings, malls, holiday villages, hydro power plants etc. Projects for golf courses all over Bulgaria were also offered. It became clear at the forum that the Russians have almost no information at all about the business climate in Bulgaria. Many of them were astonished to learn that profit tax in this country is as low as 10 percent. These facts stirred high interest among potential investors, who flocked around Bulgarian companies’ reps asking for details and scheduling appointments.Apart from the Russians, the Arab countries are also seen as potential investors as there lack of fresh capitals is not a problem. Currently some of them are willing to put off all plans at home in order to buy out cheap European and US investment projects that were hardly affordable before the global crisis.
Interests on deposits in Bulgaria go down
The interest on bank deposits in Bulgaria are going down, but still a lot of Bulgarians who work abroad keep their savings in Bulgarian banks, investor.bg reported. on Friday, the interbanking interests slumped to 2.19% (the lowest value since December 2005). This indicates an increase in the free resource in the banking system. The slump in the interbanking interest coincides with a record low Eonia index, which indicates the overnight interests on bank credits in euro on the European interbanking market. on April 2, its value was only 0.89%. Given that Bulgaria's national currency, Lev, is pegged to the euro, the deposit interests here are relatively higher than those in the UK, USA and the Eurozone. Foreign banks have already taken advantage of the situation and as a result the funds drawn to Bulgaria from foreign crediting institutions increased by 163 million levs in February, after the slumps in December last year and in January this year. According to Investor.bg many of the bank deposits in Bulgaria are made by Bulgarians who work abroad but want to take advantage of the high interest rates at home.
Bulgaria’s Minister of Finance: We’d introduce the euro if we have to
“At present, there are no economic reasons whatsoever for Bulgaria to have to enter into another agreement with the International Monetary Fund,” Bulgarian Minister of Finance Plamen Oresharski said in an interview with the Bulgarian National Radio. “Just give me one reason why Bulgaria should make such a step. I don’t think the fact that someone said so on air is enough reason to,” Oresharski said. Further on, he added that the Bulgarian economy has become sort of ‘adapted’ to a fixed exchange rate and that the question of what would be the impact of introducing the euro on the Bulgarian economy has been discussed for over ten years now. “If we must, we’d introduce it. There is nothing we should be worried about,” he concluded.
Bulgaria to attract productions closed down in Western Europe?
According to World Bank experts Bulgaria could attract industrial productions which the countries in Western Europe close because of the financial crisis. The specialists believe that the producers could direct their businesses to the countries in Eastern Europe but only if the countries in the region continue with the structural reforms. At a round table on the topic “Economics and finances” experts recommended Bulgaria to continue observing strict financial discipline because of the crisis.
Bulgaria's 2008 M&A market contracts 7.9% to $3.5 billion
The M&A market in Bulgaria amounted to $3.5bn in 2008, down by 7.9% year-on-year, DealWatch said on Wednesday. In the first quarter of 2009, total deal value dropped by 72% to EUR402.6m with the volume dropping 18.2% to 27 transactions. The mergers and acquisitions (M&A) market of southeast Europe totalled $40.5bn in the first nine months of 2008, compared to $48.8bn in the whole of 2007.
Expert predicts 30% drop in Bulgaria new car sales
The Manager of KIA Motors Bulgaria, Hrabrin Ivanchev, has predicted an overall decline of 30% of new car sales in Bulgaria in 2009.Ivanchev has also told the Pari Daily that the shock of the 50% decrease of new car sales since the beginning of 2009 because of the crisis had already started to be neutralized by the recent movements on the new cars market in Bulgaria.Ivanchev said both companies and individual consumers were buying fewer new cars as a result of the effects of the global financial and economic crisis.The market of small and light trucks has suffered the most as the construction firms, which had been the primary buyers of such vehicles, had been hit hard by the crisis.
Bulgaria’s new car market plummet 53% Y/Y Q1’09
New car sales in Bulgaria fell by 52.8% year-on-year in first-quarter 2009, extending a downtrend that began back in end-2008 as the sector comes under increased pressure from the crisis. According to figures of the Bulgarian carmakers’ association and their authorised local representatives, new cars, trucks, buses and motorcycles sold in the first three months of the year slipped to 7,188 units. A deeper decline was offset by relatively better sales in March, which saw 2,543 units in comparison with 2,300 in January and 2,345 in February. The Bulgarian auto market took a beating after global markets collapsed and new car output contracted to an unprecedented low. Sales picked up less than 5% for the full 2008 in each segment, a decent performance against the grim fourth-quarter performance. The 40% slide in car sales in December 2008 compared to the same month of the previous year and the downhill slides from the start of the year flung the sector into the crisis. Juicy discounts and softer leasing schemes fail to shelter Bulgarian buyers from the global economic storm.
