% of GDP
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: 079 - (01/12/03)
The Bulgarians have delivered their verdict on the 800 days which Premier Simeon-11 Saxe-Coburg said in 2001 he would need to double their living standards. The answer is negative.
Communists win at municipal polls
The winners at late October's municipal elections were the former communists, who gained 32% of the votes, according to provisional results. The Bulgarian Socialist Party (PSB) was the clear winner, while the conservative opposition United Democratic Forces won second place with 21%. "There has been a clear winner in these elections," said Andre Raiechev, of the Gallup Poll Organisation. "That is the PSB. A third of Bulgaria has voted red."
The National Simeon 11 Movement of the premier, the former monarch of the country in the 1940s as a boy, came third on 11%. Its ally in the coalition government, the Movement for Rights and Freedom, mostly representing Bulgaria's 800,000 ethnic Turks, obtained 9%.
The result was a clear setback for the centre-right coalition that does not look likely to survive beyond the next parliamentary elections in two years' time.
Economy in the doldrums
The explanation is not hard to find. Despite positive growth rate figures for GDP of around 4% annually in the period since March 2001 when the government came to power, this has not shown up in people's living standards. Poverty is still rife. Unemployment is in double figures at 12.98% of the work force, which is below the average for Central and Eastern Europe of 14.5%, and lower than in 2002 by 170,000 people, but too high for comfort.
Simeon is paying the price of raising expectations unduly in the electoral campaign, now seen as a long time away. People were expecting a royal bounty and have got a beggarly response. There was in truth little chance of the former monarch keeping his word. Bulgaria will need time to turn the corner in terms of prosperity for the bulk of the population.
An austere budget deficit of under one per cent of GDP wins the applause of the international institutions, but not of the electorate. Penny-pinching impresses the bankers, but not the poor and needy, who abound in the Balkan country.
Foreign investment to the long-run rescue
One bright feature is that Bulgaria is at last attracting considerable interest by foreign investors. It has been low down on their priorities, compared with Hungary and the Czech Republic, which have both seen inflows of FDI of over $20bn since 1989.
Now Bulgaria is coming into their sights. The three big investor countries are Greece in first place with $692.6 million, Germany with $658.8 million and Italy with $605 million. Switzerland and Austria are also notable investors, pushing the total figure for accumulative FDI above $3bn.
For the last 10 years Greece has been a regular investor. Between 1995 and 1999 investments were made by Delta (in the food and beverage industry), Goody's (in restaurant management), Chipita and Vitamina (in the food and beverage industry).
Greece is also well presented in the field of telecommunications (through Intracom) and in the banking sector (Union Bank).
The peak investments of Greece in Bulgaria were made in 2000 and 2001 with US$241.1m and US$240.2m, respectively. Substantial investments were made in telecommunications, banking, metallurgy and media business sectors.
Bulgarian-Swiss Aleko hydroelectric station reopens
Bulgaria's Energy Minister, Milko Kovachev, and Pierre Luciri, Switzerland's ambassador to Sofia, recently inaugurated the renovated Aleko Hydroelectric Electric Station. That marked the end of the entire renovation of the power-generating facilities of the Batak cascade chain. The project was carried out with the financial aid of the Swiss government. The renewal of the power-generating facilities of the Batak cascade chain is worth a total of 22m Swiss francs and nine million Bulgarian levs, novinite reported.
The modernisation of the plant should increase its power by up to 10%. During the inauguration ceremony, Kovachev stressed that Bulgaria was a leader in reforms at the region's energy sector, and that the country was also considered one with some of the greatest investments in the energy field.
FOREIGN ECONOMIC RELATIONS
Bulgaria, Russia hold consultations on Balkans, Euro-Atlantic integration
Opinions on bilateral cooperation conducted by Russia and Bulgaria with the countries in Southeastern Europe and on regional cooperation within the organizations of which the two countries are members were exchanged at the political consultations Foreign Ministry officials of Bulgaria and Russia had in Moscow 3rd November, BTA News Agency was told by the Bulgarian Foreign Ministry.
