% 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: 074 - (19/06/03)
The US now the ally
The Bulgarians have done a somersault in their geopolitical orientation. Once the staunchest ally of Moscow, now they see the US as the great partner. They have earned for their country the name of "the new hawk" in the UN Security Council, where it sided with the US and the UK over Iraq.
Bulgarian airspace was made available during the war, including an air base on the Black Sea coast. For the period of the campaign 400 US troops and 18 refuelling aircraft were deployed at Sarafavo near Bourgas.
Bulgaria was one of seven countries whose NATO admission was unanimously backed by the US senate on May 8th. The Bulgarians and the Romanians will henceforward guard the southern European flank of the alliance, replacing fickle Turkey in a crisis. Colin Powell has come to Sofia and endorsed the new line, at the 100th anniversary celebrations of US - Bulgarian relations. The US may site military bases permanently in Bulgaria. Bulgaria is heading to the West.
Nevertheless, in February Chirac denounced the pro-US line of Sofia and Bucharest, linking the issue to EU entry, due in 2007. Long before then the connection should be no longer contentious. Anyway Chirac leaves office in 2007, as in all likelihood Schroeder in Germany.
Economy in trouble
Bulgaria stepped up the measures against its widespread grey economy by closing down various anomalies, Finance Minister, Milen Velcev, said recently. Among the nine measures introduced were a new tax police force and the closure of duty-free shops, which would support the crackdown on customs and tax fraud, he said. The measures are expected to bring an additional 500m levs (US$295.6m) to the state coffers annually. The volume of the Bulgarian grey economy was estimated at up to 40% of the Balkan country's GDP.
Earlier the World Bank threatened to suspend disbursement of a US$150m loan to Bulgaria because of stalemate in privatisation and legal system reforms.
World Bank Director for Bulgaria, Andrew Vorkink, told Deputy Prime Minister, Nikolai Vasilev, that the lending would be suspended if the government fails to complete the privatisation of state tobacco monopoly, Bulgartabac, by the end of this year. The bank also wants the government to mark progress in reforming the country's legal system.
Privatisation talks with a Deutsche Bank-owned consortium, which had bid 110m Euro for 80% of Bulgartabac fell apart in the end of March over disagreements on the terms of the deal.
Earlier this year the Constitutional Court has annulled a government-sponsored law that would make magistrates easier to replace and more accountable. The Constitutional Court has also revoked a government-sponsored law that would exempt privatisation of 15 major state companies from judiciary control.
Turkey, Bulgaria settle dispute over purchase of electricity
Discussions between the Turkish Energy and Natural Resources Minister, Hilmi Guler, and Bulgarian Minister of Regional Development and Public Works, Valentin Tserovski and Bulgarian Energy Minister Milko Kovachev on the purchase of electricity have been concluded and a protocol was signed on 10th June, Anatolia News Agency has reported.
Sources said on that under the protocol, Bulgaria would award a Turkish company the motorway construction contract within three months and a decision would be taken on construction of two dams shortly.
If Bulgaria did not award the contract for the construction of those dams to Turkey, Turkey would not purchase electricity at the equivalent cost of construction of those dams.
The Energy Cooperation Agreement which was signed by Turkey and Bulgaria in 1998, foresaw the purchase of 4bn kWh of electricity (kWh for 3 cents) by Turkey from Bulgaria for 10 years and construction of the motorway that will connect Bulgaria to Turkey, three dams over Arda River and a hydroelectric power plant by Turkish companies.
Turkey has not been purchasing electricity from Bulgaria since April as Bulgaria did not fulfil its commitments under the agreement.
Government to decide on IMF funding
By the end of this year the Bulgarian government may come to a decision on whether to continue the country's funding through loans from the International Monetary Fund (IMF), Finance Minister, Milen Velchev, said.
"We are considering the possibility of this being Bulgaria's last stand-by arrangement with the IMF and of the country joining another group of countries, that of the 10 new EU members," Velchev said in an interview for BTA News Agency. The decision will be made towards the end of the year. Then, if the present economic development trends continue, the need for a new stand-by arrangement with the IMF will be even smaller than today, Velchev said. Velchev recalled that instead of the planned deficit of 304m levs, in the first quarter of 2003 the national budget registered an 110m levs surplus, which is a 415m levs improvement on the parameters agreed on with the IMF.
Revenue compliance exceeds not only the expectations of the IMF experts but also the inflated, according to them, expectations of the government, Velchev said. Twenty four per cent of the planned budget revenues for 2003 were collected in the first quarter of the year, against the less than 22 per cent in the same period of 2002.
"These trends make us quite optimistic about the implementation of the budget for the year," Velchev said.
FOREIGN ECONOMIC RELATIONS
Bulgarian president visits Estonia, Lithuania
President Georgi Purvanov made official visits to Estonia and Lithuania on 11th June and 12th-13th June, respectively. These were the first ever visits to the Baltic countries by a Bulgarian head of state, the president's press secretariat announced, BGNES web site has reported.
The programme for the visits included meetings with the presidents, the prime ministers, and the Speakers of the parliaments of the two countries, as well as business events which were attended by representatives of Bulgaria and the respective states. The talks focused on the efforts to achieve the common goal of the three countries, namely, integration in the European Union and NATO.
Economy minister urges Spanish businessmen to invest in Bulgaria
Economy Minister Nikolay Vasilev said on 10th June that he expects Bulgaria to be assigned its first investment credit rating soon . Vasilev was among the speakers at the opening of a Bulgarian-Spanish business forum held during the state visit to Bulgaria of King Juan Carlos and Queen Sofia, BTA web site has reported.
"I hope that Bulgaria will be a full member of the European Union following Spain's successful and proven model of economic development," said Vasilev. He added that in 2002 two-way trade totalled US$325m, which makes Spain the fifth biggest trading partner of Bulgaria among the EU member states. In the area of direct investment, Spain is 14th with a total of US$115m.
The economy minister went on to say that with its good macro-economic and business environment, low inflation and GDP growth of 4-5 per cent, Bulgaria gives Spanish businesses good reason to consider a larger-scale presence in Bulgaria.
Addressing the forum, the Spanish State Secretary for Trade and Tourism, Juan Costa, said that the Bulgarian economy is one of the region's front-runners with its stable economic growth, balanced budget and foreign trade growth. He added that the Spanish administration will help Bulgarian and Spanish businesses that want to work together.
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