INVESTMENTS:
Spanish investments in Bulgaria reached nearly €900 M
The possibilities for cooperation between Bulgaria and Spain in the time of world economic crisis and after discussed at a meeting in Madrid the deputy minister of economy and energy Anna Yaneva and the Spanish state secretary on trade Silvia Iranso. Among the discussed topics were the possibilities for increase of the Spanish investments in Bulgaria, the cooperation in the acquisition of EU funds and the construction of infrastructural projects, informed the press center of the Bulgarian ministry.The delegation led by vice-minister Yaneva had a meeting with “Promo Madrid” association which promotes the expansion of companies registered in Madrid. Spanish companies expressed interest in participation in the establishment of a Bulgarian-Spanish trade chamber. The Spanish investments increased significantly in the last ten years. In the end of last year they reached 894 million euro. This claimed vice-minister Yaneva at the opening of a Bulgarian-Spanish investment forum, which was held in Madrid. The bilateral trade between Bulgaria and Spain also marks continued growth and in 2008 it amounts to 800.8 million euro. Bulgaria is a business-favorable place with the 10% corporative tax, the cheaper and well qualified work force, as well as with the low production expenses, stress Yaneva. The Bulgarian-Spanish investment forum was held on the headquarters of the Spanish entrepreneurs confederation with the partnership of the Bulgarian embassy in Spain.
German Company N-Vision Invests € 300 M in Bulgaria wind power parks
The German company N-Vision Energy is going to invest about EUR 300 M in the construction of two wind power parks in Bulgaria.The wind parks with a total capacity of 241 MW are supposed to be completed by 2011, the Pari Daily reported. However, N-Vision energy still has not announced where in Bulgaria exactly the wind parks will be located.About 75% of the planned investment of EUR 300 M are to come from bank credits.The news about the projected N-Vision Energy investments in Bulgaria comes several days after on Tuesday another German company, Enertrag, announced it was planning to invest EUR 1 B in three wind power stations close to the city of Dobrich in Northeast Bulgaria.
Kavarna begins work on new waste treatment station
A new waste collection and treatment station will be built in the Black Sea tourist resort of Kavarna. The project will cost a total of 11 million leva and will be funded under the European Union's operational programme Environment.The EU's cohesion fund will cover 8.8 million leva of the costs, with the remaining 2.2 million leva allocated from the Budget as national co-funding.On April 4, Environment Minister Djevdet Chakurov and the mayor of Kavarna, Tsonko Tsonev, turned the first sod on the project for the construction of the main collector and the sewarege network, Stroitelstvo Gradut weekly has reported.Once the facility is constructed, it will serve the needs of over 2500 residents from the Hadji Dimitur borough in the town. Furthermore, the new sewerage system will facilitate 1500 other people from adjacent boroughs and regions who will be gradually connected to the network at a later stage.The projects' construction deadline is December 15 2011. The general supervisor of the project is Kram Komplex Engineering Sofia. This is the first European project for which the Kavarna town hall has sought EU funding, Stroitelstvo Gradut said.
Penny to invest € 100 M in Bulgaria
German discount store chain Penny Market plans to invest EUR 100 million in Bulgaria by the end of 2009, the manager for Bulgaria announced. The biggest project is a logistic centre for EUR 30 million near the town of Elin Pelin located on 78 decars. At present the company is building 10 stores in the big towns throughout the country and expansion will continue after the logistic centre is ready.
