BULGARIAN ECONOMIC TOP NEWS DIGEST
WEEKLY REPORT ( 11 – 18 SEPTEMBER 2009 )
Sections/headline briefs:
MACROECONOMY:
· Bulgaria's trade deficit goes up for 1st time in 3 months
· Raiffeisenbank Bulgaria: We are optimistic about Bulgaria's economic development
· Russia willing to buy Belene nuclear plant from Bulgaria
- Bulgaria seeks EUR 1 B loans for highways, infrastructure
· 60 Bulgaria building projects stalled by contractors
· Bulgaria's new car sales collapse by over 60% in August 2009
· Sofia to buy 25 trams
· Bulgaria gets EU globalization fund aid for steel giant layoffs
· Payments on 308 SAPARD projects released
· Bulgaria government puts forward anti-crisis measures
· Bulgaria's tourism presented at fair in Japan capital Tokyo
· Battery recycling is just on paper
· Bulgaria loses BGN 1.3 B over fuel contraband
INVESTMENTS:
· Kraft Foods invests BGN 40 M in Bulgaria chocolate factory
· Dundee Precious Metals: Bulgarian cabinet improves investment climate
· Foreign investments for 2009 down by EUR 2 B
· US agency awards grant to support healthcare in Bulgaria
· Bulgaria Sofia to build tram, subway car factory
COMPANIES:
· Spanish Telecom giant Telefonica enters Bulgaria market
· Export of textile companies slumps 20%
THE CRISIS:
· Bulgaria technology exhibition canceled over financial crisis
· EBRD: Eastern Europe faces possible banking crisis
- Survey: 30% of Bulgarian firms not affected by economic crisis
- Can business be ethical?
- Deputy finance minister: We will refrain from increasing country's external debt
Articles:
MACROECONOMY:
Bulgaria's trade deficit goes up for 1st time in 3 months
Bulgaria's trade deficit has increased in July 2009, according to data released Friday by the National Statistical Institute.This is the first increase of the trade deficit since April 2009 after the economic crises caused the import to decline more than the export of the country.Bulgaria's trade deficit in the month of July was BGN 826,5 M compared to BGN 668,4 M in June 2009.This is because in July Bulgaria's import started to grow again more than the export; in July, it grew by 8,4% up to BGN 2,84 B. In the same month, Bulgaria export grew only by 3% to reach BGN 2,01 B.As a whole, Bulgaria's trade deficit in the first seven months of 2009 declined by 33,7% compared to the same period of 2008.
Raiffeisenbank Bulgaria: We are optimistic about Bulgaria's economic development
Raiffeisenbank Bulgaria CEO Momchil Andreev told BTA that the bank's decision to lower interest rates was consonant with the optimistic scenario for the Bulgarian economy. on September 10, the bank cut the interest rates on all new loans to individuals in leva and euro by between 0.5 and 2 percentage points. Andreev said the bank had sufficient capital and liquidity. While the risk remains high and there are some difficult months ahead, which may bring unpleasant surprises, the bank is more optimistic than pessimistic, he said.The Bulgarian bank market is strongly competitive and tends to react rather quickly to changes in supply and demand, Andreev said. Asked about any fluctuations in deposit rates, he declined to make a forecast.He noted three important factors in changing the interest rates in the domestic bank market. First, the withdrawal of deposits seen at the outset of the crisis when people feared that the global financial system would collapse has stopped, and some of the money is back in the banks after they raised their deposit interest rates.Second, credit demand has shrunk, although this is not immediately seen in bank statistics because some banks have repurchased loans sold abroad and have continued drawing on investment loans approved before the crisis hit. Although it seems that credit is growing, it is actually shrinking, Andreev said.Third, the global economy and finances are returning to normal and risk premiums have decreased, while external liquidity has increased. In the last few weeks the bank has had quite a few requests for information about deposits from European institutional, corporate and private investors because Bulgaria is an EU member and the free movement of capital makes it more attractive than other countries of the region, Andreev said.
