BULGARIAN ECONOMIC TOP NEWS DIGEST
WEEKLY REPORT ( 31 AUGUST – 4 SEPTEMBER 2009 )
Sections/headline briefs:
MACROECONOMY:
· Borissov to ask Merkel help in unfreezing EU funds for Bulgaria
· BGN 250 M under PHARE may stay frozen
· Central Bank's forex reserves increase
· Bulgaria slashes registration cap for limited liability companies down to two leva
· Ambassador Williams: bilateral trade between Bulgaria and the UK has further potential
· Borissov, Putin meet to talk on energy business
· Foreign reserves rise 2.5% last week
· Bulgaria government inspects ownership of Plovdiv International Fair
· Environment and waters ministry suspends BGN 159 M projects
· UniCredit sees rebound in Eastern Europe
· Switzerland considers offering Bulgaria access to CHF 70 M fund
INVESTMENTS:
· US PryMarke offers alternative energy sources to Bulgaria
· IMF: Foreign investments won't be back soon in Eastern Europe
· Bulgaria: Foreign Direct Investment: Flow in EUR million
· Bulgarian Insa Oil puts EUR 25 М into eco fuel installation
· Retailer Piccadilly opens third corner shop in Sofia
· Cleantech, infrastructure, real estate hot with investors
· Melrose to pour millions in Bulgaria, Romania in 2010
COMPANIES:
· Prista Oil enters Central Asia
· HES exports 95% of its production
· Bulgaria steel mill faces cash hole of BGN 1 B
THE CRISIS:
· Bulgaria’s business climate lowest in nine years Aug 2009
· Finance Minister: Bulgaria to overcome economic crisis May 2010
· Crisis nibbles Bulgarian food companies
· Bulgaria wine exports crash 70%
· Agro companies' turnover falls 7%
Articles:
MACROECONOMY:
Borissov to ask Merkel help in unfreezing EU funds for Bulgaria
Bulgaria's PM Boyko Borissov will seek the cooperation of German Chancellor Angela Merkel to unfreeze the frozen EU subsidies for Bulgaria. The two are scheduled to have a one-to-one meeting on Tuesday in Gdansk, Poland.It is expected that Mr. Borisov will ask Mrs. Merkel to state her support for the unblocking of Bulgaria's EU aid before Brussels in her capacity of a prime minister from the quota of the European People's Party. Borissov will also seek her cooperation to receive from the European Commission an extension of the deadline for optimization of the landfills across the country. Mr. Borissov will also try to secure the support of his Italian counterpart, Silvio Berlusconi, for the unblocking of Bulgaria's EU subsidies. In Gdansk, Berlusconi and Borissov will also discuss a possible visit of the Italian PM to Bulgaria. About a month ago, the two politicians agreed that Berlusconi would visit Sofia towards the middle of September. Borissov's visit in Gdnask is his first visit abroad as a Prime Minister of Bulgaria. Mr. Borissov will take part in the ceremony commemorating the 70th anniversary of the battle of Westerplatte that marked the official start of WW II. Bulgaria's Prime Minister is also scheduled to have talks with his Russian counterpart, Vladimir Putin, over common European projects, as well as with Poland's Prime Minister Donald Tusk. As Mr. Borissov's schedule is really tight, his meetings with the European leaders will not be longer than ten minutes, sources from the Prime Minister's Office said.
BGN 250 M under PHARE may stay frozen
The transfer of the National Road Infrastructure Agency to the ministry of regional development and public works will speed up the construction of motorways and prevent the diluting of responsibility, minister Rossen Plevneliev told the Pari daily in an interview. An action plan will be ready by the middle of September. The projects under the transport operative programme will be controlled by the transport ministry. We have set up a working group on motorways including officers from the ministries of transport, regional development, agriculture, environment and the road agency. Frankly speaking, I am downbeat about funding under PHARE, Plevneliev admitted. Most probably Bulgaria will not be able to have its BGN 250 million suspended financing unfrozen. More clarity on the issue is expected after the talks in Brussels on September 9 and 10. As concerns ISPA, the problem lies in the huge delay of construction, the poor contracts and the chosen contractors, Plevneliev pointed out. We will try to extend the programme by a year but we can hardly expect to be given more than six months extra. In the light of the drastic slump in civil construction, infrastructure becomes the strongest anti-crisis measure. The projects, however, will take time. We plan to kick-off the construction of eight motorway lots by the end of 2010. The projects will cost EUR 900 million and will be completed by the end of the government's term.
