% of GDP
a free service
Bulgaria earned its independence from the Ottoman Empire in 1878, but having fought on the losing side in both World Wars, it fell within the Soviet sphere
of influence and became a People's Republic in 1946. Communist domination ended in 1990, when Bulgaria held its first multi-party election since World War II
and began the contentious process of moving toward political democracy and a market economy while combating inflation, unemployment, corruption, and crime.
Today, reforms and democratisation keep Bulgaria on a path toward eventual integration into NATO and the EU - with which it began accession negotiations in
Update No: 060 - (18/04/02)
The Bulgarians have done either a foolhardy or a very clever thing. They have elected their former King as the premier of the country. He has excellent
connections. As a Saxe-Coburg-Gotha, Simeon II is related to the entire remaining monarchs of Europe, outside Scandinavia.
This puts Bulgaria on the map again. But will it put dividends on the table for the Bulgarians?
The government has inherited an excellent dispensation from its predecessor, which did all the unpopular, but necessary, things. It is now the beneficiary of
several years of belt-tightening, with low inflation, rapid growth of around four per cent annually and reasonable finances justifying B+ ratings from
international financial institutions. The foundations have been laid for a new pitch for international recognition.
What Bulgaria needs is foreign investment. To date it has only attracted something like US$1bn, way below what one would expect for a nation of ten million
in an excellent strategic location at the crossroads of the Black Sea littoral nations, of which it is one, and Western Europe. An infusion of foreign
investment could do wonders. In early March Bulgaria engaged in a Third Round Table with foreign investors, with Prime Minister, Simeon Saxe-Coburg-Gotha,
opening the discussion. He was himself a businessman for decades in Madrid, so that he knows the ropes.
US and European business people, present were optimistic. The IMF is approving a US$299m loan to support the economy, including a renewed effort of
privatisation. The fund will be distributed in nine tranches over two years. US$40m will be available immediately. The successful fight against inflation
has been based on a currency board arrangement.
Privatisation to the fore
The Privatisation Agency (PA) is preparing for sale some 40 ventures. As posted in the country's Standart daily, the tenders will be announced after the new
Privatisation Act is enforced. It has been already approved by government, and the president must undersign it. The first to be denationalised are the
state-owned giants Bulgartabac, BG Telecom and DZI (State Insurance Institute), PA Chief Apostol told the press.
DZI is absolutely ready for the sell-off; the appraisal of the company has been endorsed. Currently, the MPs are discussing the strategy for Bulgartabac. The
bids for the three ventures will be submitted six weeks after the tenders are announced in the State Gazette. At the moment, the PA experts are working on
privatisation packages for VMZ Sopot, Eliseina copper smelter, Kamet, and St. Constantine and Elena resort.
Cleaning up the act
Bulgaria has become a key conduit for drugs and money-laundering, especially from the former Soviet world. Its local mafia are in cahoots with their Russian
counterparts and the needs of Europe's security would certainly be enhanced if Bulgaria was brought into its structures.
Bulgaria's early entry into NATO now looks on the cards, not only to facilitate the anti-terrorist cause, but to consolidate peace in Macedonia, where in the
aftermath of the attack on the US the impetus for a new settlement between rebel Albanians and the majority was redoubled in strength. Bulgaria is a neighbour
and indeed almost the same country, speaking the same language and having the same ethnicity. It could provide secure bases for NATO operations in the whole
Simeon to the fore
Simeon has promised results by August 2003, the 60th anniversary of his own accession in 1943, which indicates that he has not quite abandoned monarchical
ambitions. It is to be hoped that he does not attempt to bribe his way to a throne, which could jeopardise an anti-inflation policy that has brought inflation
down to single figures on an annual basis.
The new regime has the alibi of the sluggish world economy to fall back upon if things are slow to improve. Simeon has an excellent young reform team to
organise a recovery and probably a more extended honeymoon period than he originally thought to bring improvements to his people's lives.
Bulgaria to reveal Brady swap result
On 22nd March Bulgaria announced the results of its €1bn-1.2bn (US$883m-1bn) Brady bond swap, which will save the country millions of dollars in debt
servicing costs, the Financial Times reported.
Bulgaria will exchange its restructured Brady debt for new dollar and euro-denominated bonds. Bulgaria's total Brady debt is US$4.6bn, so only a quarter of
this will be swapped for new bonds.
The new dollar-denominated bonds will mature in 2015 and will yield 9.1 per cent or 375 basis points over the US treasuries. This compares to the yield of
about 9.75 per cent on Bulgaria's Brady bonds.
The euro-denominated portion of new debt will mature in 2013 and will be priced to yield 275 basis points over the German bund.
Milen Veltchev, Bulgaria's finance minister said the swap would reduce the net present value of Bulgaria's debt by between US$75m and US$100m, and the face
value of the debt by about US$250m.