Russia willing to buy Belene nuclear plant from Bulgaria
Russia is interested in buying all or part of the share of the Bulgarian government at the planned nuclear power plant in Bulgaria's Belene.This has been announced by Russia's Energy Minister, Sergei Shmatko, as quoted by the RBK Daily, Wednesday, just a day before he is to arrive to Sofia for talks with his Bulgarian counterpart, Traicho Traikov, over the Bulgaria-Russia energy projects."We are aware of Bulgaria's position that it might want to sell its 51% share. We are interested in such an offer because as investors we are interested in having control over the expenses," Shmatko said without specifying how large a share Russia might want to buy from Bulgaria, and which Russian state-owned companies would do that.Russia's state-owned company Atomstroyexport has been chosen to build two 1000 MW reactors at Bulgaria's Belene. The Bulgarian government is going to own 51% of the plant; the minority owner will be the German company RWE.Shmatko also said Wednesday that the issue of how much the construction of the Belene NPP still hadn't been settled. He said Russia had estimates that differed from the EUR 10 B cost mentioned most often by the Bulgarian officials.Together with the head of the Rossatom company, Sergei Kiriyenko, Shmatko will meet with Traikov and Bulgaria's Prime Minister, Boyko Borisov, over the Belene NPP, the South Stream gas pipeline, and the Burgas-Alexandroupolis oil pipeline.Shmatko has declared that the Bulgarian leadership must understand that the realization of the three projects would turn the country into an energy hub for Southern Europe.
Bulgaria seeks EUR 1 B loans for highways, infrastructure
Bulgaria is going to ask the European Investment Bank for a loan of about EUR 800 M - EUR 1 B.This has been announced by the Deputy Minister of Transport, Ivaylo Moskovski, during his hearing with the Parliamentary Committee on Transport, the Pari Daily reported.According to Moskovski, the negotiations with the EIB about the loan are in progress.The money from the loan will be used to finance large infrastructure projects such as the Sofia Metro, the railroad between the southern town of Svilengrad and the border with Turkey, as well as the three highways - Trakiya, Struma, and Maritsa.These projects are to be funded primarily with funds from the EU operational program "Transport". However, it provides only 80% of the necessary funds so the Bulgarian government is planning to get the rest of the money from the EIB.
60 Bulgaria building projects stalled by contractors
Unblocking the 60 infrastructure projects frozen by the Bulgarian construction ministry is being hampered by companies’ unwillingness to renegotiate contract prices, Regional Development Minister Rosen Plevneliev said.He said the ministry is holding strenuous talks with building firms, seeking a downward price reduction to account for a slide in building materials in the aftermath of the economic turmoil. Moreover, the prices on some projects have been inflated and do not match market prices, according to Plevneliev.Citing a 52 million leva deficit, the ministry put on hold 41 infrastructure projects in a number of municipalities and has already sifted out the top-priority seven or eight schemes that should be completed by the end of the year. The ministry has so far clinched a deal to lower the contract price by up to 15 per cent on the project in the southwestern municipality of Blagoevgrad. Talks are still underway with the other contractors.Another 19 municipal projects financed under the Regional Development programme of the European Union (EU) were put on ice owing to exorbitant prices.
Bulgaria's new car sales collapse by over 60% in August 2009
The sales of new cars in Bulgaria in August 2009 dropped by the staggering 60% compared to number of cars in the same month of the previous year.This becomes clear from data of the Union of Car Importers released Sunday.Only 1 812 new vehicles were sold in Bulgaria in August 2009 compared to 4 431 sales in August 2008. August is also the month with the smallest number of new car sales since the beginning of 2009.A total of 18 493 new cars were sold in Bulgaria in the first eight months of 2009 compared to 37 003 in the same period of 2008, which a decrease of over 50%.The Japanese brand Toyota retains it place as the most popular car on the Bulgarian market with 243 vehicles sold in August, and 2 058 since the beginning of 2009 (a market share of 11,3%). Volkswagen is second with 124 sales in August, and 1 798 in 2009 so far (a market share of 9,72%). OPEL is third with 1 703 sales in the first eight months of 2009 (a market share of 9,21%).
Sofia to buy 25 trams
Sofia’s municipal-owned tram and trolley bus operator Sofia Public Electrical Transport Company (SPETC) invited an order for the supply of 25 low-floor trams. Payments will be made at monthly installments starting from when funding is secured, according to an announcement in the Official Journal of the European Union (EU). The contract is estimated at a bottom BGN 50 million with an eight-year duration. Eligible candidates need to have had sales of at least BGN 60 million for the past three years and deposit BGN 500,000 in participation guarantee. Papers can be submitted by December 7. SPETC also plans to purchase 35 second-hand trams and 35 wagons. The order is estimated at BGN 5 million, which rises to BGN 8 million including participation guarantees. Technical offers will be opened today at 1400 local time.