Swiss company mulls investing € 85-100 M in solar panels plant in Bulgaria or Germany
An unnamed Swiss company is considering investing 85-100 million euro ($114.3 million-134.5 million) in a solar panels plant in Bulgaria or eastern Germany, a coordinator of the project said on Tuesday. "We have a Swiss investor who is trying to decide where to put his investment in photovoltaics. [...] He is considering Bulgaria and eastern Germany," Steve Carney of The Linde Group told SeeNews on the sidelines of the 5th International Congress and Exhibition on Energy Efficiency and Renewable Energy Sources for Southeast Europe held in Sofia. "That plant will be an investment of somewhere in the order 85 to 100 million euros." Apart from a project coordinator, the technological group is also planning to be a supplier for the future plant. "In about two-three weeks we expect to sit down - Linde and a couple of other companies - with the investor and design the business case," Carney said, adding that after that talks with the investment promotion bodies of both Bulgaria and Germany will be held. "I expect this investor will make the decision [where to build the plant] in the next three to six months." Carney added that the plant could become operational in up to two years. The plant's output will be sold to companies with solar energy business in the region. The market of Southeast Europe has a significant growth potential as the solar business is still underdeveloped, the climate is ideal for solar power generation and the population of Bulgaria, Romania and Turkey exceeds 100 million people, Carney said. The Linde Group (www.linde.com) is a gases and engineering company with almost 52,000 employees working in around 100 countries. It had sales of 12.7 billion euro last year, up 2.9% from the previous year.
Bulgaria's Solarpro solar panel plant to reach full capacity by year's end
Bulgarian manufacturer of integrated photovoltaic panels Solarpro, a company majority-owned by local mineral extracting and processing company Kaolin, plans to reach full capacity at its newly opened plant by the end of the year, Solarpro's CEO said on Tuesday. "The maximum annual capacity of 18 megawatts will be reached by the end of the year," Nikolay Berov told SeeNews on the sidelines of the 5th International Congress and Exhibition on Energy Efficiency and Renewable Energy Sources for Southeast Europe held in Sofia. Solarpro opened earlier this year its plant, located in the northeastern town of Silistra on the Danube. It invested 20 million euro ($26.7 million) in it. The company will decide by the end of the year whether to expand the plant's capacity. "It much depends on how the market develops - there is infrastructure for an increase of the capacity," Berov said. The company also plans to build for a local client five solar parks with a combined capacity of 20 MW, located mostly in the country's northeast and southeast, by the end of 2010. "We also aim to sell panels outside Bulgaria, not only to install them in the country," Berov said, adding that talks with potential clients are under way. Solarpro (www.solarpro.bg), set up in 2007, is 80% owned by Kaolin. Berov holds the remainder. Shares of Kaolin, a component of the blue-chip SOFIX index on the Bulgarian Stock Exchange (BSE), ended 2.54% lower at 2.88 levs ($1.98/1.47 euro) in a volume of 3,465 shares on Tuesday.
New €250 M investment project for Pirin Mountain
A large scale investment project in Pirin mountain and the region of the Razlog valley was submitted to the Bulgarian prime minister Sergei Stanishev by the association “Kulinoto” in which partners are Razlog municipality and the company “Balkanstroy”, writes “Struma” newspaper. Within 3 years over 120 million euro will be invested in the ski complex. Over 58.8 km of tracks will be made on the ridges of the peaks in Pirin. There will also be 19.4 km of cable cars, golf playgrounds with 18 holes, trade and hotel complexes. The capacity for skiers will be 18 855 people per day. The overall amount of the realization of the investment for the population in the region of Pirin will be 250 million euro, believe representatives from “Industry watch”.
Investment in IEC amounts to € 20 M
Vanto Trade, the official importer of motor vehicles, is the majority owner of Inter Expo Centre (IEC) in Sofia holding 74% while Sofia municipality has 17%. The building is worth EUR 20 million but the return of the investment is very successful as annually over 40 specialised exhibitions take place there. The centre has 14,000 sq. m exhibition space, one big congress hall with 350 seats, smaller halls, outside exhibition area, parking place.
COMPANIES:
Fifteen companies show interest in digital TV licences in Bulgaria
Bulgaria's telecommunications regulator said on Monday that 15 companies have shown interest in participating in tenders for digital television licences. Nine companies have announced their interest in the two tenders that the Communications Regulation Commission (CRC) will hold, four are interested in the first one only and two plan to participate just in the second one, the commission said in a statement. In March CRC announced it will call two tenders to award digital TV licences. Back then CRC said it will first issue one licence for the use of the radio frequency spectrum for electronic communications through two digital TV networks which should cover at least 95% of the population of the serviced area by the end of 2012. During the second stage of the digitalisation process, the commission will issue a licence for the establishment of three digital TV networks, which are to cover 95% of the population of the serviced area by June 2015. The two tenders are also open to companies that have not explicitly notified the commission of their interest.