Bulgaria is the latest country to exchange its restructured debt, known as Brady bonds, for new international bonds. Similar exchanges were carried out among
others by Brazil, Argentina and more recently, Peru.
By buying back Brady bonds, or by swapping them into new bonds, countries like Bulgaria can release the collateral in the form of US Treasuries. "For each
US$100m of Brady bonds back by US Treasuries, Bulgaria will get back US$32m-33m of the collateral locked in those bonds," said Philip Poole, chief emerging
markets economist at ING Barings.
The debt exchange will also allow Bulgaria to shift its debt from dollars into euros, which fits in with Bulgaria's trade and economy. Bulgaria's currency is
pegged to the euro.
Bulgaria has one of the fastest growing economies in the region. Last year its Gross Domestic Product grew by 4.5 per cent and this year is expected to grow
by about 4 per cent, according to Mr Veltchev, who said Bulgaria could join the EU in 2007-2008.
Bulgarian arms sales in second half of 2001 worth same as whole of 2000
The sales abroad of the domestic defence industry in the second half of 2001 amounted to US$200m which equals the full year figure for 2000, BTA web site has
reported. Bulgaria entered new markets such as the United States and Great Britain and did business with the Czech Republic and India, Economy Minister,
Nikolay Vasilev told a news conference on 26th March.
The government will assist the defence industry in its efforts to increase their market exposure in Asia and South America, Vasilev said a meeting on the
future of the domestic defence industry.
The jump in sales is attributable to the renewed licences of a number of foreign trade companies, the improvement in Bulgarian-Russian relations and increased
exports to the EU and NATO member states.
The signing of framework agreements on military and technical cooperation with strategic partners abroad, of agreements on cooperation and on joint research
projects are all steps the government will take to assist the domestic defence industry. The state will also assist the introduction of quality management
systems through the PHARE [EU economic and reconstruction aid for Eastern Europe] programme. That will facilitate the efforts of domestic manufacturers to
enter new markets and be subcontracted by industry-leading companies, representatives of the executive said.
Bulgaria must not miscalculate and become embroiled in international scandals in view of the expected invitation for NATO membership and in the context of
accession talks with the EU, Vasilev said...
FOOD & DRINK
Wine fair promotes better Bulgarian wine
The ProWein 2002 International Fair for wine and Spirits in Dusseldorf presented Bulgaria in a new light, as a producer of high quality and expensive wines,
the BBC reported recently.
Until now the Germans have associated Bulgaria with inexpensive Bulgarian resorts and inexpensive wine of recognised quality. However, during this year's
wine fair, Bulgaria's private wineries Damianitza, Melnik, Magura, Trakia and Vinex Slaviantsi were targeting the higher price category of expensive wines.
"We are trying to make a new kind of breakthrough," Damianitza chief, Filip Harmandjiev said. "We are not targeting Metro or Aldi," he said, adding the
Damianitza's importer in Germany is Schoumberger, known for importing only expensive high-quality wine. The Damiantza winery displayed, among many others, a
Merlot of the Strouma region and Reydark.
FOREIGN ECONOMIC RELATIONS
Bulgarian premier, minister seek to attract Austrian investment
"Invest in Bulgaria!" was the motto of an investment forum held on the last day of Bulgarian Prime Minister Simeon Saxe-Coburg's official visit to Austria.
Investment opportunities in Bulgaria were presented at the forum, BTA web site has reported.
Saxe-Coburg invited Austrian business representatives to invest in the Bulgarian energy sector, tourism, high-tech sector, pharmaceutical industry and
The Bulgarian prime minister identified opportunities for development of cultural and historical tourism, winter tourism and sport, in addition to Black Sea
In a conversation with Saxe-Coburg before the forum, Christoph Leitl, president of the Austrian Federal Economic Chamber, voiced the interest in tourism shown
by Austrian investors and his country's readiness to provide Bulgaria with know-how for developing the tourist industry.
Deputy Prime Minister and Economy Minister, Nikolay Vasilev, set forth the key parameters of Bulgaria's economic development in the last few years, as well as
the economic prospects. Both Saxe-Coburg and Vasilev assured the Austrian investors of the Bulgarian government's resolve to eliminate corruption.
Austrian businessmen raised the issue of the cumbersome legal procedures in Bulgaria, to which Saxe-Coburg replied that "considerable improvement" in this
area would become a fact by the year's end.
The forum held at the Federal Economic Chamber was attended by representatives of 34 Bulgarian companies and more than 75 Austrian companies from sectors
including industry, trade, banking, electrical engineering, mechanical engineering and construction. Leitl told Bulgarian journalists that 14 Austrian
companies had specific projects targeting Bulgarian tourism, water power stations and infrastructure. If they are carried out, investment will exceed 100m
Bulgaria can be China's "gateway" to Europe, foreign minister says
Owing to its strategic location, Bulgaria, which is bidding for EU membership, may act as one of China's gateways to Europe, Bulgarian Foreign Minister
Solomon Pasi and the Chairman of the National Committee of the Chinese People's Political Consultative Conference Li Ruihuan agreed when they met on 3rd
April, BTA web site has reported.