Bulgaria gets EU globalization fund aid for steel giant layoffs
Bulgaria is going to get BGN 5 M from the European Globalization Adjustment Fund in order to help the workers laid off from its ailing steel giant Kremikovtzi to find new jobs.This has been announced Sunday by Labor Minister, Totyu Mladenov, who explained that the EGAF required 35% co-financing by the state, as cited by the Pari Daily.Thus, the several thousand workers who might be laid off from the bankrupt steel plant could be enrolled in qualification courses with the Labor Ministry including motivation training, professional orientation, subsidized employment for people over 50, and a small grant of BGN 10 000 if they want to start a business.The money from EU's Globalization Adjustment Fund cannot be used for paying unemployment benefits.
Payments on 308 SAPARD projects released
The State Agriculture Fund has started remitting payments on 308 SAPARD projects that were unblocked by Brussels. The total value of the projects is BGN 152.601 million. The prosecuting authorities have established cases of malfeasance in 10 of 98 checked-up projects. The SAPARD agency has invited the beneficiaries to voluntarily recover subsidies worth BGN 9.356 million.
Bulgaria government puts forward anti-crisis measures
A crackdown on corruption in European funds absorption, speed-up in the process for joining the euro exchange-rate mechanism and quick VAT refund feature on the list of fifty-nine economic anti-crisis measures that the government will discuss on Wednesday.The proposed measures are short-term and are scheduled to be implemented by June 2010.The government also assigns great priority to the equal development of all regions in Bulgaria and leveling off the huge differences in the living standards and opportunities for doing business in them.The cabinet does not plan additional cuts in administrative costs other than the already announced 15% in the second half of this year that will help save BGN 1,2 B. Plugging loopholes in excise tax collection and curbing contraband is expected to help cover another BGN 1.3 B.The 15% cut in public spending is the biggest fiscal limitation in the European Union, while the budget deficit reduced five times to BGN 105 M in August from BGN 564,3 M in July.Most experts have welcomed the measures of the new government, but others have warned that they may deepen Bulgaria's recession.The list of anti-crisis measures comes fifty days after the center-right government of GERB party came into office after sweeping the elections on July 5.
Bulgaria's tourism presented at fair in Japan capital Tokyo
Bulgaria is going to participate for a fifth year in a row in the international tourism expo JATA WTF, taking place in Japan's capital Tokyo on Sept 17-20, 2009.Bulgaria has a stand of 36 square meters where the country will be represented by the State Tourism Agency (which is to be merged with the Ministry of Economy and Energy), and five tourism companies - Vegena, Travel Gate, Balkan Holidays Services, Bulgarian Tourist Bureau, and Guide Partner from the Golden Sands resort.The JATA World Travel Fair is a three-day expo; the first day is reserved for tourism professionals, and the other two days are open for the general public. 980 participants from 136 countries visited its 2008 edition.
Battery recycling is just on paper
The question about waste is constantly present in the Bulgarian daily life, but the problems pertaining to it could not be solved on their own. And while the mess regarding the kitchen refuse and the threat of European Union imposing bitter sanctions are well known, there is nobody to pay attention to far more dangerous waste such as used batteries and accumulators. Most of the people just throw them in front of the dustbins and thus consider the problem solved. However, in accordance with the Waste Management Act, they may be fined by between BGN150 and 500 since they cause this way serious damages to the environment. The truth is that the batteries' active ingredients are highly toxic and having once get into the nature they pollute the soil, water, plants and animals with heavy metals such as mercury, cadmium, lead, nickel, magnesium and lithium, as well as with a number of acids. Almost all of the above elements are cancerogenic and may cause brain damages and chronic diseases, especially among children. Just because of this Western Europe has for many years now a well-organized system for the collection and recycling of such waste - the used batteries can be thrown into special containers available in almost all stores and supermarkets. However, no such practices are present in Bulgaria despite the EU requirements set in Directive 2006/66/EC. The best that one can do here is to leave the old car accumulator when purchasing a new one, but the majority of the people prefer to deliver it against money in some center that buys up ferrous and non-ferrous metals. Moreover, they don't care at all that the bulk of these centres don't held the licences required for trading with this kind of waste. As for the myriads of small batteries (including that for mobile phones, cameras and many other consumer electronics), the situation is almost tragic. A check-up at the Executive Environment Agency reveals that since the beginning of the year no battery has been delivered for recycling, while 2008 ended with just 87 kg of collected batteries against more than 1,000 tonnes that have been put on the market. In fact, the Bulgarian legislation has a special regulation pertaining to the requirements for battery and accumulator production and sale, and the treatment and transportation of the used ones. The regulation says that every customer has