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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: 072 - (17/04/03)

Iraq reconstruction beckons
The Bulgarians gave assistance to the US-led coalition in Iraq as requested by Washington. This did not involve troop deployment but the use of Bulgarian air space and airport facilities, while Bulgaria was a signatory of the Vilnius-10 statement backing the war.
The US ambassador to the country, James Pardew, has presented a wide-ranging document to Deputy Prime Minister, Nikolay Vassilev, covering the areas where Bulgarian participation in Iraq's postwar reconstruction would be helpful. They include telecoms, health care and construction, in which Bulgaria's famous fork-lift trucks have a role to play.
Bulgaria had extensive commercial ties with Iraq for decades, extending back to Soviet times. Saddam's regime was virtually unique in being courted by both sides in the Cold War, doubtless one reason for his acquiring folies de grandeur. Bulgaria will be ready to supply much-needed spare parts for the equipment it sold to Iraq in the old days. But it is now of course under the umbrella of the US, not the USSR, that it will be operating.
Deputy Economy Minister, Milen Keremedcheiv, in charge of trade, will co-ordinate the efforts of the government to protect Bulgaria's interests in Iraq and the region. The projects are worth between US$600m and US$900m.
The Economy Ministry was due to familiarise the biggest local business structures recently, namely the Bulgarian Industrial Association, the Bulgarian Chamber of Commerce and Industry, the Employers' Union and the Bulgarian International Business Association with the conditions which applicants should meet. According to local reports, if a company is not a member of any of the above organisations, it can directly approach the Trade Promotion Agency to apply for a competition for sub-contractor of a US company. Applicants must be registered under Bulgarian law, operating for at least three years in the stated area and with no financial obligations.
Bulgarian Industrial Association President, Bozhidar Danev, commented that the government should already have adopted a programme on the Bulgarian participation in the post-war recovery of Iraq by now.

Government under stress
The opening to the US and the forthcoming entry into the EU, set for 2007, are the vistas the government is holding out to the people, who are disgruntled at the recent performance of the economy. The ruling party Simeon II National Movement and its junior coalition partner, the ethnic Turkish Movement for Rights and Freedom, are not popular. Economic growth is sluggish and the prospects fall far short of the doubling of living standards in the first 800 days of the government, rashly promised by ex-king Simeon II on election two years ago.
It is not just a question of growth, however, but of widespread corruption and chicanery. State assets sales have been every bit as dubious as in Russia; Bulgartabac was about to be sold off to local investors on cheap terms before its privatisation was halted by the government. Bulgaria needs a new start and the EU may yet provide it with one. 

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AUTOMOBILES

Michelin introduces new products in Sofia

In order to further improve its performance the French tyre producer, Michelin, has pledged constant enhancement and innovations. The latest products of the French giant - Michelin Energy and Michelin Pilot Sport - were presented at a recent special press event in Sofia, New Europe reported. 
Six Michelin Energy tyres, boasting increased safety, durability, and fuel efficiency, are sold every day in Bulgaria. The company has reported profits for the 2002 fiscal year at €332.4m whilst net incomes almost doubled. The operating incomes rose by 18% and the sale volumes by 2.9%

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AVIATION

Russian-Bulgarian venture to repair MiG aircrafts

The Russian aircraft corporation, MiG, and a delegation of the Bulgarian Defence Ministry have reached an agreement to set up a joint venture for repair of MiG aircraft, during the latter's recent visit to Moscow.
Based on reports released by BTA News Agency, the Bulgarian partner in the joint venture will be Terem of Plovdiv. The parameters of the agreement were due to be specified by the end of March and take effect by the end of April. The joint venture will have all licences for repair of MiG aircraft.
The Bulgarian side has also decided to temporarily suspend its claim for indemnity on an agreement for repair of Bulgarian combat aircraft. The Russian side has promised that the repair will be completed and six planes will be ready for flight by the end of June.
According to the Russian e-zine madiapartner.ru, the Russian design bureau, MiL, has expressed readiness to start a joint business with Bulgaria for repair of MiL helicopters. The information was confirmed by Avgust Michev of the Bulgarian Defence Ministry delegation.