Bulgarian Industrial Group seeks € 100 M for cogeneration project
Bulgarian Industrial Group (BIG) will seek loans from the EBRD and London-based banks to finance the construction of its cogeneration plant. The plant will have capacity to burn 400,000 tonnes of household garbage per year and will produce 60% steam, 30% energy and 10% solid waste to be used for drainage layers in road construction. The produced power will be used by the chemical plant Polimeri only, in which BIG holds a 30.9% stake. Construction works are to continue up to four years. Polimeri is located in the north-eastern town of Devnya and produces caustic soda, polyvinylchloride, hydrochloric acid, chlorine and sodium chloride. Its production is expected to decline by 33% this year from 120,000 tonnes last year due to the global economic crisis. The net sales of Polimeri added 2.6% to BGN 46.7mn (EUR 23.9mn) last year.
Romanian IT dealers merger to affect Bulgaria
Three of the biggest distributors of IT technics and solutions in Romania are preparing a merger worth 250 million euro. The negotiations are however into their initial phase, writes the local media. The three companies are Scop Computers, RHS and Tornado Sistems. The last has a subdivision in Bulgaria and is one of the big players in the wholesale business with IT goods. The company’s headquarters in Bucharest claimed, for money.bg, that the merger talks are still rumors and nothing is final. To the question whether possible merger will affect the operations of the company in Bulgaria the answer was that so far this was not expected. According to the made accounts it is anticipated that the merger will lead to the reduction of the logistical expenses with 40%.
UK spirits producer Diageo signs with Bulgaria Avendi
The Bulgarian distribution company Avendi signed a five year contract with the leading international producer of luxury spirits Diageo.That was announced by both companies who have been working together for eight years already.The management teams of the companies have decided that the marketing of Diageo's products will be done by Avendi.The cooperation between Diageo and Avendi led to a 23% growth of their business in Bulgaria for 2008. Their whiskey market increased by 28% for the same period."Eastern Europe, and Bulgaria in particular, is a fast growing key market for Diageo", company's commercial director, Nikolai Mladenov, commented for the Pari Daily.
Russia Reclaims Bulgartabac Again
It has become sort of a tradition for Russia to claim ownership over former Soviet properties every time Moscow and Sofia face one another in an important talk. once again - this time in the heat of the South Stream negotiations - Russia has expressed its desire to have back Bulgartabac, Bulgaria's biggest tobacco producer. "We are set to reclaim all properties that lie abroad and belonged to the Soviet Union. Bulgartabac will not be an exception," Vladimir Kozhin, head of the Presidential Property Management Department of the Russian Federation, said in an interview with the Moscow newspaper Tribuna. Russia's aspirations for Bulgartabac were repeatedly reconfirmed in the past several years, nonetheless Bulgaria remains unbending in its refusal to hand it over. Its motive is that Moscow's claims are groundless and completely devoid of documentary evidence. The first mention on the Bulgartabac subject was back in 2002 when the holding was due to be denationalized and when there was a Russian company wanting to get it, which was eventually ousted from the rivalry. Kremlin then announced it would refer its pretences to the future owner.Bulgartabac was handed over as reparation to the Soviet Union following WW2. The Bulgartabac matter was most recently discussed by Bulgaria and Russia's heads of state Georgi Parvanov and Vladimir Putin. In the end they agreed to take it off from all common agendas in the future.
GLOBAL FINANCIAL CRISIS ANALYSIS AND NEWS:
Mass bankruptcies of transport companies in Bulgaria
There are going to be mass bankruptcies of transport companies in Bulgaria due to a 50% reduction of the volume of their work, AEBTRI CEO Georgi Petrov told Focus News Wednesday. There is at least half as much work for said companies in the first three months in 2009 compared to the same period of the previous year, and is coming due to the rapid shrinking of exports. Because of this, the prices at which cargo transporters work are now way lower. ‘The transportation of a 20-tonne cargo from Bulgaria to Germany currently costs around EUR700, compared to EUR1,100 last year’, Petrov said. This mean that the price of the service is currently the same as the cost of a person doing the trip with his personal automobile.