Central Bank's forex reserves increase
Bulgaria has received 474,586,534 Special Drawing Rights (SDR) from the IMF (about 517 million euro), which increased the foreign exchange reserves of the Bulgarian National Bank (BNB), its press office said.At the April summit in London of the Group of Twenty (G-20) industrial and emerging market countries, state and government leaders called for an SDR allocation equivalent to 250,000 million dollars among the IMF member states as part of the anti-crisis package, the BNB said. This entitles each IMF member state to SDR to the amount of up to 75 per cent of its IMF quota.In line with this decision, the proposed general allocation was approved by the IMF's Board of Governors on August 7. In his capacity as the IMF Governor for Bulgaria, the BNB Governor voted for the Resolution, expressing the joint position of the government and the central bank.A special one-time SDR allocation of 136.3 million will be made to Bulgaria on September 9. The special one-time allocation equivalent to about 33,000 million dollars, separate and additional to any SDRs allocated to members under the general allocation of SDRs, was proposed in 1997 and became effective for all members on August 10, 2009 when the Fund certified that at least three-fifths of the IMF membership (112 members) with 85 per cent of the total voting power accepted it.
Bulgaria slashes registration cap for limited liability companies down to two leva
Bulgaria’s Deputy Prime Minister and Finance Minister Simeon Djankov announced a proposal to slash the bottom capital requirement for registration of limited liability companies (LLC) from 5000 at present to just two leva.The proposed legislative amendment needs to secure the go-ahead by Parliament.Djankov explained that by making this decision the government is fulfilling another one of the 15 emergency priorities mapped out in its economic plan published in July. The ministers pledged that all of them will be realised within the Cabinet’s first 100 days in office. Meanwhile, he said the government is drawing up a list of its long-term commitments by the end of its term.Company executives and economists asked for comment by Dnevnik daily welcomed the news, saying that what is in practical terms a suspension of the minimum statutory capital requirement will pave the way for not only fast company registration but also winding up the business of loss-making companies. The move will help companies better withstand the economic headwinds, while clearing a major roadblock before new market entrants, according to employers’ organisations. But it should be followed up by a broader policy ensuring efficient oversight, sanctions and rules that should apply for everyone.In its Doing Business report, the World Bank ranked Bulgaria as one of the countries with the highest statutory capital requirement, outstripped only by Mongolia, Mozambique, Congo and other developing nations. Almost 100 countries, including some of the most developed, have set a zero requirement.
Ambassador Williams: bilateral trade between Bulgaria and the UK has further potential
Bulgaria has further potential to export food and drink products to the UK, said British ambassador to Bulgaria Steve Williams during talks with Bulgarian Agriculture and Food Industry Minister Miroslav Naidenov.Ambassador Williams described the UK as an important exporter to Bulgaria, and said it would be mutually beneficial if the UK develops its potential. Currently, Bulgarian quality wine is one of the popular products in the UK, he said.Naidenov noted the UK’s admirable record in setting food safety and quality standards and said he hoped that Bulgaria would follow suit when developing a new State Food Control and Safety Agency.Naidenov told the UK ambassador about steps taken to improve the European agriculture funds management, citing changes in the management team of the Bulgarian State Agriculture Fund.Ambassador Williams said that he had a high opinion of Bulgaria's achievements in this area and expressed hope that the EC would acknowledge them.Statistics show that trade between Bulgaria and the UK is increasing. The most popular food products exported to the UK are bakery and paste products, confectionary, grape wines, fruit, sunflower seeds, tinned and ready-made meat food and coriander seeds.Last year, among the UK's top exports to Bulgaria were coffee and tea, ethyl alcohol, various food products, poultry and meat.The UK came in as the fourth biggest investor in Bulgaria in 2008, topping 573.6 million euros.But British investment in Bulgarian agriculture still had further potential, both sides agreed.