The sides discussed in detail the situation in the Western Balkans and the realization of major infrastructure projects in Southeastern Europe in which Russia is interested. The Russian Foreign Ministry officials were informed about Bulgaria's progress on its path to full EU membership and the ratification process relating to Bulgaria's entry into NATO. Arguments were set forth showing Bulgaria's leading role in the maintenance of stability in Southeastern Europe, the promotion of the European and Euro-Atlantic integration of the countries in the region, the implementation of key regional projects and the expansion of cultural and education contacts as a tool of peoples in the region getting to know each other better.
The Bulgarian-Russian consultations are part of a working plan signed by the Foreign Ministries of the two countries. The Russian delegation was headed by Aleksandr Alekseyev, director of European Department III of the Russian Ministry of Foreign Affairs, and the Bulgarian delegation by Khristo Georgiev, director of Europe I Department of the Bulgarian Foreign Ministry.
Minister urges businessmen to show initiative in Iraq reconstruction
Foreign Minister Solomon Pasi told journalists in Dobrich on 31st October that Bulgarian entrepreneurs should put much effort and initiative in the drawing up of projects for Iraq's reconstruction, BTA web site has reported.
There are still expectations that such projects will fall from heaven, but these illusions should be forgotten, Pasi said.
Stability Pact National Coordinator, Milen Keremedchiev, recommended that Bulgarian companies should open offices in the areas along Iraq's border. He recalled that an exhibition would be held in Kuwait in January, fully oriented to trade with Iraq.
Regional Governor, Ivan Ivanov, said he had invited Pasi and Keremedchiev to Dobrich to discuss possibilities for PHARE [Economic and Reconstruction Aid for Poland and Hungary Programme] and ISPA [Instrument for Structural Policies for Pre-Accession] crossborder cooperation projects.
EBRD promotes residential mortgage lending in Bulgaria
Residents in Bulgaria will gain access to long-term financing to buy, build or refurbish residential properties following a 15m Euro loan from the European Bank for Reconstruction and Development to Bulgarian Post Bank (Postbank).
The 12-year loan, the EBRD's first residential mortgage loan in Bulgaria, will enable Postbank to provide its clients with long-term mortgage financing, which is currently limited. The loan will also increase competition in the longer-term residential mortgage lending sector.
Rogers LeBaron, Director, Bank Lending at the EBRD, said the loan will help Postbank provide its clients with the opportunity to become homeowners. Bulgaria's mortgage market is still underdeveloped, but it is growing. This loan will improve competition, which will benefit local residents, Mr LeBaron's added.
The facility will be structured in such a way that the underlying credit assessment procedures, mortgage loan documentation and security will be standardised, which can later facilitate mortgage bond issues and securitisation.
Postbank is one of the top five banks in Bulgaria, with assets of 400m Euro and equity of nearly 40m Euro at 2002 year-end. ALICO, a subsidiary of AIG, New York, and Greece's EFG Eurobank Ergasias, a subsidiary of EFG Group, Geneva, are majority shareholders of the bank.
"Postbank has been traditionally among the leaders at the mortgage lending market in Bulgaria," said Panagiotis Varelas, Chief Executive Officer of Postbank. "Our mortgage lending program - MY HOME - is designed according to the specific needs of the customers and at the same time fully responding to European standards. With the support of the EBRD we believe we will offer high-quality products to our clients and provide them opportunities for long-term finance," added Mr Varelas.
The EBRD is the largest investor in Bulgaria, with more than 784m Euro committed to 76 projects, and has helped mobilise more than 2.4bn Euro in further investment.
For further information contact Jazz Singh, EBRD, London - Tel: +44 20 7338 7931; E-mail: email@example.com
Bulyard consortium acquires Varna shipyard
Acquiring 75% of Bulgaria's Varna shipyard equity is the Bulyard consortium, New Europe reported recently.
The transport ministry broke the news following a special committee appointed by Navigation Marine Bulgare came to the decision. Bulgaria's national sea carrier will now form a joint venture with the winner. The national sea carrier acquired the shipyard the previous year for 35.5m Bulgarian levs. Deputy Prime Minister and the Transport Minister, Nikolay Vassilev, stated that the procedure was a victory. The deal would come out benefiting both sides, he stressed. The deputy prime minister hoped that the new owner of the Varna Shipyard would hold onto the 720-headcount and boost it in the next year as well. Ares Commodities UK Ltd London and AKB Fores, the other two bidders in the tender were disqualified by the commission. The other companies that remained in the tender were asked to make better offers.
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