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BONDS

Banks eye navigation Maritime Bulgare Eurobond issue

Twenty investment banks have shown interest in acting as intermediaries in the corporate Eurobond issue, which state-owned Navigation Maritime Bulgare plans to launch into circulation at the end of April. According to Transport Minister, Plamen Petrov, reported by novinite.com, half of the banks have expressed willingness to purchase the whole issue. 
The Privatisation Agency has not yet issued a permit for the launch, which is expected to boost growth, and which was announced for the first time at the end of February. A new company will be set up, in which Navigation Maritime Bulgare will hold 25%, Transport Minister, Petrov, said during his visit to Varna on February 19th. The investing partner will acquire 75%, 26 of which will be deposited in the Central Depository. The investor will lose its 26% if its revenues over the first three years do not exceed 400,000 levs a year or a total of 120m levs.

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DEFENCE INDUSTRY

Arms plant capable of high-quality ammunition production

The Dunarit arms plant in Ruse in north Bulgaria has the potential to make high quality ammunition and the only way to production recovery is to find markets, said Col Lubomir Saroch, military attaché of the Czech Republic, speaking on behalf of eight colleagues from other diplomatic representations in Sofia, BTA web site has reported. 
Col Saroch advised the plant management to adopt NATO standards and adjust of production to the new situation in Bulgaria. 
Dunarit makes aviation, artillery and engineering ammunition and has facilities for civilian production. It has applied to participate in a programme for the destruction of old and surplus ammunition, its chief executive officer, Krustyo Krustev, said, adding that the plant has facilities for environment-friendly storage and destruction of such ammunition. The orders received for 2003 give grounds to expect a normal financial year for the plant, despite its debts to the National Social Security Institute and to the tax directorate, Krustev told the foreign military attaches. 
This year Dunarit marks its 100th anniversary which is one of the reasons for the diplomats' visit on 27th March.

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FINANCIAL NEWS

Foreign trade in 2002 amounted to US$13.6bn 

Bulgaria's foreign trade for 2002 amounted to an estimated US$13,600m, up 9.7 per cent from the previous year, according to the National Statistical Institute (NSI), NSI National Accounts and Balances, Export and Import Department Director, Emiliya Danailova, told a news conference on 26th March, BTA News Agency has reported. 
At US$5,700m or 11,800m leva, exports rose 11.2 per cent from 2001, Danailova said. With the exception of the first quarter, the monthly levels of exports in 2002 exceeded the comparable figures for 2001, with the margin topping US$100m for July, September and December. Monthly exports peaked in July at US$586.3m and bottomed in January at US$383,7m. Exports were briskest in the third quarter, which accounted for 28.8 per cent of the annual total. 
Imports exceeded exports by 38.8 per cent in 2002. Imports were valued at US$7.9bn or 16,400m leva. Compared to 2001, imports increased by 8.8 per cent. 
December was the hottest month for importers: at US$869.5m, the goods they brought into the country were US$286.7m more than in 2001 and marked the largest monthly volume for the last three years. The last quarter accounted for 30.7 per cent of the annual total of imports. For 2002, Bulgaria ran a trade deficit of US$1.6bn or 3,300m leva. The deficit peaked in December at US$325,9m. 
Last year the European Union member states accounted for US$747.4m or 52.5 per cent of Bulgaria's total foreign trade. In value terms, this amount showed an 11.7 per cent rise from 2001. The three principal trading partners in this group: Italy, Germany and Greece, absorbed 61.2 per cent of Bulgaria's exports to the EU and supplied 63 per cent of the country's imports. Bulgaria ran a trade surplus with Greece. Less goods were imported from Finland, Luxembourg and Sweden. 
Exports to the CIS countries declined by 15.6 per cent last year from 2001, and imports dropped 15.8 per cent. 
Bulgarian exports to Turkey advanced 28.4 per cent, to Romania 22.9 per cent, to Greece 16.1 per cent, and to Macedonia 9.0 per cent, and exports to Yugoslavia decreased 18.1 per cent. Imports from Turkey rose 42.7 per cent, from Yugoslavia 16.6 per cent, and from Greece 15.5 per cent. Imports from Romania and Macedonia diminished. 
In 2002, Bulgaria exported US$268.5m worth of goods to the US (down 5.7 per cent from 2001) and imported goods valued at US$171.8m (down 10 per cent). Imports from China soared by nearly US$50m to US$137.4m, and exports amounted to a tenth of the total value of imports...

