Bulgaria Love/불가리아 뉴스

불가리아 주요 경제뉴스 (29 MAY – 5 JUNE 2009 )

KBEP 2009. 6. 5. 18:58





Sections/headline briefs:





·        Bulgaria to set up new arms exports company

·        Foreign Minister: Bulgaria should sign IMF deal

·        Bulgaria's economy minister calls for IMF agreement

·        Deutsche Bank to fund Bulgarian highway construction

·        Government supports Business Park Sofia with € 1.5 M




·        Courting investors

·        Global funds to finance building projects in Bulgaria

·        USD 175 M waste plant project in Bulgaria Targovishte

·        BLD builds holiday sea complex

·        Italy's Enel to invest additional €37 M in Bulgaria's Maritsa East 3 Power Plant by the end of 2009

·        Bulgaria's Energoni plans to build €160 M wind park

·        Solar power plant to be built near Belogradchik




·        Consolidation of cable operators is at hand

·        Holding Nov Vek AD with 510% more sales





·        The crisis – buoyant interest rates, cheap cars and less heavy trucks on the road

·        Foreign Investments Act amended







Bulgaria to set up new arms exports company

The Bulgarian government is considering the founding of a new foreign trade company to be in charge of Bulgaria's arms exports.The news was announced by Bulgaria's Deputy Economy Minister, Yavor Kuyumdzhiev, as cited by BTA, who said the new company would most likely be a public-private partnership.Kuyumdzhiev also said the Council of Ministers is going to review a draft strategy for the development of the Bulgarian arms trade sector at the beginning of June.The future company is said to include representatives of the Bulgarian arms industry associations, Bulgarian arms producers, and the Bulgarian state as shareholders.Another option is to transform the presently existing state-owned company Kintex, which deals with arms exports and imports for the Bulgarian Army and police, through adding private partners.The setting up of the new company is said to promote the Bulgarian arms exports on the global market. The initiative enjoys the support of the Bulgarian Arms Industry Association.According to Stefan Vodenicharov, the Chair of the Association, Bulgaria has missed a lot of benefits because of the lack of such a company.Representatives of Kintex also believe that such a new umbrella organization would be useful if it managed to overcome the existing unfair competition among Bulgarian arms producers on the same foreign markets, the Pari Daily reported.Kintex representatives have pointed out that similar umbrella companies of the arms industry existed in Italy and Russia, and had managed to boost substantially the volume of exports and long-term contracts of the respective arms producers.

Foreign Minister: Bulgaria should sign IMF deal

Bulgaria should sign a precautionary deal with the International Monetary Fund (IMF), not because it needed a bailout, but to boost security, Foreign Minister Ivailo Kalfin said on May 29.Kalfin was campaigning for European Parliament elections in Varna as the leader of the Socialist party MEP list. He is on leave as Foreign Minister and Deputy Prime Minister overseeing economic policy for the duration of the campaign.Socialist Prime Minister Sergei Stanishev and Finance Minister Plamen Oresharski have repeatedly rebuffed calls from business associations and analysts to seek an IMF deal, saying that Bulgaria did not need bailing out because its banks were sound and the economy would avoid the worse of the economic slowdown.Flash estimates on economic growth for the first quarter of the year forecast the gross domestic product shrinking by 3.5 per cent.According to Kalfin, who spoke to representatives of businesses from the Varna region, a precautionary agreement with the IMF would help maintain investor confidence in Bulgaria and prove that the country had access to outside financing.






Bulgaria's economy minister calls for IMF agreement

"Bulgaria does not need a loan from the international institutions, as this country has a significant fiscal reserve, but maybe it will be wise if we sign a provisional agreement with the International Monetary Fund, so as to secure financial aid should need arise," Bulgaria's Economy and Energy Minister Petar Dimitrov said as quoted by the Standart news agency. At the end of last week, Deputy PM Ivaylo Kalfin also said it would be useful if Bulgaria started negotiations with the IMF on a future agreement."The Bulgarian Government has allocated half a billion levs to be distributed in the banking sectors through the Bulgarian Development Bank, but more than half of the money has not been appropriated yet. Last week we signed another agreement for the absorption of 400 million levs through the European Investment Fund. The money will again be allocated to the Bulgarian Development Bank as crediting resource," Minister Dimitrov said further.


