Bulgaria Love/불가리아 뉴스

불가리아 주요 경제뉴스 ( 4 – 11 SEPTEMBER 2009 )

Mайка 2009. 9. 13. 09:17






Sections/headline briefs:




·        Wall Street Journal: Bulgaria deploys swift cost-shelving measures

·        EU Commission releases EUR 109 M in frozen aid to Bulgaria

·        French President Sarcozy invites PM Borissov

·        Bulgarian PM meets Chinese defence minister

·        Vietnamese workers to be dismissed from Bulgarian companies

·        IMF mission to audit Bulgaria's fiscal plans 2009-10

·        Bulgaria GDP fall deteriorates to 4,9% in second quarter of 2009





·        Bulgaria's Foreign Investment Downturn Started in 2008

·        Large companies only to compete for Sofia waste plant





·        Bulgaria telecom, mobile operator merge in Vivacom

·        Bulgaria car dealer Auto Union mulls acquisitions in SE

·        Bulgaria internet company launches domain names in cyrillic





·        Crisis makes companies sell their stocks

·        One in six Bulgarian businesses facing bankruptcy – EOS Matrix

·        World Economic Forum latest report: Bulgaria stagnates

  • World Bank: Bulgaria losing competitive shine







Wall Street Journal: Bulgaria deploys swift cost-shelving measures

Bulgaria’s new government reined in expenditure, saw its approval ratings hit the skies and former World Bank economist Simeon Djankov, who was appointed treasurer in the Cabinet of right-of-centre party GERB, became a political star, the Wall Street Journal wrote yesterday. Djankov put public sector paychecks and pensions on hold and mothballed exorbitant state investment projects, while slashing government spending by 15%. This brought a 81% reduction in its budget deficit to USD 76.5 million in August from a formidable USD 412 million in July. Amid those measures, the government has earned accolades from Western economists and drawn the highest approval ratings at home since the fall of communism two decades ago. Recent Gallup polls put the government's approval at 64%. While also reeling from recession, the Bulgarian economy has so far ducked the double-digit declines that have dogged Latvia, Lithuania and Estonia. However, joblessness is on the rise and is expected to skyrocket by the end of the year. Furthermore, the country has started to lose its appeal as a low-case labour base, which could hamper a possible export-led economic rebound. Djankov points out he will not dash to line at the door of the International Monetary Fund (IMF) on the example of several neighbours. “We will have clearer signals on whether we will need IMF financing by the end of the year," he said. Admitting the government needs to cut deeper in public spending, Djankov says he is confident the country will have balanced budget this year. The current account gap is expected to shrink to 15% of the gross domestic product (GDP) versus 25% last year as imports slump faster than exports.

EU Commission releases EUR 109 M in frozen aid to Bulgaria


The European Commission announced Monday it has released EUR109 million of suspended pre-accession agriculture aid for Bulgaria. A commission spokesman based the release on requirements the country has finally matched to regain access to the funds from the EU SAPARD programme. They were frozen more than a year ago because of fraud investigations concerning their beneficiaries. Bulgaria has finally agreed to return to the EU budget the m oney spent years ago on a total of 98 SPARD projects which are under suspicion of frudulent use of EU funds. They will have to pay back the money if a legal inquiry in the cases finds that necessary, Bulgaria's farming minister Miroslav Naidenov said. The EU anti-fraud unit OLAF is looking into the issue. The previous Socialist-led government has balked at commission demands that the beneficiaries under those projects be included in a list of debtors to SAPARD until being cleared of fraud suspicions, Naidenov said. He said some of tham had sponsored political parties. Bulgaria can immediately use EUR 19 million of the unblocked aid and another EUR 90 million are made available to it, provided it submits projects to fund with them, the spokesman said.