Borissov, Putin meet to talk on energy business
Pressed by his Russian counterpart Vladimir Putin to clarify the new Bulgarian Government’s stance on planned energy projects, Prime Minister Boiko Borissov said that his administration would study the contracts, potential costs and merits, and give an answer by November 2009.Borissov met Putin in Poland on September 1 on the sidelines of a gathering of government leaders to commemorate the 70th anniversary of the outbreak of World War 2.The projects are the South Stream gas pipeline, planned to transit Bulgarian territory, the Bourgas-Alexandroupolis pipeline and the Belene nuclear power station project.All three were the subjects of commitments by previous Bulgarian governments, but Borissov’s Cabinet has called into question the value of going through with the projects, especially given that it has come into office without knowing crucial details of contracts that have been shrouded in secrecy.Putin told Borissov that he hoped that the process of the administration in Sofia investigating the contracts "would not take much time".Firmly, Putin said that should Bulgaria decide against proceeding with the projects, it would not harm bilateral relations but "we would go through somewhere else".
"Just tell us ‘no’ and the issue will be over," Putin said, according to a transcript on the Russian government website.In the first hours after the meeting, it seemed that South Stream – a project that is rivalled by the US-backed Nabucco pipeline project – appeared to have the strongest chances of continued Bulgarian involvement. Speaking to Bulgarian National Television, Borissov described South Stream and Nabucco as both good for Bulgaria.Belene has been the subject of a stream of statements from those close to Borissov, including his ministers, querying the worth of the nuke project that would cost at least four billion euro. The previous government committed itself to giving Russia’s Atomstroyexport the work of completing Belene, but getting financing has been a headache.On Bourgas-Alexandroupolis, the Russian transcript gives an indication of Putin’s thinly-veiled ｅxpression of frustration. Sofia and Moscow had been talking about the 280km project for seven years, while in just two, Russia had finished a 1500km pipeline from Eastern Siberia to the Chinese border and was poised to add a further 2000km to the Pacific shore, Putin told Borissov.Borissov said that Bourgas-Alexandroupolis had been targeted for opposition by environmental groups and local misgivings had spawned two referendums. Overall, Borissov said, the fact that his party GERB lacked a decisive majority in Parliament meant that he needed wide consensus before being able to proceed with the projects.Putin said that his government’s policy was to want to help turn Bulgaria into an energy centre on the Balkans and in Europe, and welcomed Borissov’s idea of Russian experts coming to Bulgaria to work with local colleagues to achieve clarity on the projects.
Foreign reserves rise 2.5% last week
The stock of international reserves rose by 2.5% (EUR 291.7mn) last week to EUR 11.8bn as of Aug 28, according to data of the central bank. The increase is due to the rise in the deposit of the banking department of the central bank by 32% as the central bank received on Friday last week (August 28) SDR 474.6mn from the IMF valued at total of EUR 517mn. The amount is part of the programme of the IMF to allocate USD 250bn to member states to contain the adverse effects from the world financial and economic crisis. on September 9, the central bank will receive SDR 136.3mn from the IMF additionally under the special one-off SDR distribution as of 1997, which was recently ratified by all member states. Last week, the deposit of the government and the commercial banks at the central bank dropped by 3.2% and 3%. The IMF amount contained the reduction of the international reserves to 7.2% since the beginning of the year as compared to 9.5% a week earlier. The value of the reserves is thus by 0.76% higher as compared to end-July. The international reserves cover slightly more than 90% of the short-term external debt as of end-June as compared to 95.7% as of end-2008, 109.5% a year earlier, 126.3% at the end of 2007, and about 300% in 2002-2004.
Bulgaria government inspects ownership of Plovdiv International Fair
Bulgaria's Ministry of Economy has formed a working group to inspect how businessman Georgi Gergov gained control of the Plovdiv International Fair.On Wednesday, Bulgaria's Economy Minister, Traicho Traikov, said that this was one of the weirdest deals in the recent years". In his words, the Plovdiv International Fair company even refuses to give the government information because the state is not a majority owner.Even though the Plovdiv International Fair is in the companies that are banned from being privatized, the tourism businessman Georgi Gergov, who is close to the former governing Bulgarian Socialist Party, controls almost 51% of it through several connected firms, according to a report of mediapool.bg.Gergov is currently the executive director of the Plovdiv International Fair company. The Ministry's working group is headed by Deputy Minister Evgeni Angelov.Gergov has reacted by saying that if the state wanted to increase its share of the Plovdiv International Fair, it should buy out shares from the other owners instead of carrying out inspections. He has expressed confidence in the legality of the situation, adding that the public-private partnership for the Plovdiv International Fair had been inspected by the Interior Ministry, the National Security Agency, and the prosecutor's office.Gergov has also denied Minister Traikov's claim that the state was refused information about the ownership of the company.The Plovdiv International Fair is in charge of Bulgaria's largest commercial annual exhibition, which bears the same name.