the right to give the trader its used batteries when purchasing new ones. The trader, in turn, is obliged to keep them and deliver them for recycling. However, the practice is much more different. The trading establishments, which provide such a service are very few indeed and the major reason is that there are no sanctions for those who don't accept used batteries. The producers and importers, too, are obliged to collect and recycle a certain amount of batteries. The collection rate for this year is 5%, compared to a target of 45% for 2015. This target, however, is hardly likely to be achieved since until the beginning of 2009 there has not been a licensed organization to be involved in this activity. For a long time now, the Environment and Water Ministry used to reject to issue such licences despite there were several firms interested. It is obvious that the Ministry has preferred all producers and importers to pay production eco-tax to the state Environment Management Company (the tax is now BGN4.5 per one kg, to grow to BGN5.5 as of 2010) instead of paying less to a licensed organization. In any case, even one Bulgarian lev of the company's revenue has not been invested in organizing activities on the separate collection of such waste or in overcoming the ecological damages resulting from the misuse of the old batteries. The first licence - that of Ecobattery AD, which belongs to Makmetal Holding, was issued as late as January 5, 2009. A licence was given also to Stim Bat OOD on July 21, 2009, one of the last days of the tripartite coalition's mandate. Under an August 6, 2009 order by the Ecology Minister Nona Karadzhova, a licence for used battery and accumulator recycling was given also to NUBA Recycling AD. The company is the first that has filed to the Environment and Water Ministry an application for providing such a service. It did so still in December 2007, but has come across the so-called silent rejection. The company's executive director Plamen Goranov told BANKER weekly that because of delayed issuing of licences, the country still lacks a well-established system for battery collection. "We will need at least two-three months to carry out the analyses needed, and then we can start the real work. In practice, we are at the very beginning now," Goranov emphasized. Similar is the situation with Ecobattery. "We are going to establish a system for collecting used batteries. The system will include the placement of appropriate containers at key points in stores, administrative buildings, schools, etc. This will help the people a lot or at least stimulate them to be more aware towards this hazardous waste," the company said. According to the regulations, there has to be at least one container per 1,000 people for collection of used batteries, but the fulfillment of this task will be quite tough even for the licensed organizations. Such containers could not be placed on the streets (as it is done with the containers for waste paper, plastics and glass) since they are too small in size. And those for accumulators will remain empty since the waste will be gathered by Gypsies and totters. It would be most practical and safe, the companies say, if the containers are placed at stores and public buildings where new batteries are sold. The companies are planning to do this until the end of 2009, but in this case, too, the things are not so simple. "We need the assistance of all concerned. There is no way for placing a container at an administrative building without the help of the municipalities. Moreover, the traders cannot be obliged to provide this service without the control of the institutions in charge," Ecobattery officials said. In order to facilitate the establishment of a system for the collection of used batteries, the Environment Ministry's new management said that it would carry out the law amendment needed and would create a register of the battery traders. Currently, there is no information available on the batteries and accumulators sold and it is therefore difficult to define what part of them should be collected and recycled. According to data by the Executive Environment Agency, a total 15,500 tonnes of portable, accumulating and industrial batteries have been put on the market in 2008, but the real amount is several times more. The regulation package envisages also strengthening the control over the organizations, which collect and recycle used batteries and accumulators. They will sign a memorandum of cooperation with the Environment and Water Ministry, and, according to Plamen Goranov, the memorandum is to be approved until the end of this month. The Ministry also added that it would invite all municipalities to join the systems for separate collection of used batteries and accumulators by signing agreements with the companies for the placement of containers at administrative buildings. Even all those promises to be kept there is one more serious problem pertaining to making the hazardous waste harmless: Bulgaria lacks battery-recycling facilities. Even if we manage to collect the required amounts, we cannot recycle them here and we have to export them abroad. This, however, makes the task very expensive." Ecobattery said. In contrast to the portative batteries, the situation with car accumulators is a bit different. According to Plamen Goranov, more than 90% of the used accumulators have been collected for many years now and the facilities for their recycling in Montana, Asenovgrad and Kardzhali are four times more than what is needed now. In the end, as it is with all other activities related to waste management, the recycling of used batteries, too, places Bulgaria far away from the European countries.