French President Sarcozy invites PM Borissov


France would like to cooperate with Bulgaria on energy projects. "Paris thinks that Bulgaria should not be left alone before the risk of suspended energy supplies," stated Pierre Lellouche, French minister of State responsible for European Affairs after his meeting with Bulgaria's PM Boyko Borissov yesterday. Pierre Lellouche is the first envoy of a EU member state, who is visiting Bulgaria after GERB party won the 2009 general elections in July. Mr. Lellouche passed to PM Borissov an invitation from French president Nicolas Sarcozy to visit France next month."Nicolas Sarcozy would like that the problem about the energy cooperation in the EU turns into a central issue in the future," Lellouche stressed. In his words, one of the ways in which Bulgaria could gain independence on gas supply is the development of the country's nuclear power industry. According to him, France realized that the new Bulgarian cabinet had good will "to clean out the closets of the past," and to better fulfil the EU requirements on combating mafia, corruption and organized crime, to become a government of law.


Bulgarian PM meets Chinese defence minister

Prime Minister of Bulgaria Boiko Borisov met Tuesday afternoon the visiting Chinese State Councillor and Defence Minister General Liang Guanglie in Sofia, capital of Bulgaria.General Liang arrived Tuesday for a four-day official visit to Bulgaria on the invitation of Bulgaria's Defence Minister, Nikolay Mladenov. This is his first trip to Bulgaria and the last leg of his three-nation tour to Europe. During the meeting, Borisov said that his new government highly appraises the Sino-Bulgarian relations, attaches great importance to bilateral military cooperation, satisfied with the level and status quo of military cooperation between the two countries. The PM expressed his hope that both sides will continue efforts in the existing good cooperation on the basis of continuing to tap the potential for cooperation, expand the scope of military exchanges, so that military relations in the new historical conditions be further developed. Borisov also stressed that the Bulgarian government will unswervingly uphold the one-China policy. Liang thanked Bulgaria's support on the issues concerning China 's sovereignty and territorial integrity. Although the international situation has undergone great changes, and two countries' domestic situation has undergone profound changes, but China and Bulgaria have always maintained friendly cooperation, underlined Liang. Liang said China values the relations between the two countries and the two armies, and is willing to take the 60th anniversary of establishment of diplomatic relationships as an opportunity to summarize the past and plan for the future, make joint efforts to bring the bilateral relations to a new level. Chinese ambassador to Bulgaria Zhang Wanxue, and Liang's major entourage took part in the meeting.

Vietnamese workers to be dismissed from Bulgarian companies


The economic crisis will make the Vietnamese and Chinese workers leave the Bulgarian companies. The Bulgarian firms will employ foreigners from non-EU countries only in extreme situations, said Minister of Labour and Social Policy Totyo Mladenov.Some of the companies imported cheap labour from Asia in the last years.




IMF mission to audit Bulgaria's fiscal plans 2009-10

A mission of the International Monetary Fund, headed by Bas Bakker, will pay a visit to Sofia from September 10-21.The mission has been invited by the new government to help it assess the fiscal situation in 2009 and 2010 and plans to disseminate its main conclusions at the end of its visit.Representatives of the European Commission are expected to accompany IMF mission.Bulgaria's budget deficit shrank to BGN 105 M in August, down 81.4 % on the month after the new government cut spending and took measures to raise revenues.The new center-right government approved at the end of August a mid-term fiscal policy document, which brings together the country's key macroeconomic forecasts for 2010-2013.The document forecasts the contraction of Bulgaria's economy to slow down to 2% next year from a 6.3% shrinking in 2009.The GERB party has vowed to cut public spending by an additional BGN 1,156 B and improve tax collection to avoid slumping into a budget deficit at the end of the year.Bulgaria, like other eastern European countries, has already been hit by the global crisis, but the finance minister says the hardest blow will come in the autumn.The country's economy may show the first signs of recovery at the beginning of 2010 and is likely to start a rebound in the spring next year, according to Djankov.Given a healthy recovery of the economy, Djankov said plans for a 2% cut in the Value Added Tax (VAT) may be implemented in 2011, to be followed by another 2% decrease before the term of the government expires.The government plans to apply in November to join the exchange-rate mechanism, the European Union's two-year currency stability test before the country can drop the lev and adopt the euro, and leave the lev tightly pegged to the euro through the duration of the two years.According to Djankov devaluing the lev, an option that has been supported by a number of experts, is out of the question.The International Monetary Fund expects the Bulgarian economy to shrink by 7% in 2009 and another 2,5% the next year, the head of the global lender mission to Bulgaria Bas Bakker told Deutsche Welle at the beginning of July. The forecast beat considerably the figures previously published and came amid new analyzes for the world economy.The new government had initially given indication that it is likely to turn the IMF for help, something the previous government has resisted and most economists would applaud.Earlier this week, however, in what comes as a U-turn in their position, Finance Minister Simeon Djankov said securing a loan from the International Monetary Fund, following Latvia, Romania, Hungary and Ukraine among others, to support the currency peg to the euro, is not an immediate priority for the Bulgarian government.