At the end of his official visit to China, Pasi conferred with Li, who is one of the seven members of the Standing Committee of the Politburo of the Chinese
Communist Party Central Committee and ranks fourth in the Chinese state and party hierarchy after the president, the chairman of the National People's
Congress (parliament) and the premier.
Li reiterated the Chinese position that despite the major changes that have occurred in both Bulgaria and China over the last 10 years, the fine relations
have been preserved and there are opportunities for their promotion.
The Foreign Minister handed Li a formal invitation from the Bulgarian National Assembly Chairman Ognyan Gerdzhikov, to visit Bulgaria. The visit is to take
place in late May. For his part, Li invited Gerdzhikov to visit China...
SKF inks VMZ 14.3m lev acquisition deal
Swedish SKF has acquired the Sopot-based bearing factor VMZ, after signing a contract with the Privatisation Agency. The price of the deal is 14.3m levs,
and the buyer is expected to invest 6.75m Euros in the next three years and keep all employees employed for one year at least. Through this acquisition, SKF
substantially strengthens its position in the Central and East European markets, New Europe has reported.
According to SKF Regional Director of the Black Sea and Yugoslavia, Ivan Stoimenov, this investment will attract other big investors. Citing novinite.com, the
investment strategy of the company includes process and technology improvement of the factory, know-how transfer, the introduction of strict safety
regulations, as well as European standards of working relations. The new company will be named SBB (SKF Bearings Bulgaria EOOD) and will be part of the SKF
Bulgaria plans to resume construction of second nuclear plant
Prime Minister Simeon Saxe-Coburg-Gotha, prime minister said on 6th April that the government plans to resume the construction of the nuclear power plant at
Belene [suspended in the early 1990s over environmental considerations] by meeting all modern standards for safety and reliability, BTA web site has
This will guarantee Bulgaria's energy independence over the next decades, Saxe-Coburg-Gotha said.
Bulgaria will continue to be one of the major energy sources in the Balkans, he said. "Observing the agreement reached with the European Union, including the
commitments assumed by this country's previous governments, we will not betray the national interests in the field of nuclear power generation," the prime
"The projects, the financing of which has been guaranteed and which will improve Bulgaria's infrastructure and communications in the next three years, total
over 1bn euros; one-third of this amount will be provided under the European Union programmes," Saxe-Coburg-Gotha said. One of these projects is the
construction of a second bridge across the Danube at Vidin Calafat, he said.
Bulgaria invites bids for privatisation of tobacco firm
The Privatisation Agency announced on 25th March that it is opening a procedure to privatise between 51 per cent and 80 per cent of the Bulgartabak tobacco
holding company, BTA web site has reported.
Bulgartabak has under its umbrella 22 companies in Bulgaria and eight overseas.
The tender dossier including an information memorandum and the tender forms will be available for potential bidders shortly.
The privatisation procedure will have two stages. In the first stage potential bidders will submit tentative offers, including a comprehensive business
programme, a price and evidence of financial stability of the bidder.
The first-stage offers will be sifted, based on an analysis of the balance of several criteria, including the prospects for the tobacco industry and the
company itself, the revenue for the Exchequer and the social impact.
Potential buyers have to submit their tentative offers before 3rd May, when the first stage will be closed.
Those shortlisted for the second stage will be expected to come up with offers including the prospects for tobacco production and tobacco and cigarette
export - which will be the overriding criteria; secondly, the quantity of tobacco that will be purchased from local growers - and over what period - in
compliance with the national strategy for the tobacco industry.
The second-stage offers will also include a price, the volume of investment in tobacco production, staff numbers and a proposed scheme for debt
The government will keep a golden share allowing it to veto possible decisions for a change in the line of business, the head office, the name of the company
or a resolution for liquidation, among other important decisions...
At the moment 92 per cent of the Bulgartabak capital is held by the Government and the rest is traded on the Stock Exchange.
The Privatisation Agency and the Economy Ministry expect between 12 and 13 potential buyers. No minimum bidding price has been set and the tender will be
TUI in leading tour operations
Bulgaria might become popular among the well-off tourists after the successful entry of the TIU chain of four-star luxury hotels, New Europe has reported.
This emerged after a meeting with the deputy economy minister, responsible for tourism and TUI managers during the tourist exhibition in Berlin. Over 30
Bulgarian tourism companies participated in the 2002 edition of ITB-Berlin. The German tour operator TUI plans to become the leading foreign tour operator in
The company expects to double the number of people who will spend their vacation in Bulgaria in 2002. Based on novinite.com reports, last summer 120,000
foreign tourists came to Bulgaria with TUI. The company will launch a new service this year. In May a hotel complex in the town of Tryavna is to be opened.
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