Bulgaria loses BGN 1.3 B over fuel contraband
"Over 1,3 billion levs (1 euro =1,95 levs) are siphoned from the state budget yearly due to fuel smuggling," announced Radostin Genov from "Security and Development" organization. According to him, the share of fuel trade in grey economy is bigger than the recently reported 30%. The sale of smuggled cigarettes on the Bulgarian market leads to losses worth at least 920 million levs, added Genov. Information revealed by Bulgaria's finance minister shows that smuggled cigarettes in Bulgaria constitute 40% of the market.
The total profit from tobacco trade in Bulgaria is 3,3 billion levs per year, specified Genov.
INVESTMENTS:
Kraft Foods invests BGN 40 M in Bulgaria chocolate factory
Kraft Foods Bulgaria invested BGN 40 M in the chocolate factory in the northern town of Svoge, the company announced Tuesday.According to the CEO of Kraft Foods Bulgaria, Franco del Fabrro, the investment is a show of the continuous trust of Kraft Foods in the good business opportunities Bulgaria offers and the country's important role in the region.This is the company's largest investment in Southeastern Europe.The investment, as del Fabrro pointed out, is even more significant in the light of the global financial and economic crisis and will provide 120 new job opportunities in the production lines of the factory and another 200 indirect job openings. Kraft Foods is currently one of the most significant employers in Bulgaria, providing 800 jobs.The resources will be invested mostly in new production lines. They will be officially launched on October 2, 2009.Kraft Foods is a world leader in the food manufacturing industry with yearly revenue of over USD 37 B and over 100 000 employees world wide. The company is included in Standard & Poor's 500, the Dow Jones Sustainability Index and Ethibel Sustainability Index. Kraft has been on the market for over 100 years. In Bulgaria, the company offers the popular coffee brands "Jacobs" and "Nova Brazilia" (New Brazil), the chocolate products "Milka", "Svoge" and "Suchard" and the "Moreni" chocolate waffles.
Dundee Precious Metals: Bulgarian cabinet improves investment climate
Dundee Precious Metals President Jonathan Goodman said Monday at the Denver Gold Forum that the Bulgarian government has the will and commitment to change Bulgarian investment climate, so as to turn Bulgaria into an attractive business destination, Dundee Precious Metals said in a press release. The Denver Gold Forum is internationally regarded as one of the world's most prestigious precious metals investment forums, attended by major global fund and portfolio managers, institutional investors and analysts.Canadian-based Dundee is engaged in two investment projects in Bulgaria - the expansion of the gold and copper mine in Chelopech and the Kroumovgrad gold project. At the Denver forum, Goodman said that the Bulgarian government and the Ministry of Environment and Water in particular, had taken the necessary steps which would enable Dundee to start work on its investment projects in Bulgaria. According to Goodman, they would bring both direct and indirect benefits to the Bulgarian economy.Goodman stressed that members of the new cabinet, including Environment Minister Nona Karadjova and Deputy Environment Minister Evdokia Maneva, had demonstrated that they would take decisions based on priorities such as lawfulness, environment protection, implementation of modern mining methods and sustainable development. According to Goodman, this marks a positive development trend and is a token of goodwill to all investors in Bulgaria, including Dundee.
Foreign investments for 2009 down by EUR 2 B
Foreign direct investments in Bulgaria this year will mark a sharp decline with forecasts saying they will be down by nearly EUR 2 B in comparison with last year."Foreign direct investments in Bulgaria by the end of this year will not exceed EUR 4 B," Director of the InvestBulgaria Agency, Stoyan Stalev, said on Monday.The forecast beats previous analyzes, which painted a much gloomier picture and set the downfall at about 50%.A total of EUR 1,6 B poured into Bulgaria during the first half of the year, which Stalev described as a good result against the background of the global financial and economic crisis.France has joined the group of top investors in Bulgaria and leads the ranking together with the Netherlands, Austria and Germany.The real estate sector has retained its momentum even though being one of the worst-hit by the crisis and ranks third in the amount of attracted investments, following the financial services sector and commerce.