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NUCLEAR ENERGY

EBRD puts off N-plant storage tender deadline

The deadline for submitting offers for constructing a new storage for spent fuel at Kozloduy Nuclear Power Plant was postponed recently, at the request of the European Bank for Reconstruction and Development. EBRD, which manages the funds under the project, has proposed a new approach, which envisages a two-stage tender. The first stage will include an assessment of the technical parameters of the submitted bids, while the second stage will assess their financial parameters. The date to invite the tender will be fixed after consultations with the EBRD and all documents are prepared in line with its conditions. 
Following the working meeting of potential participators in the tender for construction of a new storage on January 16ht 2003, the deadline for submitting offers was extended by one month. This was done at the request of the candidates, who wanted more time for the preparation of the documentation.

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PRIVATISATION

Bulgaria cancels privatisation of tobacco firm

The parliamentary groups of the Simeon II National Movement (SND) and the Movement for Rights and Freedoms (DPS) decided unanimously that the state-owned tobacco holding, Bulgartabak, should not be sold under the existing circumstances, and the privatisation procedure should be terminated, BTA News Agency has reported.
The decision was announced on 31st March by National Assembly Chairman, Ognyan Gerdzhikov, following a joint meeting of the SND and DPS MPs.
"It is a nationally responsible decision. It was clear that there should not be a deal at any price, and it turned out that the price we had to pay is unfavourable for Bulgaria," Gerdzhikov said.
He explained that the prospective buyer - Deutsche Bank-controlled Tobacco Capital Partners - tried to renegotiate important clauses of the draft agreement, including those connected with the bank guarantee and one which does not allow the buyer to transfer Bulgartabak shares for five years after the acquisition to any company if it is not fully owned by Deutsche Bank. "There are other clauses as well but these two are enough to decide against closing the deal," said Gerdzhikov.
Asked who will take the political responsibility for what happened, Gerdzhikov said that the SND/DPS meeting did not discuss that but only whether, under the present circumstances, they should go ahead with the deal or not.
The MPs heard the position of the Privatisation Agency - that the deal should not be closed under these circumstances, and Deputy Prime Minister Nikolay Vasilev who listed the unacceptable conditions of the buyer, and supported the Privatisation Agency's position, said Gerdzhikov.

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SHIPPING

Petrov says Varna shipyard keeps attracting bids

Eleven companies have shown interest in the Varna shipyard, according to Transport and Communications Minister, Plamen Petrov. The Varna shipyard is owned by Navigation Maritime Bulgare, which in turn is controlled by the state. The transport minister said that he expected strong competition among the bidders.
Letters of intent have come from companies from Germany, Ireland, Greece, Ukraine and a consortium with British and Greek participation.
"AKB Corporation will bid for 75% of the Varna shipyard in a consortium with Iranian Shipping Line," Chairman of the AKB Supervisory Board, Nikolai Banev was quoted as saying by BTA News Agency. Banev said that the Iranians are the world's third largest ship owners and have strong interests in investing in Europe because of the Iraq crisis.
Iranian Shipping Line and AKB will have equal shares in the consortium. Banev believes that the 25m Bulgarian levs set as the price for the shipyard, is reasonable.

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