Environment and waters ministry suspends BGN 159 M projects
The Bulgarian environment and waters ministry has halted 280 low-priority projects of a combined BGN 159 million (USD 115.6m/EUR 81.3m). The ministry, on the other hand, has identified as top priority schemes for the construction of wastewater treatment plants and sewerage systems in areas with over 10,000 residents, completion of waste depots, protection of rare species and development of the EU's Natura 2000 network of conservation sites. In recent years the state enterprise for environmental management with the ministry has inked over 500 contracts with municipalities but check-ups established inflated prices for 80 projects in nine municipalities fuelling suspicions that contractors have been picked in breach of law.
UniCredit sees rebound in Eastern Europe
East European economies are on the road to recovery and are poised to pull themselves from recession ahead of western nations, UniCredit CEO Alessandro Profumo said as quoted by Reuters. Optimism about the state of economies in Central and Eastern Europe is perking up. "We can't say that there is a full-blown boom but certainly we are seeing signs of improvement,” Profumo told reporters. Emerging European markets generate around 20% of the group’s total revenue. UniCredit is the region’s largest lender in terms of assets. Meanwhile, Raiffeisen International -- the region’s second-largest financial institution -- said Ukraine has the most rickety economy in the Central and Eastern Europe.
Switzerland considers offering Bulgaria access to CHF 70 M fund
The Swiss government is considering the opportunity of making available to Bulgaria a fund of over 70 million Swiss francs for a period of 10 years. This emerged during a meeting Thursday between Bulgarian Agriculture Minister Miroslav Naydenov and Swiss Ambassador Thomas Feller. If it is approved, funding will be available on a competitive basis for projects in several areas, including security and stability; environment and infrastructure; private sector development; and human resource development.Ambassador Feller said that the project is still at a working stage and is yet to be discussed as several levels before a final decision by the government. The issue is expected to be discussed during a Bulgarian visit of Swiss officials in late 2009. Even though agriculture is not explicitly includes in the areas of the possible agreement, cooperation in this field would be very useful considering its importance for Bulgaria and its GDP, the Swiss diplomat said. During their meeting, the two sides paid special attention to a Swiss-funded project for supporting mountain farming in the Rhodope village of Smilyan.According to Economy Ministry statistics, Swiss investment in Bulgaria in 1996-08 stands at 897.2 million euro placing Switzerland 14th in the list of foreign investors with 2.66 per cent of the total investment in Bulgaria. Figures of the CustomsAgency show a surplus for Bulgaria in trade in agricultural produce with Switzerland. In the 2005-08 period, it was biggest in 2006, at 6,033,000 dollars.
INVESTMENTS:
US PryMarke offers alternative energy sources to Bulgaria
US company PryMarke, representing solar panel manufacturers from Canada, China, and the USA, announced a plan to provide alternative energy solutions to Bulgaria later this year."We are now in contact with several bodies within the Bulgarian government, including the country's president and the Ministry of Energy and Energy Resources for this effort," said Dr. Bryan Christiansen, PryMarke's president and founder.PryMarke plans to distribute solar photovoltaic (PV) modules for commercial and residential use, thin film-based solar modules for reduced cost and increased adaptability over PV modules, wind power generators, and turbines.Wind power generators and turbines will come from the company's clients in Turkey, the USA, and elsewhere.