US agency awards grant to support healthcare in Bulgaria
The US Trade and Development Agency awarded a grant to United Medical EAD (United Medical) to assist the company in evaluating its expansion plans in Bulgaria. The USD 268,825 grant was conferred during a signing ceremony held at Hilton Hotel in Sofia.Chargé d'Affaires of the U.S. Embassy in Sofia John Ordway and United Medical Executive Director Andrey Markov signed the grant agreement on behalf of the US government and United Medical, respectively.At the ceremony, Ambassador Ordway commented on the long history that the USTDA has in Bulgaria, and underscored that this grant will improve the process for access to high-quality healthcare in Bulgaria. He also stated that this grant will also help bring US innovation and technology to Bulgaria.Developing an extensive network of medical facilities and hospitals is one of the major goals of United Medical. This feasibility study will provide United Medical with an analysis of the viability of its expansion plans, develop a strategy to increase United Medical's medical insurance business, and provide a medical equipment and disposables plan for each type of proposed facility.
Bulgaria Sofia to build tram, subway car factory
Sofia is planing to build a plant for the production of tram and metro cars, the city's Chief Architect, Petar Dikov, announced Thursday.Dikov said the plant will be located near the tram garage at the "Gara Iskar" district of Sofia.The Chief Architect pointed out Sofia really needs such production since the expansion of the rail public transportation is a priority for the City Hall. The capital will require 50 more new metro compositions and about 100 to 200 new tram cars in the next five years, Dikov said, adding the Bulgarian market would be sufficient for the realization of the plant's production, but it could also be sold elsewhere in Eastern Europe.Currently the tram factory that is the closest to Bulgaria is the one in Zagreb, but it sells its production mostly on the Western market, Dikov explained.The Chief Architect stated that the future plant could be built by joint municipal and private investments. The City Hall will provide the land and part of the money, while a private company will build the plant and supply the equipment.Until recently Sofia had a municipal tram factory "Tramcar," but it was shut down. The City Hall plans to sell the land. Dikov said that "Tramcar" had been an ersatz factory that could not be renovated.
COMPANIES:
Spanish Telecom giant Telefonica enters Bulgaria market
The Spanish telecom Telefonica opened new offices in 15 European countries, including Bulgaria.To better serve its multinational customers, the company also launched a new website - www.multinationalsolutions.telefonica.com. The expansion has the goal of improving integrated telecommunication services for corporate clients while the global capacity of Telefonica allows for the fast and efficient services' delivery for both stationary and mobile networks all over the world.In addition to Bulgaria, Telefonica opened for the first time offices in France, Belgium, Greece, Italy, the Netherlands, Portugal, Sweden, Denmark, Estonia, Poland, Hungary, Switzerland, Austria and Romania.
Export of textile companies slumps 20%
The coming winter will be a difficult time for the clothes manufacturing companies, Valeria Zhekova, chairperson of Bulgarian Association of Apparel and Textile Producers and Exporters told the Pari daily. The volume of orders in the branch dropped 25%. Export fell 20% to BGN 1.36 billion. Import for the first half of 2009 amounted to BGN 860 million, down 25%.
THE CRISIS:
Bulgaria technology exhibition canceled over financial crisis
Bulgaria's biggest exhibition for computers, software, Internet, communications, nets and whole IT decisions, Bait Expo 2009, has been canceled over the global financial crisis.The decision has been made by the governing council of the Bulgarian Association of Information Technology (BAIT), headed by Teodor Zahov, the Pari Daily reported.In Zahov's words, the reason of the move cancellation of the exhibition is the negative effect of the global financial crisis on the IT business. The companies simply cannot afford the cost of taking part in it.Bait Expo 2009 will be substituted by the Bait@Home exhibition which will take place December 2-6 in Sofia, and there will be maily for consumers' electronics."Bait@Home cannot substitute Bait Expo... BAIT will be satisfied even with a smalled exhibition... We have been following similar exhibitions in the region, and they can be described as unsuccessful. That is why we decided not to organize Bait Expo this year", Zahov said.The Information Technology Association has already started a research on which companies are willing to take part in an exhibition in 2010. In this way BAIT will decide whether to organize Bait Expo 2010 or not, Zahov added.
EBRD: Eastern Europe faces possible banking crisis
Eastern Europe's recovery remains at risk from a banking crisis as a lack of transparency in the industry undermines confidence and impedes interbank lending, said European Bank for Reconstruction and Development Chief Economist Erik Berglof.Emerging Europe's banking system is "not out of the woods" and "there's still a chance" the region may suffer a financial crisis, Berglof said in a Sept. 10 interview in London.The development bank, created to support projects in former Soviet and communist states after the end of the cold war, has helped international efforts to limit the impact of the financial crisis on eastern Europe, persuading western banks to stay invested in the region and help fill a funding hole it estimates at 0 billion.Preventing a second banking crisis is "the absolute key" to a recovery in the region, Berglof said."There are some signs that demand will go up in western Europe and that will help these countries, but the biggest threat to that is a deterioration of the financial system again," he said."There are big questions about western European banks' portfolios and a lot of those uncertainties are tied to investments in eastern Europe," Berglof said."When banks don't trust each other, the interbank market doesn't work and they are cautious about on-lending to clients. When there are pressures at the center of these banks, it's typically in the periphery that they withdraw. That's the same fear that we had in the spring."
