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bulgaria

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BULGARIA


  
   

REPUBLICAN REFERENCE

Area(sq.k.m)
110,600

Population
7,707,495 

Capital
Sofia

Currency
Lev 

President 
Georgi Paranov


Private sector
% of GDP
40%
 

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Background:
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 2000. 

Update No: 071 - (27/03/03)

The Bulgarian government is hard-pressed by domestic disaffection. It is no more likely to win re-election than its predecessor on present showing. But elections are still years away and it has a clear mandate.

Foreigners to the rescue
The West on the one hand and Russia on the other are keen to see Bulgaria succeed, a key state in the region. The traditional ally, Russia, is being supportive by rolling over huge debts for gas imports. The Russians see Bulgaria as a vital part of their evolving plan of an energy corridor to southern Europe. Once their economy turns around, the debt arrears will be soluble. The Bulgarians are exporting more wines, foodstuffs and fork-lift trucks to Russia already.
Westwards, the picture also looks brighter. The World Bank is chipping in with a three-year credit, whose first tranche is US$150m. They are Programmatic Adjustment Loans (PAL), which are part of the World Bank's Country Assistance Strategy (2002 - 2004).
The PAL 1 Project Agreement has already been signed by Finance Minister, Milen Velchev, and the World Bank Country Director for Bulgaria, Andrew Vorkink.
The proceeds of the loan will support the government's efforts towards job creation, sustained economic growth and poverty reduction. PAL 1 will be disbursed in Euro with 16 years maturity, including a six-year grace period. The purpose of the PAL programme is to provide a single umbrella of support to reforms across different sectors of Bulgaria's economy.
"Our expectations are that through implementation of the reforms under PAL, Bulgaria will cope with the challenges and increase its competitiveness which, no doubt, will facilitate the EU integration. On the other hand, the ambitious objective of the government is to reduce poverty and unemployment levels through creation of favourable business climate and market institution strengthening to reach the ultimate goal of improving the quality of life of the Bulgarian citizens," Velchev said at the ceremony.
"The PAL programme is a clear recognition of the progress that Bulgaria has made in advancing its economic and social reforms and its transition to a fully functioning market economy," Vorkink commented.
"Successful implementation of the programme will lead to a better business environment so that new firms can start up and existing businesses can grow; new jobs will be created, including for the young and long-term unemployed; quality of education and health care will be improved; corruption levels will be reduced; and the most vulnerable groups in society will have greater access to the benefits of economic growth and public services. The realisation of these benefits will ultimately decide the success of the reforms," Vorkink said. 

Privatisation in trouble
The sort of assistance that would be of even more help is FDI, which is small so far in Bulgaria, around US$1bn, nothing compared with the over US$20bn into Hungary next door or the Czech Republic, both with similar sizes of population. Investors have been deterred by the evident role of bribery in obtaining contracts hitherto. Using diplomatic language the president recently explained why he vetoed the Privatisation Act, which is not exactly designed to ensure fair play and a level playing field. A notorious case of a shady, non-transparent deal was over Bulgartabac.
"Every investor will feel secure when they see that the laws are observed and not every government can change them, and that no laws will be made giving one investor or another non-market opportunities," President Georgi Purvanov stressed whilst commenting to reporters on reactions to a veto he recently imposed on revisions of the Privatisation and Post-Privatisation Control Act. Such amendments to the act would make judicially nonappealable privatisation sales of enterprises relevant to national security.
"Placing everybody on an equal footing is what matters," the president was quoted as saying by BTA. Asked about Deputy PM, Nikolay Vassilev's meeting with the ambassadors of NATO and EU member states and of Russia in connection with the issue, Purvanov replied; "The government is sovereign in this respect."
The president continued by stressing the need for the public to get "an honest answer" to its question about who stands in the way of the privatisation process, and why.

US shows new interest
An encouraging sign for Bulgaria is a new interest by US companies. A new Bulgarian-US consultancy has been established to promote Bulgaria's opportunities for investments and assist Bulgarian companies interested in doing business with the United States. 
Miller & Behar Strategies is the first consultancy established for the purpose of encouraging business between Bulgaria and the US. Bob Miller, former governor of Nevada (1989-1999) and Bulgarian PR expert Maxim Behar, CEO of M3 Communications Group, have done business together for a long time, primarily by organising conferences and business meetings. Among them the International Conferences on Tourism "Bulgaria Dream Area" gained most in popularity. 
"Establishing this company is another dream come true for me, helping US companies discover Bulgaria, and with my partner, Mr Behar, giving the opportunity to many Bulgarian companies to enter the North American markets," Miller said. He also expressed confidence that the need for such a company existed, adding that assistance would be offered to Americans and Bulgarians alike.

Government still in trouble
All this foreign interest will take time to show up in results for the population. The promise of Premier Simeon Saxe-Coburg Gotha to double living standards by late 2003 now looks unwise, indeed did at the time. But there is no going back on it now.
The former king is slogging it out without the support of his wife who prefers to stay in Madrid, their home for forty years. He may be rejoining her there before long.