Bulgaria GDP fall deteriorates to 4,9% in second quarter of 2009

Bulgaria's gross domestic product (GDP) contracted by 4,9% in the second quarter of 2009, the first time the country's GDP marks a drop year-on-year in two successive quarters since the financial and economic crisis in 1997.The country's GDP shrank by 3,5% in the first quarter of 2009 on an annual basis.Bulgaria, the European Union's poorest member, has already entered recession with its economy shrinking 5% from January to March and contracting 1,6% in the fourth quarter on a quarterly basis.The county has seen its tax revenues falling as foreign investors flee, exports plunge and companies cut output.Bulgaria's exports and imports shrank 15,8 % year-on-year and 24.3 % year-on-year in the second quarter, the statistics office's data showed.Consumption wend down by an annual 3,7 % in the second quarter from a 5,4 % drop in the first quarter.Industrial output shrank 7,2 % from April to June, the growth of services slowed down to 1,4 %. Investment shrank by 16,3 % in the second quarter after dropping 14,1% in the first quarter of 2009.The government expects the contraction of Bulgaria's economy to slow down to 2% next year from a 6,3% shrinking in 2009.






Bulgaria's Foreign Investment Downturn Started in 2008

The foreign direct investments in Bulgaria in 2008 amounted to BGN 12 B, which is a 27,4% decline compared to 2007, when they were BGN 16,6 B.This becomes clear from revised data released Monday by the National Statistical Institute, which also shows that Bulgaria's GDP in 2008 was BGN 59,9 B, a 6% increase compared to 2007.In 2008, one employed person produced an average of BGN 17 397 of the GDP in Bulgaria calculated in current prices.Bulgaria's labor productivity per employed person has increased by 2,7% in 2008, and the average labor productivity per one working hour has also increased by 2,7%.

Large companies only to compete for Sofia waste plant

Companies wishing to participate in the public tender for building Sofia's waste treatment plant will have to have a turnover of at least BGN 200 M for the past three years.The news was announced by Sofia's Deputy Environment Mayor, Maria Boyadzhiiska, who says that the tender will be announced as early as next week.In addition to the turnover requirement, candidates must show proof that the have built at least one similar plant with a capacity of 200,000 tons of waste per year, or two such plants with a capacity of 100,000 tons each.Boyadzhiiska said that those requirements will not limit the number of potential bidders since this is one of the major projects in the Bulgarian capital with a total value of the installations worth EUR 183 M.The tenders for the compost installations near the village of Gorni Bogrov in Sofia's suburbs and for construction control will also be announced next week.In the mean time it was reported that a company with mixed Jordanian and British capital had expressed interest in building a waste treatment plant near the southern city of Pazardzhik.













Bulgaria telecom, mobile operator merge in Vivacom

Vivacom is the name of the new brand created by the merger of the former Bulgarian State Telecom, BTC, and the mobile operator Vivatel.The merger was made official Thursday and also includes the cell phone chain store 2be, acquired by BTC in April.The merger aims at preserving the dynamics of Vivatel and combining them with the reliability and technological profile of BTC under the corporate motto: "Everything that Connects Us."Along with the merger, the Vivacom management plans to relocate in the beginning of 2010 the new company into modern 20,000 square-meter office building at the so-called European Trade Center. The Center is in construction stage on Sofia's main thoroughfare- "Tsarigradsko Shosse."