Deutsche Bank to fund Bulgarian highway construction


Deutsche Bank intends to provide funding for the construction of the Rila highway from Sofia to Bulgaria’s ski resort of Borovetz, Dr. Thomas Rueschen, Director of Asset Finance & Leasing at Deutsche Bank, told Pari daily. The bank also re-confirmed its involvement with other major infrastructure projects in Bulgaria. The newspaper’s experts comment this is really good news, since it was expected that Deutsche bank would give some of them up due to the financial crisis, and the frozen EU funds under the ISPA program. The article points out that with the Deutsche Bank participation guaranteed, the Bulgarian road construction companies were now sure that at least one of the country's road construction projects would proceed as planned. The Rila Highway is supposed to provide a fast-speed connection between the Bulgarian capital Sofia and the Super Borovetz resort in the Rila Mountain so that the distance could be covered in only 40 minutes.

Government supports Business Park Sofia with € 1.5 M

The investment project Business Park Sofia is expected to be supported with over 1.5 million euro. This will be decided on today’s session of the Bulgarian government, informed Darik radio. The construction of the last stage of the road and water supply and sewerage technical infrastructure of the business park are to be funded with the granted resources.The investment plan is certified by the Bulgarian investment agency.So far over 81 million euro have been invested in the project. Business Park Sofia includes the construction of modern business complex, situated in the southeast part of Sofia. Its total area is 220 000 sq.m. Main investor of the project is the German company Lindner.











Courting investors

In an attempt to stimulate Foreign Direct Investment in Bulgaria the Cabinet succeeded in adding to Parliament’s agenda amendments to the Investment Encouragement Act a week before the end of its four-year term. The Cabinet first proposed the amendments in January 2009 and now, four months later,  Parliament has adopted, on first reading, amendments to the system of granting government help to foreign investors.Investors currently apply for first- (A) and second-class (B) certificates depending on the scale of the investment. Under current legislation, the state backs first-class certificate holders who develop projects worth at least 70 million leva with building adjacent infrastructure. Second-class investment certificates offer fast-track administrative support to investors who invest at least 40 million leva.On May 18, Parliament decided to lower these thresholds to 32 million leva for first class certificates and 16 million leva for second-class certificates. Municipalities with an unemployment rate that is not below Bulgaria’s average will issue investment certificates to investors who invested 16 million leva (class A) and eight million leva (class B).As for investments in high-tech sectors, the minimum amount required for granting a class A certificate is 16 million leva and eight million leva for class B. Companies will no longer be required to present their financial reports for the past three years but only for the current and the previous year. Another amendment stipulates that those with more than a 10 per cent share in the companies no longer need to present information about their overall current economic activity.Easing the procedure for granting the certificates followed statements by Stoyan Stalev, head of the country’s promotion authority InvestBulgaria Agency, who on several occasions in the past six months said that the high threshold was one reason why only a little more than a dozen investors received government help in 2008. on May 25 this year, Bulgarian-language Dnevnik daily quoted Stalev’s words to Bloomberg news agency that this would hardly change in 2009 because of the economic downturn.He said that FDI in Bulgaria would fall by one third this year or about four billion euro,  given that in 2008 FDI was about six billion euro. His most pessimistic prognosis was for a drop to three billion euro by the year’s end. Such a serious decline will inevitably lead to problems for the economy at a time when a new government is expected to take power after the July 5 elections.The issue is important because FDI has always been pointed out by this and previous governments as one of Bulgaria’s main achievements. In 2004, the volume of investments, two billion euro, accounted for a quarter of total FDI volumes for the period 1992-2004. Since then, the volume of investments in absolute terms has bested each previous high with double-digit year-on-year growth.The volume of FDI in 2007 rose by 20 per cent year on year to 5.2-5.3 billion euro, a trend that continued upwards in 2008. What’s more, in 2007 Bulgaria attracted a fifth of total investments in the South East European region.Now, however, despite encouraging words from Finance Minister Plamen Oresharski that Bulgaria would survive the crisis better than Western economies, Stalev’s words to Bloomberg suggested otherwise. In such a situation the Cabinet’s last minute efforts to ease conditions on granting investors’ certificates could be rather too late because the negative effect on the economy has long started to show, and lowering thresholds is unlikely to change that.  The amendments also fail to tackle the more serious issue of the structural imbalance of FDI in Bulgaria, an issue reported by The Sofia Echo on several previous occasions and acknowledged by experts. Unfortunately, despite huge investment volume recorded in the past, more than half of it had been invested into speculative capital. Arguably, this has not triggered a healthy growth in the Bulgarian economy because it does not encourages growth in domestic output, productivity or the creation of new jobs.So, in a way, by not dealing with these problems the amendments proposed by the Cabinet could make it easier for investors looking for quick return on their investments to apply for government help rather attract the so-called strategic investors.