IMF: Foreign investments won't be back soon in Eastern Europe
Eastern European countries see for the first time since 2007 a revival of investors' interest in the region, but foreign investments and crediting for people and companies will not be here soon, says an analysis of the International Monetary Fund.The banking sector, which triggered the global economic crisis, now holds to key to finding a way out of it, say the experts, as cited by Deutsche Welle.The analysts from the global lender believe that the crediting in Eastern Europe is one of the most difficult problems to solve, since it this is very much dependent on the Western banks, operating in the region.The piles of debts continue to be a source of financial instability, the article points out.According to Fitch Ratings, Bulgaria has USD 26.2 B of debt coming due in 2009, equal to 64% of GDP.Bulgaria's gross foreign debt totaled EUR 36,925 B at the end of June, long term-debt dues stood at EUR 8.397 B, while short-term liabilities stood at EUR 6,6 B.According to Fitch agency Bulgaria may be forced to consider outside funding as the second half of 2009 gets under way despite recent assertions by newly elected Prime Minister Boyko Borisov that no IMF loan will be necessary.The problem for Bulgaria is said to be not necessarily foreign currency-denominated lending (household-sector foreign currency-denominated lending is actually quite low), but rather years of high current-account deficits that required trade financing and corporate lending.
Bulgaria: Foreign Direct Investment: Flow in EUR million
Ten times more foreign direct investments were withdrawn from Bulgaria in the second trimester of this year compared to the first three months of 2009. While in the period January-March 2009 FDIs to this country were 2 million euros, in April-June the amount rose to 18,271 million. This is according to National Statistical Institute data on the inflow of investments in the non-financial sector. However, on the whole, the second trimester accounted for a 36,9-million-euro growth in the FDIs causing the overall FDI volume to increase to 137,1 million euros.
Bulgarian Insa Oil puts EUR 25 М into eco fuel installation
Bulgarian petrochemicals maker and distributor Insa Oil has invested EUR 25 million (USD 35.7m) in a top-quality, eco-friendly fuel capacity, the company said on Monday. The system of the desulphurisation type will come on stream in mid-October and will expand the group's annual production by up to 115,000 tonnes. once up and running, the capacity will turn out diesel fuel conforming to the highest European emission standard - Euro-5, which caps sulphur content at 10 parts per million (10 ppm), the firm said in a statement. In addition, the installation will generate industrial gas oil meeting European sulphur limits of 0.1% that will take effect in 2010. The investment, which is part of the firm's pollution control and prevention commitment, will create 50 jobs. Insa Oil is part of Insa group, which lumps together propane-butane storage and trading facility Insa Gas, oil transport terminal Insa Port, lubricants maker Insa and health care centre Sveta Elisaveta. The group employs over 450 staff.
Retailer Piccadilly opens third corner shop in Sofia
Retail chain Piccadilly, controlled by the Serbian company Delta Maxi, opened its third corner shop in the capital city of Sofia with total trade area of 285 square metres. The retailer plans to open 40-50 corner shops Piccadilly Express all over the country. The network of Piccadilly expanded to a total of 23 supermarkets, including the three corner shop stores in Sofia .
Cleantech, infrastructure, real estate hot with investors
Clean energy, infrastructure and distressed property assets have the widest appeal with investors at the moment and restructuring is also sparking keen interest, Anna Rizova, Clegg, managing partner of the Bulgarian office of global legal service provider, told a press conference in Sofia yesterday. Although it is still grappling with consequences of the worldwide economic downturn, the property sector has remained one of the main fields for the company’s Bulgarian businesses. But interest in depressed assets in the sector comes chiefly from investment funds with a suitable business management model, she explained.The Bulgarian office has consulted projects worth around EUR 100 million since the start of the year, planning to add another EUR 50 million, mostly in distressed property assets.The company is also active on the equity market and is an active M&A partner but investors have lost sight of new purchases as they are busy restructuring their portfolios. DLA Piper opened its Bulgarian office in 2006 and now employs about 15 lawyers. It is in talks to grow its local business through acquisitions of new partners.