Survey: 30% of Bulgarian firms not affected by economic crisis
About 32% of the Bulgarian firms have not been affected negatively by the global financial and economic crisis.This is a conclusion of the Bulgarian Chamber of Commerce and Industry based on a survey of 110 companies made at the beginning of September.41% of the respondents said they were likely to lay off workers, 54% believe they would keep all of their employees despite the crisis, and 5% have even said they would be looking for new workers.55% of the companies expect a drop of their sales income whereas 12,7% actually expect an increase in their profits.Similar surveys carried out by the BCCI in September 2008 and in October 2008 showed 60% and 43% of the firms expected increase in their profits as the crisis was about to hit Bulgaria.
Can business be ethical?
Source: www.neurope.eu
While new Bulgarian Prime Minister Boyko Borisov, the former mayor of Sofia, is not the type of political leader to succumb to pressure and blackmail, his country's current European Commissioner, serving in the low-level Consumer Affairs position, Meglena Kuneva, is making her best effort to show she can manoeuvre with the big boys but is proving the opposite. Kuneva, who won a seat in the European Parliament in June, decided to stay in her job - though she knew she might lose it because her party lost the election and the power to appoint Bulgaria's representative to the European Commission - is struggling to keep her job and using all the kinds of means she learned in Sofia and Brussels.Although Bulgaria's Deputy Premier Tsvetan Tsvetanov said in Sofia she would not be going back to Brussels, there's still some wiggle room and she's shown a survivor's ability. Kuneva had a brilliant career so far, one which was not interrupted or delayed by the sea change that occurred in Europe after the collapse of the Communist regimes or the structural changes that followed. Starting as a Research Fellow at the Institute of Law of the late Communist leader Todor Zhivkov, Kuneva married financier Andrey Pramov, son of the one of the most powerful Secretaries of the Bulgarian Communist party, thus becoming by marriage a member of the top echelon of the Communist nomenclature. In this capacity, Kuneva joined the Legal Service of the Council of Ministers. Following the end of Communism in Bulgaria in 1989, Kuneva "jumped" from the Communist nomenclatura to the new order, joining the court of King Simeon. She was thus elected a Member of Parliament with the King's party and for a brief period also served as Deputy Minister.Kuneva was appointed to her country's spot in the European Commission by Socialist Prime Minister Sergei Stanishev on the hope that her connections and knowledge of European affairs would help Bulgaria overcome difficulties in Brussels. But after securing her appointment, Kuneva completely forgot her commitments to Stanishev and Bulgaria received very severe treatment from the Commission, including a freeze in EU payments because of rampant corruption in offices that get EU funding. This explains why Kuneva and Stanishev have not been on speaking terms for the past two years or so, and why the then Prime Minister was told by a Commissioner that,"... we have a Commissioner from Bulgaria but you don't have a Bulgarian Commissioner." Indeed, those in the know remember that besides the King's pressure, Stanishev was requested by two Members of the European Commission, Franco Frattini from Italy and Olli Rehn from Finland, to appoint Kuneva.Seeking re-appointment, Kuneva is now playing with new friends though and making the same arguments why she's the best person for the job and her country. What Borisov seems to be offered in return is the proposition of Kuneva to reportedly close an eye when judging whether there's corruption and bad practices in the government. This was indirectly implied by Kuneva in statements to the Bulgarian press. This approach may prove highly counterproductive since Borisov is not begging for tolerance from the European Commission but demanding an end to his country's de-marginalization and to get the role it deserves in European decision-making, and a post other than Consumer Affairs. Indeed, Borisov, as Secretary of the Internal Ministry, the highest administrative positions in matters of internal security, has cut deeply into organized crime in Bulgaria in a matter of months, despite the obstacle set by various politicians, allowing his country to join the European Union.Kuneva is now trying to approach the center-right European People's Party, despite the expressed support from the Liberals and its leader, Guy Verhovstadt, who wants her to stay in her seat. To this effect, she participated in the presentation of EPP President Wilfried Martens? book signing presentation last week in Brussels. Kuneva has to overcome two major obstacles: the nomination by Borisov - provided he succumbs to pressure - and then approval of her appointment by the European Parliament. This may prove to be Mission Impossible because she could have been in the Parliament but rejected it and resigned just to remain a Commissioner for a few more months. But not before making inflammatory statements in the Bulgaria media, that, when are read by the European lawmakers, will make her appointment very unlikely indeed. If that happens, if Borisov proposes Kuneva and Parliament rejects her nomination, then the problem won't be hers anymore, but Borisov's because he will lose face and have to nominate a new Commissioner, even if he didn't want her in the first place.