Bulgaria car dealer Auto Union mulls acquisitions in SE


Passenger cars dealer Auto Union Group, part of the local holding company Eurohold, plans acquisitions in Bulgaria, Macedonia and Romania, Intellinews reported. In addition, the company will complete the construction of several large dealership units and car service centres in the country. Eurohold will inject more than BGN 40mn (EUR 20.5mn) in its car sales unit to finance the take-over intentions. Auto Union Group plans to place convertible bonds as well and the funds will be used for the investment programme. The total value of the issue has not been unveiled by now. In July, the financial supervision commission approved a prospect for trading on the local bourse EUR 7.5mn bond issue of Auto Union. The dealer issued 7,500 ordinary and convertible bonds with nominal value of EUR 1,000 each. The bonds mature on 14 April 2014. In May, Eurohold Automotive Group, the car sales leasing unit of the local holding Eurohold, raised its stake from 20% to 100% in Auto Union paying EUR 8mn to Equest Investment Balkans Limited.

Bulgaria internet company launches domain names in cyrillic

The company that manages domain registrations .bg has announced that it is now possible to register .bg websites in the Cyrillic alphabet.Register.BG stated Monday that from today any company wanting a .bg registration will be able to register a Cyrillic Internet address.The only requirement for those who want to have a Cyrillic domain name in the .bg Internet is that it must only use Cyrillic letters and include at least one letter, which is distinguished visually from the Latin alphabet (б, г, д, ж, и, й, л, п, ф, ц, ч, ш, щ, ь, ъ, ю, я). However, the extension remains .bg in Latin letters.Service registration and maintenance of the domain in Cyrillic .bg is the same as for the previous domain Latin .bg domains and is available under the terms and conditions of the registrar.










Crisis makes companies sell their stocks


The global financial crisis is the reason part of the public companies to finance themselves by selling their stocks, market analysts comment concerning the free float of the nine Sofix-index companies. The decrease or increase of shares listed on the stock market doesn't mean that the majority holder sells or buys company's shares, Andrey Georgiev from Balkan Capital Management said. The highest growth in free float was registered by Sopharma AD, from 8.12% to 27.68% for the period June-August 2009, BSE data show. First Investment Bank's free floats also gained 6.72% to 21.72% in the second quarter of 2009. The shares traded on the stock market of Enemona AD and Central Cooperative Bank also gained during the last quarter respectively 3.04% to 24.56% and 2.88% to 26.87%. No change in the free float was registered in four of the Sofix companies: Neochim AD, Toplivo AD, Roads Holding AD and Kaolin AD. The other seven companies in the blue-chip index decreased the shares listed on BSE between 0.92% and 9.47%. The drop is the highest for ELARG Agricultural Land Opportunity Fund REIT, down 27.14%. The shares were bought both by big and small shareholders, the executive director of the fund Stoyan Malkochev commented. In his opinion this has been the reason for the rising trend in their prices over the last two weeks. When the market revives the shares will be listed again which increases the free float but also brings good profit.