Global funds to finance building projects in Bulgaria

International funds are ready to plough almost EUR 100 million into construction projects, said Bulgarian real estate company Century 21, which is part of the programme. Eligible projects should have a price tag of more than EUR 30 million. The scheme’s Bulgarian partner said it will collect information about local building projects, which should be sold through the company if approved for funding. A similar scheme is yet to be set up to provide financing for projects worth less than EUR 30 million. Century 21 predicted the real estate market will pick up at the end of the year.

USD 175 M waste plant project in Bulgaria Targovishte

A USD 175 M waste processing plant is going to be built in the North-East Bulgarian Targovishte district.The city council in Targovishte has approved the sale of a terrain for the construction of the plant, Darik Radio reported.The waste plant will be situated on an area of 117,37 decares next to the village of Dralfa.The project is led by the company "Alternative Energy Targovishte". It has showed interest in signing a contract with the US "Doich International".The US company has constructed 31 waste plants in Europe, and more than 70 back in the States."It is a modern technology that is environmently friendly", the investors explained.

BLD builds holiday sea complex


Bulgarian Land Development (BLD) company, listed on the London Stock Exchange, starts the construction of its latest holiday complex on the Black sea called July Morning near the town of Kavarna. It will consist of 55 holiday houses with a total of 3,600 sq. m built-up area. The first stage of the project with the infrastructure amounts to EUR 2.2 million. The complex will be finished in June 2010.


Italy's Enel to invest additional €37 M in Bulgaria's Maritsa East 3 Power Plant by the end of 2009


Italy's Enel will invest an additional 37 million euro ($52.53 million) in its coal-fired power plant Maritsa East 3 in Bulgaria by the end of the year, a company official said on Wednesday."This year we will invest 37 million euro more in ecological and technological upgrades at the plant," the regional manager of Enel for Bulgaria, John Clark, told local daily Dnevnik (www.dnevnik.bg) in an interview. Enel completed successfully a 700 million euro upgrade of Maritsa East 3 in April. The upgrade increased the plant's installed capacity to 908 megawatts (MW) from 840 MW. The main goals of the upgrade, which started in 2003, were to increase the efficiency and the capacity of the power plant, to extend its operational life by more than 15 years and to bring it in line with European environmental standards. Over 160 million euro of the total investments were spent on environmental improvements. Bulgaria, a European Union member since 2007, relies heavily on its coal-fired power plants after closing down four 440-MW reactors of its sole Kozloduy nuclear power plant as a condition to join the bloc. At present Kozloduy operates its two remaining reactors of 1,000 MW each.


Bulgaria's Energoni plans to build €160 M wind park


Bulgarian energy company Energoni, which starts trading on Sofia bourse on Thursday, plans to invest some 160 million euro ($228 million) in a 100 MW wind farm, its CEO said. We will finance one part of it, roughly 70 million, by own funding, the rest will be with investors," Dimitris Aivaliotis told reporters. The company plans to raise its capital by 67 million levs in the next few months to finance part of the project, Aivaliotis said. Energoni has capital of 250,000 levs, divided in the same number of shares. After the company secures funding for the wind power project, it will float up to 15% of its share capital on the Sofia bourse, Aivaliotis said. The construction of the wind park can start in October-November and will take around a year to be completed. The company is also studying a possibility to implement a water bottling project in which up to 10 million levs will be invested. "In three or four months the water bottling project will be ready and we will start developing it," Aivaliotis said.


Solar power plant to be built near Belogradchik


Belogradchik municipality is negotiating with private investors for the construction of a photovoltaic electric power plant with a 20 MW capacity near the Rocks of Belogradchik, the mayor announced. Two companies, from Germany and Italy, have expressed interest so far. Yesterday the first ever agreement for cooperation was signed between the municipality and the Energy Effectiveness Agency.