Melrose to pour millions in Bulgaria, Romania in 2010
The UK company Melrose Resources announced plans to invest USD 195 M next year, 60% of which in development activities in Bulgaria and Romania and the rest in exploration and farm-in activities in the two countries and Egypt.Meanwhile the Edinburgh-based oil and gas firm confirmed it is negotiating with the recently-elected Bulgarian government about a scheme to use Galata for gas storage.The Scottish The Herald newspaper cited Chief executive David Thomas as saying that scheme was proceeding more slowly than directors had hoped.However, he added: "There are absolutely no issues regarding the strategic requirement for it."Thomas said following drilling successes in the first half, Melrose increased the mid case reserves estimates for three finds off Bulgaria to 100 billion cubic feet gas. only 66bcf has been produced from Galata.The company is also pursuing plans for its recent Kavarana and Kaliakra gas discoveries and various other exploration prospects on the Galata block on a geologic trend running east from the Galata field.The two discoveries will be developed via subsea wells tied-back to the Galata platform, with export via the existing offshore pipeline and onshore processing plant. Melrose also will facilitate tiebacks of any future discoveries.Kavarna, around 7 km (4.3 mi) east of Galata, holds an estimated 24 bcf of reserves. First gas from Kavarna is planned next July and Kaliakra in October 2010, with an initial combined field flow rate estimated at 45 MMcf/d.Melrose expects its expenditure in 2009 to be around USD 165 M, slightly lower than market estimates, and forecasts preliminary capital expenditure of USD 195 M for 2010.Melrose posted a pretax profit of USD 19.8 M for the first half, compared with USD 134 M a year ago. Revenue fell 58% to USD 97.5 M.
COMPANIES:
Prista Oil enters Central Asia
Bulgarian lubricants producer Prista Oil has teamed up with Turkmenistan's Turkmenbashy state-owned oil refinery to build a joint lube oils production unit in the Asian country. Plans call for an annual production capacity topping out at 100,000 tonnes. The announcement was made by Turkmenistan president Gurbanguly Berdimuhamedow, who was on an official visit to Bulgaria.
HES exports 95% of its production
Bulgaria's Hydraulic Elements and Systems (HES) AD produces hydraulic cylinders mainly for the agriculture and automobile industry. The Yambol-based company exports 95% of its production. A company's project won BGN 4.3 million under competitiveness operative programme. Despite the crisis, HES is modernising its plant and plans to buy new Japanese machines.
Bulgaria steel mill faces cash hole of BGN 1 B
The market evaluation of Bulgaria's obsolete steel mill Kremikovtzi is BGN 837 M, according to the appraisers' report published on the company's internet site.This amount includes long-term material assets and shares.The liquidation value or the market price for a forced sale is nearly BGN 603 M.The lands owned by the mill have the highest value of BGN 202 M while the buildings are appraised at BGN 189 M.The effective date of the appraisal, conducted by the "Amirita" Consulting Agency is September 1.The Kremikovtzi assignee in bankruptcy, Tsvetan Bankov, told the Bulgarian information agency BTA that it is obvious the mill's assets cannot cover its debts amounting to BGN 1,9 B, but failed to commit to any forecast about possibilities to sell Kremikovtzi at market value citing the global economic crisis.After the mill's creditors examine the evaluation of the assets, they would declare their final decision about capitalizing their their debts and becoming shareholders.On August 30, creditors including State owned companies such as the railroads, Bulgargaz and the National Electric Company declared their readiness to become shareholders.The capitalization of the debt is the only mean to implement a healing plan for Kremikovtzi. The sole other possibility is liquidation.The sprawling communist-era behemoth near Sofia was declared insolvent in August last year with debts exceeding EUR 1 B. It is a big source of pollution and urgently needs re-furbishing.Kremikovtzi, one of Bulgaria's biggest companies, provides jobs for over 5 000 people and its future was a politically sensitive issue ahead of the general elections in the summer.
THE CRISIS:
Bulgaria’s business climate lowest in nine years Aug 2009
Bulgaria’s business sentiment plunged to a new nine-year bottom in August, when it dropped by 1.3% to 9%, its lowest since 2000, showed figures of the National Statistical Institute (NSI). The estimates tie up with projections by the Finance Ministry that Bulgaria will feel the worse of the crisis in the final months of 2009 and the start of 2010. But if positive signals streaming out of the EU at the moment keep up, Bulgarian companies will be able to lift their spirits next year. The industrial sector -- which was hit hardest by the economic tumult that battered EU demand and crippled exports -- put on rosier glasses, expecting operations to be flat in the three months ahead compared with a reduction predicted in July. The sector-specific indicator eked out an uptick of 0.3 percentage points but NSI said that order intakes will continue to droop and capacities to hum low. But entrepreneurs’ spirits were dampened by a downbeat construction industry, where prices are expected to go further down in the next few months. Most retail traders expect the status quo will hold on for the coming months but a further deterioration is unlikely. As customers snapped up their purses, sales plunged in the past three months and more respondents pointed to mounting insecurity as an acute problem. The services sector echoes the opinion that matters should stay as they are by the end of the year and not go worse but demand is stale and more redundancies are not out of the way, according to company executives.