Deputy finance minister: We will refrain from increasing country's external debt
Publication: Banker Weekly English
Provider: Financial Information Agency Ltd.
Anna Mihailova, Deputy Finance Minister, tells Banker weekly:
Mrs Mihailova, the Government said that one of his priorities would be Bulgaria's rapid entry into the two-year mechanism ERM II for future adoption of the euro. Do we need to hurry in this respect? What has been done so far? - The need for Bulgaria to enter the two-year mechanism for the introduction of the euro is determined by the fact that our country is in a currency board. At the same time, we have demonstrated that the local currency is stable and fulfils almost all Maastricht criteria, except the one for price stability. I think that Bulgaria can't be a problem for the Eurozone but, on the contrary, it may contribute to its stability. We do not consider ERM II as a waiting room for the adoption of the euro, but rather as a mechanism through which our country will once again demonstrate that it is leading a sustainable fiscal and macroeconomic policy. It would be enough to say once again what the Maastricht criteria are. The first is price stability. A country's annual inflation should not exceed by more than 1.5 percentage points the average value of this index for the three Eurozone countries that show lowest inflation in EU. Another dimension is the long-term interest rate. It must not be by more than 2 percentage points higher than the average rate for the three countries with lowest inflation. The third indicator is the amount of debt to gross domestic product, which should not be larger than 60% and for Bulgaria it was 13% at the end of July 2009. The fourth indicator is the budget deficit, which should not be more than 3 percent of the GDP. And our goal for 2009 is to have a balanced budget. This target is also envisaged by the medium-term fiscal framework for 2010, too. Let's go back to the long-term interest rate. As it became clear, this is a derivative indicator. How does the index for Bulgaria look like and do we fit in the Maastricht requirement? - Last year this average rate, calculated on the basis of long-term interest rate in the three lowest-inflation countries, was 6.26 percent. The long-term interest rate in Bulgaria is 5.38 percent. This rate, as it is well known, is in principle determined on the basis of the yield which the state pays for its ten-year government bonds. However, Bulgaria in recent years has not issued foreign debt. How is then our long-term interest rate formed? - We take the average yield the state pays for the entire standing debt. This includes interests on all existing loans to foreign creditors. Have there been any talks with EU representatives over Bulgaria's entry into the two-year mechanism for euro introduction? - I can only say that in order to enter this mechanism a country must obtain the consent of all EU Member States and the European Commission. The opinion of the European Central Bank is of great importance here. There is a great deal of confidentiality in the discussions on this issue, so this is all we can say for the time being. What kind of course will Bulgaria steer in respect of the public debt and international financial institutions? - So far we have not been very active on international financial markets, because for many years we have been generating budget surpluses. As regards domestic debt, the policy was predominantly focused on its re-financing - that means we issued debts not because we needed extra money, but only when the maturities and coupon payments on old issues were due. As for the external liabilities, the focus was on the so-called project financing - loans that were not in support of the balance of payments, but for specific projects. They are usually drawn from the World Bank, EBRD and other similar institutions. The current medium-term programme for the management of Bulgaria's external debt provides the opportunity for it to be substantially increased. Are there any plans? - This programme will be reviewed. Specific decisions regarding the issuance of new external debt will depend on the implementation of the budget plan, but, generally, we will refrain from increasing the state obligations to foreign institutions. Since you are in charge of the macroeconomic projections, what is the pessimistic scenario for the development of the Bulgarian economy in 2010? - The projections in the medium-term fiscal framework for 2010 are for a 2%-decline in the country's GDP. Actually, this is the most negative option for the development of the economy as even the IMF forecasts are encouraging - they don't envisage a decline of more than 1.3 percent. The Central Bank also has a little more upbeat version of their GDP forecast. So, this time, we have decided to be a little more conservative in our assessments.