Consolidation of cable operators is at hand


Cable channels in Bulgaria are mainly musical, sport, and educational but there is potential in the areas of science, history and adventures, Petyo Staikov, chairman of the board of directors of Eurocom Cable Management Bulgaria, told the Pari Daily. Some 80% of the households have cable TV and the crisis will not affect us very much. Consolidation in the business is something that has to be carried out.


Holding Nov Vek AD with 510% more sales


Sales incomes of Holding Nov Vek AD for the first quarter of 2009 grew by 510% to BGN 1.4 million against BGN 230,000 for the same period of the previous year, the consolidated report of the company issues for the BSE showed. The turnover of the holding depends entirely on the sales. Total expenses grew by 328% to BGN 1.7 million. The loss of the same period was by 165% higher and reached BGN 252,000.




























The crisis – buoyant interest rates, cheap cars and less heavy trucks on the road


24 Chasa Daily asked a wide range of financial experts – from bankers, through economists and financiers, to brokers – to express their visions as to what the future holds for the country’s economy. Most of the inquired believe Bulgarians will sense the meltdown in the autumn of this year. GDP will keep falling, output and export volumes will continue to shrink, unemployment will be on the rise and default credits will be growing in numbers. At the same time, inflation will stay down, real estate prices won’t decrease any further and the heavy trucks on our roads will drop in numbers.


Interest rates will remain high. Retail loan prices reached an average of 12.92% in BGN and 11.8% in EUR, while accruements on mortgage debts stood at 9.81% in BGN and 8.21% in EUR.

Incomes and prices

The incomes of most people will be frozen, whereas the price tags of products and services are to keep their present levels.

Real estates

The overpriced properties will be getting slightly cheaper, but the average prices won’t be going down any further.


It is still uncertain what’s in store for the local stock exchange, as the processes there depend on a number of factors both internal and external.

Industrial output

Production volumes in Bulgaria will keep on shrinking and export is to follow suit shortly.






Foreign Investments Act amended


Publication: Banker Weekly English
Financial Information Agency Ltd.


Provocation or a bow to favourites? Bulgarian rulers decided to give out pre-election anti-crisis bonuses to large investors. on March 1, the National Assembly decided to do away with public exchanges of property and put an end to such kind of trade. To do that, Parliament amended four laws limiting the options for exchange of public forests, land lots, state and municipal properties. only a month later, MPs passed new texts in the Investments Act. It was then when it became clear that the privilege allowing for exchange of properties without tenders or competition procedures was a bow to potential pre-election sponsors. It was named "anti-crisis measures" to throw dust in EU's eyes. Changes quickly passed all parliamentary commissions and were finally approved by MPs on May 18, 2009. After the approval of the new changes, every investor who has been awarded a special certificate by the state may buy, sell, lease or receive in exchange properties of state or municipal entities without tenders or competition procedures. In order to conclude contracts with private owners, the head of the respective municipal or state company will have to give his or her consent, which is to be sanctioned by the Economy Minister. The new texts envisage a very controversial (according to parliamentary opposition) option. Businessmen may not only buy without tender or competition, but may buy at prices equalling tax assessment. In this respect, it is worth reminding that in many regions of the country tax assessments are much lower than the properties' real market value. The new amendments tried to mask this downright insolence by limiting it only to the so called priority projects. Vice Economy Minister Anna Yaneva said that priority projects would be named only those of more than EUR48 million. Moreover, they will to secure new jobs in problematic regions, high-tech parks and industrial zones. This is how only largest entrepreneurs will be in position to make use of the new exchange mechanism. Up to now, certificates for an A-class investors have been given only to those entities that have invested at least BGN70 million in local industry, renewable energy sources, new technologies or medicine. The B-class certificates have been awarded to those whose investments were smaller, but of at least BGN40 million. The new changes, however, lowered the thresholds dramatically. Now, exchanges with state and municipal properties will be accessible to businessmen with investments of as little as BGN32 million (for an A-class certificate) and BGN16 million (for a B-class one). Thresholds in high-tech sectors may be lowered five-fold. The application of priority investment projects law is expanded through the new amendments, too. The new texts put weight on the "triangle of knowledge", i.e. education, scientific research and innovations. The driving force of the change is that innovative companies in Bulgaria account for 20% of all enterprises, which places the country to one of the last places within EU. For comparison, the average proportion in the Union is 39 percent.