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BANKING

Erste Bank starts DSK due diligence

Austria's Erste Bank, the third bidder in the privatisation of Bulgaria's last state-owned bank DSK, has already begun its due diligence. Hungary's OTP Bank and Greece's Pireos Bank started a two-week due diligence procedure on February 10th. The deadline for submitting final offers for DSK Bank will be in accordance with KPMG auditing report under international accounting standards for the bank's financial results for 2002. 
The date for submitting final offers was fixed no later than two weeks after the report is issued, novinite.com reported. The final contract for DSK Bank privatisation was expected to be signed by the end of April.

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ENERGY

Bulgarian energy minister views gas transit memorandum with Russia

Energy Minister, Milko Kovachev, has commented on the memorandum with Russia on long-term cooperation in the transit of natural gas in the period after 2010. This memorandum was signed on 2nd March, Bulgarian Radio has reported. 
Kovachev said: "I think that the most important thing was that, during the dialogue with Gazprom, it was noted by Russian President, Vladimir Putin, that trade relations should be extremely transparent, because, both the Bulgarian and Russian public expect these trade relations to be clear enough to improve long-term prospects for developing the economy. We are interested in these issues because the price for end consumers is an important factor that affects the competitiveness of the Russian economy."

Putin confirms support for Burgas-Alexandroupolis pipeline

Russian President, Vladimir Putin, confirmed at the Bulgarian-Russian plenary talks the political support for carrying out the Burgas-Alexandroupolis pipeline project and the opening of commercial negotiations at the earliest opportunity, the press centre of the Ministry of Regional Development and Public Works said, BTA web site has reported. 
Interviewed for National Radio, Regional Development and Public Works Minister, Valentin Tserovski, said that on 1st March he met Vagit Alekperov, President of LUKoil company. 
"The talks we had confirmed that since the memorandum on the Burgas-Alexandroupolis was signed by Bulgaria and Greece on 29th January, Russian companies' interest in the project has increased," Tserovski said. 
Tserovski was assured by LUKoil's full support for the construction of the oil pipeline. His partner emphasized the Russian interest in it. The sides shared the opinion that commercial negotiations should start the soonest possible. 
Tserovski said he was planning a visit to Moscow shortly to meet other representatives of oil companies that could be interested in the project. 
He said he hoped the Burgas-Alexandroupolis project would get off ground this year.

Parliament okays energy project loan

The Bulgarian parliament has ratified a €60m financial loan agreement between Bulgaria, the European Investment Bank (EIB) and the National Electric Company (NEC) for the financing of the Energy II Rehabilitation of Electricity Engineering Project, New Europe reports. 
The project is worth €153m, €41m of which has already been agreed on and released by the European Bank for Reconstruction and Development. The EIB loan will be used for the rehabilitation of the transmission network of the NEC and for upgrading the company's telecommunications system. The loan is guaranteed by the state and is repayable in eight tranches. According to the parliamentary Budget Committee, the interest rate is the best possible within the framework of the EU.

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TOURISM

Tourism flourishes in 2002, positive projections over 2003

Foreign tourists who visited Bulgaria in January 2003 totalled 126,000 marking an increase of over 17% over the same period last year, the Economy Minister announced. Experts project 7-12% growth in the number of tourists and tourism revenues, respectively, till the end of 2003, provided that there are no military conflicts, terror attacks, or natural disasters. In 2002 foreign visitors to Bulgaria increased by 8.6%, while growth in revenues is projected at 1%. 
For the first month of 2003 visitors from Greece were most numerous (36,000), followed by tourists from FYROM. Most tourists from Great Britain visited Bulgaria's winter resorts for skiing, followed by Germans and Russians. Over 219,000 Bulgarians have travelled abroad since the beginning of the year, which is an increase of 9.86% over the respective results in 2002. An increase has been also registered in travel to Turkey, Germany, Russia and Italy, New Europe reported.

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TRANSPORT

Bulgarian, Serbia-Montenegro ministers sign transport project statement

The foreign ministers of Bulgaria and Serbia and Montenegro, Solomon Pasi and Goran Svilanovic, signed on 28th February a joint statement on accelerated development of a project on transborder transport infrastructure under Pan-European Transport Corridor X to link western and eastern Europe, BTA web site has reported. 
Pasi and Svilanovic stressed the need for a meeting at expert level on the upcoming implementation of projects for the electrification, reconstruction and modernization of the Sofia-Nis railway and the building of the Sofia-Nis motorway. 
The two sides agreed to present their preliminary studies to the leading group on infrastructure of the Stability Pact for Southeastern Europe, to the donor countries and to the international financial institutions. 
Foreign Minister, Goran Svilanovic, was on a working visit to Bulgaria in connection with the completion of Serbia and Montenegro's presidency of the Process of Cooperation in Southeastern Europe

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