Decline in some industrial sectors exceeded 50%
The decline in some sectors of the industry in Bulgaria exceeds 50% for the first quarter of 2009. The peak of the economic crisis in the production field is already close but the services are yet to suffer the consequences of the crisis. This forecast the chairman of the Bulgarian industrial capital association Vassil Velev, cited by BNR. In the conditions of the crisis, the business is impeded additionally from a range of regulatory regimes, which the municipalities are introducing without legal grounds, points out Velev. The legal regimes are administered in a way that gives possibilities for corruption practices. This is the reason for the Economic and social council to submit a proposal to the authority for better quality of the normative acts and less bureaucracy.
Crisis starts to change Bulgarians’ consumer behaviour
The ongoing global economic crisis has impacted on consumer behaviour in Bulgaria although there has not been any major difference yet, according to a report by marketing research agency Pragmtatica. At this stage consumers could go without certain luxury goods and services but they plan to more or less stick to their lifestyle, showed the survey carried out in end-February. Demand is seen on the rise only in excursions and holidays, growing 35-40% year-on-year, the statistics showed. Bulgarians are seeking out vacations both at home and abroad. Real estate and car purchases are in for the steepest slide in demand, with the number of potential buyers down 50 percent from the same period of 2007. The property market is headed for an even deeper decline in areas that have experienced construction boom in the recent years. Shoppers are expected to cut down on confectionary, alcoholic beverages, cigarettes and canned meat. More than 30 percent of consumers said they will scale back spending on meat, beer and fruit juices or simply opt for cheaper products. Perfumes, hair styling products and other cosmetic goods will also attract fewer buyers. Bulgarians also say they will spend less on household big-ticket items including washing machines, TVs, fridges and computers. Demand for essential goods such as bread, eggs, yoghurt, shampoo, hair dye, lipstick and shaving products will see no sharp fluctuations. The survey revealed that 60.9 percent of Bulgarians are aware of the global financial crisis, with 90 percent expecting it might take its toll on the country’s economy.
Bulgaria’s c-bank governor says no need to worry
Bulgaria’s financial system and the balance sheet of the central bank are in an extremely good condition and there is nothing to worry about, Bulgarian National Bank (BNB) governor Ivan Iskrov said. Presenting the events to mark the BNB’s 130th anniversary, Iskrov said many countries can only dream of the current state of the Bulgarian financial system. At this stage there is no reason to take more regulatory action on the Bulgarian banking system, said Dimitar Kostov, deputy governor of the central bank. Other EU members are tightening banking rules but Bulgaria does not need to follow suit as it has already done that, including in terms of the capital requirement, according to Kostov. The EU’s total capital adequacy requirement is set at 8% against 12% in Bulgaria. The capital adequacy of the Bulgarian banking system was 14.86% as at end-2008. Stringent policies and provisions worth around BGN 2-3 billion provide Bulgarian banks with a comfortable buffer, Kostov explained. The extended period for moving bad loans to a higher loan group will enable local lenders to be even more flexible, he added. The stable financial system and the BNB’s tight supervisory standards have mitigated the impact of the global financial and economic crisis, said Iskrov. He called on the media to take with a pinch of salt the opinions of various institutions and analysts who are unfamiliar with the peculiarities of the local market.
Crisis disrupts cash flows to wind power projects
Bulgaria has potential for 3,000 MW of wind power capacity but half of this will fail to secure financing and permissions, according to a survey of Bulgarian firm New Europe Corporate Advisory presented at an enegy efficiency and renewables conference in Sofia.While clean energy sources are enjoying keen interest, there is a trend towards an investment withdrawal from Central and Eastern Europe and the impact of the crisis is yet to be felt, said Kenneth Lefkowitz, managing partner of NECA. He said 1 MW of wind power capacity takes in EUR 20,000 to develop, with construction works worth between EUR 1.5 and 1.8 million per MW. Under pressure from thinning financing, investors will start to walk out on wind power schemes, Lefkowitz forecast. Bulgaria is a risky investment destination, and the risk includes loan prices, which have grown from a year ago, said Martin Mayer of UniCredit Leasing. The preferential buy-out tariffs set by the energy regulator play a key role. Lefkowitz said they should be flexible and the annual amount added to energy rates should encourage investors. Bulgaria takes political decisions that are flexible from the point of the state but not for investors, according to Lefkowitz.Another issue the Bulgarian green energy sector is faced with is bogus investors, who want to be plugged into the national grid and linked to power utilities without a real project and without meaking the necessary measurements, said Lefkowitz.