Finance Minister: Bulgaria to overcome economic crisis May 2010
The Bulgarian economy is going to start recovering from the global crisis in April-May 2010.This was forecast Friday in Burgas by Bulgaria's Finance Minister, Simeon Djankov, during a meeting with local businessmen, as cited by Darik Radio.Djankov underscored he was not making a forecast as a Finance Minister but as an economist. He believes that by the end of the spring of 2010 there would be specific indicators showing the Bulgarian economy had started to recover.In his words, the government has decided to plan the budget for all of 2010, and might then be able to review the state expenditures in June 2010 in order to increase them.Djankov outline the draft amendments of the public procurement procedures act, the concessions system, and the improvement of the financial and judicial part of the state administration as key current activities of his Ministry.
Crisis nibbles Bulgarian food companies
In a sign that the economic slowdown is getting worse, companies are slipping to poorer results even in sectors previously believed to be better equipped to withstand the downturn such as the food industry.Agria Group Holding, which specialises in grain production and processing and bread production, said its profit has withered by nearly 19 per cent as sales plunged 10 per cent. Current liabilities to banks doubled to 12.66 million per cent.Zarneni Hrani Bulgaria-Farin, the agri business of industrial conglomerate Chimimport, suffered a threefold decline in profit to 355 000 leva at the end of June. And while sales slid too, expenses were flat at 6.7 million leva as costs for materials slipped and costs for external services and remuneration went up.Doverie United Holding worsened its financial performance by 77 per cent to 908 000 leva. Total revenue came in slightly lower but currency exchange fluctuations have fetched an almost double increase in positive differences.Doverie Brico, one of the companies in the group, which owns France’s Mr Bricolage franchise for Bulgaria, Macedonia and Albania,- closed the first half of the year 150 000 leva in the red, plunging from a 2.22 million leva profit a year earlier. This is better than expected than the 457 000 leva first-half guidance, the company said.
Bulgaria wine exports crash 70%
Bulgarian vineyards are facing tough times with the National Vine and Wine Chamber (NVWC) announcing a 70% fall in exports due to the financial crisis.NVWC announced late Tuesday that the 70% year on year decrease in exported wine followed a decrease in exports that was also registered in 2008. The export of bottled wines dropped by 21% and the export of the dry wines fell by 30%; the export of sparkling wines also shrunk.Last year, Bulgaria exported 873 hectoliters of wine, 63% of it to Russia and nineteen percent to Poland.The fall comes despite a large amount of favorable foreign press on Bulgarian wines, including recent major newspaper articles in the US and UK. It was also recently announced that French wine experts had decided to open Bulgarian wine tours.
Agro companies' turnover falls 7%
The agricultural companies listed on the Bulgarian Stock Exchange posted a 7.4% slump in their total income for the first half of 2009. The data can be found in the consolidated reports of Agria Group Holding AD and Zarneni Hrani Bulgaria AD. The turnover of both companies fell to BGN 106.33 million. Zarneni Hrani's income holds a higher share in the total income in the branch. For the first six months of 2009, the turnover of the company fell 7% year-on-year to BGN 76.5 million. Agria's income contracted 8.4% to BGN 29.8 million. The sales of both companies for the corresponding period stood at BGN 100.3 million, down 11% on an annual basis. Sales of Zarneni Hrani stood at BGN 71.1 million and that of Agria at BGN 29.2 million. The second half of the year is usually better for the agricultural business and then we expect better deals, Emil Raykov, executive director of Agria Group Holding AD, told the Pari daily. Operating expenses of both companies for Jan-June period in 2009 declined 7.6% compared to the first six months of 2009 and stood at BGN 102.1 million. Total consolidated profit of the companies increased by 0.20% and for the half year was BGN 3.92 million. The results of the two companies considered separately show a striking contrast. Zarneni Hrani posted a BGN 2.62 million profit, up 13.1% year-on-year. Agria's profit fell 18.6% and at the end of June was BGN 1.3 million.