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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 
Petar Stoyanov 

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: 070 - (21/02/03)

The Bulgarians are not very involved with the current Iraq affair, which is taking place a long way from their borders. Recently citizens of a totalitarian state, they are genuinely right behind Bush's policy. There were no serious demonstrations in Sofia on February 15th.
Chirac should be reminded of these facts by someone. The French president made some appalling comments saying that various countries, obviously Bulgaria and Romania, had not helped their cause in accession talks for the EU by backing the USA over Iraq in contradiction to the German/French line. Well, Bulgaria and Romania have been through the totalitarian drill and quill and know what it is about, unlike Chirac.
Bulgaria is joining NATO in June 2004, invited to do so in November at its Prague meeting. That was with quite another conflict in mind, one in the Balkans that might erupt in Macedonia, a close fellow Balkan people.
The Albanian minority there have been integrated into the government, indeed were into the previous one, but disaffection remains on the ground. Bulgaria can provide an element of stability, should a war erupt, which mercifully seems unlikely.
Successive reformist governments in Bulgaria since the end of communism in 1989 have pared down state control of the economy and cut back on state spending, especially on welfare services, to the approval of the IMF. But despite a solid growth record of four per cent annually in GDP of late, the economy is still characterised by endemic poverty for the vast majority, including the professional people, teachers, doctors, nurses and the like.
The prime minister, ex king Simeon II, is offering early membership of the EU and NATO as the hope for a better future, that and continued IMF-backed reform, which promises foreign direct investment (FDI) and integration into Europe as the ultimate saviours. But all this takes time; and that is what he and his government do not possess.
While NATO has agreed to admit Bulgaria, the more vital matter of EU membership is still on the backburner. None of the countries of the Orthodox faith have been deemed acceptable for inclusion yet, the Baltic States, the Visegrad nations and Slovenia all being Protestant or Catholic Christians, not Orthodox like Bulgaria, Romania and others.

IMF remains staunch
The IMF is backing the government to the hilt, negotiating terms of disbursement of successive tranches of a US$300m two-year credit. But this is not helping the government deal with those put out of work, such as the 6,000 demonstrators calling for its dismissal in the streets of Sofia in November, after it had agreed to close two nuclear reactors to comply with EU requirements, the two outdated reactors at the Kosloduy power plant. They are but a small proportion of those who have lost their jobs due to modernisation. The rate of unemployment is over 10% and growing, while the dole is exiguous in the extreme.
It is hardly surprising that while 60% of Bulgarians polled recently were in favour of NATO membership, they back entry into the EU with far less enthusiasm, those against, 40%, exceeding those in favour, 36%.

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AUTOMOBILES

Peugeot-Citroen investment likely

Deputy Economy Minister, Milen Keremedchiev, expects PSA Peugeot Citroen to say it will invest in Bulgaria, Keremedchiev disclosed at his meeting with company representatives in France, reports New Europe. 
Keremedchiev told the national radio in Bulgaria that most probably the top automobile producer would build a small enterprise for parts and components, in Bulgaria, to be used by their main plants in France. Meanwhile, a working group from the French company might soon pay a visit to Bulgaria to get onsite ideas about the investment and business conditions.