One in six Bulgarian businesses facing bankruptcy – EOS Matrix

Every one in six Bulgarian companies is facing liquidity trouble because of losses accumulated from delayed payments by partners and customers, according to a survey by international debt management group EOS Matrix on payment habits across Europe in 2009.Polling 1200 firms in Bulgaria, Hungary, Germany, the UK and Switzerland to find out that bankruptcy because of unpaid debts looms largest over Hungary, where one in three companies are treading on shaky ground. At the other end of the scale, only one in 10 companies is under risk of bankruptcy in Germany and Switzerland.However, executives in all countries where the polls was done predicted insolvencies will spiral off among both companies and individuals over the next two years.The report highlights the severity of the issue with outstanding debts for Bulgarian businesses. With 16 per cent of their receivables still due, Bulgarian companies occupy the notorious top spot, lagging behind with almost every other bill. Thus, local companies write off and lose four per cent of their total receivables against a much more humble 1.4 per cent for the UK and Switzerland, for instance.Payment difficulties worsen companies’ problems with securing working capital. Clogged access to funding was singled out as the biggest obstacle for Bulgarian businesses in the annual survey "Global Economic Competitiveness Report 2008-2009" of the World Economic Forum in Davos published yesterday. Last year it was only eight in the list of factors blocking business making in Bulgaria.Intercompany debt is indeed a complicated problem but it should not be exaggerated, according to Evgenii Ivanov, executive director of the Confederation of Employers and Industrialists in Bulgaria (CEIBG). Speaking to Dnevnik, he repeated a proposal by the organisation made last year to put in place a receivables set-off system to enable companies to pay down a portion of its debts to other firms, eliminating the need to have cash at their disposal.The issue of intercompany debt is further aggravated by delayed payments by the state, said Vassil Velev, board chairman of the Bulgarian Industrial Capital Association (BICA), who called for a speedier insolvency procedure.

World Economic Forum latest report: Bulgaria stagnates

Bulgaria has maintained  76th place in global rankings, making it the least competitive country in the industrialised developed world, according to the latest report from the World Economic Forum (WEF), released on September 8 2009.Bulgaria comes last among all European Union member states. Even Romania, which used to be in 75th place has now progressed up to 64th, whereas Greece is down to 71st position. The Czech Republic showed the best performance out of all new EU member states, in 31st place.
The reasons why the country trails so far behind other EU states are legion: Inadequate top management, corruption, shoddy infrastructure, low productivity, low grade innovation, poor financial markets, lack of business sophistication and inept and corrupt government institutions are the main explanations offered by the report.Infrastructure ranked in 102nd place out of 133 countries, business sophistication in 89th, good and market efficiency in 81st place and innovation in 91st.Bulgaria does perform considerably better in other factors, including macroeconomic stability (45th place), labour market efficiency (54th place) higher education and training (60th place), health and primary education (58th place).In the case of labour market efficiency, Bulgaria scaled up from 60th to 54th position and the country is also 43rd in the world when it comes to Internet and media access, information technology and digital communications. The top Bulgarian achievement in the table relates to mobile phones per capita, which pits the country in 11th place in the world.Switzerland tops the overall ranking in the Global Competitiveness Report 2009-2010. The United States falls one place to second position, with weakening financial markets and macroeconomic stability.Meanwhile, Singapore, Sweden and Denmark round out the top five. European economies continue to prevail in the top 10 with Finland, Germany and the Netherlands following suit. The United Kingdom, while remaining very competitive, has continued its fall from last year, moving down one more place this year to 13th, mainly attributable to the continuing weakening of its financial markets

World Bank: Bulgaria losing competitive shine

Business sentiment in Bulgaria was declining despite significant progress in easing the start-up of a business, the World Bank said in its latest Doing Business report.Bulgaria was ranked 44th, down two spots from last year. The table includes 183 countries, ranked through a poll of 8000 experts from the respective nations. The list of criteria features tax burden, access to financial resources and investor protection."In terms of the institutional framework and regulatory bottleneck, there is definitely room for improvement," said Hristo Valev, investment manager at Advance Equity Holding. He said existing legislation was good, but law enforcement was weak.In a report published on September 8, the World Economic Forum in Davos concluded that the clogged access to funding has ousted corruption as the main roadblock for Bulgarian businesses. Nevertheless, the highest assessment assigned in the World Bank study was on corporate lending. In this ranking, Bulgaria shares fourth position with a string of other countries such as the US, Serbia and Latvia, with the top criteria being legislative framework and access to information. Lending conditions were left out.In the ease of starting a business table, Bulgaria leapfrogged 31 countries to land at number 50. This takes into account number and duration of registration procedures plus minimum capital.Following the overhaul of the Trade Registry, the registration period was limited to 18 from 30-40 days, Georgi Angelov, macroeconomist with the Open Society Institute (OSI), told Dnevnik, adding that if this is followed up by a reduction in the bottom capital requirement, Bulgaria will move further up in the World Bank ranking.