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BANKING

Three foreign bidders for DSK

Hungary's OTP Bank, Austria's Erste Bank and Greece's Piraeus Bank have been named as the final bidders for the privatisation of the state DSK Bank, the Finance Minister, Milen Velchev, said in a statement, according to BTA. The news agency said the bids arrived at the London office of JP Morgan, which is acting as a consultant for the deal, and then forwarded them to the Bank Consolidation Company (BCC), with relevant discussions pending.
Erste Bank's chief financial officer, Reinhard Ortner told BTA that the Austrian bank would like to acquire 100% of DSK Bank's capital. If Erste wins the bidding, it will keep the name of the Bulgarian bank. "The state-owned bank is well-managed, is strongly positioned in retail banking, and enjoys public confidence," Ortner commented. "The expectations that Bulgaria will become a EU member in 2007 make DSK Bank attractive to us," he added.
Erste Bank is Austria's second largest banking institution after Bank Austria and is currently a leader in the Austrian savings sector with more than 2.3 million clients. The bank occupies leading positions in Central Europe. In Austria, the Czech Republic, Slovakia, Hungary, Slovenia and Croatia, its customers exceed 10.6m. Five potential buyers reportedly acquired the information memorandum on the bank.
On the basis of the indicative bids, eligible bidders will be short listed and invited to conduct a due diligence. Due diligence will most probably be completed by mid-March. A closing date for submission of conclusive bids is expected to be set right after the international audit of the bank for 2002 is ready.
On December 9th, 2002, BCC published a notice to potential investors, which officially opened the procedure for privatisation of DSK Bank. Between 80 and 100% of the bank's capital is up for sale.
Under the bank's privatisation strategy, any residual shareholding will be listed on the Bulgarian Stock Exchange if the strategic investor agrees. In the event that most bidders offer a better price for a 100% stake in their indicative bid, the BCC is ready to sell the entire capital of DSK Bank. The potential buyer is also required to be subject to banking supervision in compliance with the Core Principles for Effective Banking Supervision of the Basel Committee on Banking Supervision.
DSK Bank dominates retail banking in Bulgaria; 90% of the deposits with it are placed by private individuals. It was established in 1998 by transforming the State Savings Bank into a wholly state-owned joint-stock company.
For 2002, the bank's pre-tax profit was 50.9m Bulgarian levs. DSK Bank has the largest banking network in Bulgaria, consisting of 306 branches and 1,123 offices countrywide. In terms of asset value, it ranks as Bulgaria's second largest bank, after Bulbank.

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ENERGY

Bulgaria, Russia, Greece near to agreeing on pipeline - Russian minister

Russian Foreign Minister Igor Ivanov has said Russia, Bulgaria and Greece "are in favour of the implementation" of a project to build the Burgas-Alexandroupolis Transbalkan pipeline, Interfax News Agency has reported.
He said that he has received confirmation of this during his current visit to Sofia and during a recent visit to Greece. "Moscow, Sofia and Athens are in favour of this project," the minister said.
However, he noted that to implement the project the sides would have to agree a number of issues of a financial and economic nature. "Experts from the three countries are currently involved in consultations and we hope that soon we will be able to reach a clear and objective conclusion on this project."

Solby to invest in gas sector

Swiss investment fund Solby SA will invest US$8.5m for supplying gas to the town of Gabrovo, central Bulgaria, reports New Europe. 
The municipal council selected Solby as strategic investor in the project, which vied together with Black Sea Technology Company, owned by Italian ANGA Ltd Some US$5m will be used for capital-increasing exercises of municipal company Centralgas. The remainder will be in the form of credit for Gabrovo municipality and other Centralgas shareholders.

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FOREIGN INVESTMENT

Hyundai investment talks to resume

Deputy Prime Minister and Economy Minister, Nikolay Vassilev, announced that Bulgaria would soon resume negotiations with the Hyundai concern, reports New Europe. In his opinion talks must be started anew because the foreign investor was disappointed after the tour of Bulgarian companies at the end of last year. 
At the end of January Deputy Economy Minister, Milen Keremedchiev, and Managing Director of Hyundai Mobis Europe Parts NV, Sun Young Kim announced that despite the delay, Hyundai Motors Group had not given up their plans for investments in Bulgaria and will most probably opt for greenfield investments. 
"We still believe that Bulgaria is a very attractive place to become one of our component production base," SunYoung Kim noted. Minister Vassilev, who recently made a two-day working visit in the district of Lovech, said that the projected investments were 21% of GDP for 2002.

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FOREIGN LOANS

World Bank launches SmGP for 2003

The World Bank has launched the Small Grants Programme (SmGP) in Bulgaria in an effort to strengthen the delivery capacity of selected domestic NGOs and to encourage citizens to have greater ownership of development processes. Seven of Bulgaria's regions with the lowest development indicators will be covered by this year SmGP, novinite.com reports. 
Active NGOs in Lovech, Pleven, Veliko Tarnovo, Rousse, Pernik, Blagoevgrad and Stara Zagora have been invited to submit proposals with innovative ideas that would support the empowerment of citizens to have greater ownership of development processes. The SmGP will be focusing on marginalised and vulnerable groups. The size of individual grants is expected to be up to US$3,500 each.

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