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bulgaria

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BULGARIA


  
   

 
Key Economic Data 
 
  2002 2001 2000 Ranking(2002)
GDP
Millions of US $ 15,608 13,600 12,600 74
         
GNI per capita
 US $ 1,790 1,650 1,580 110
Ranking is given out of 208 nations - (data from the World Bank)

Books on Bulgaria

REPUBLICAN REFERENCE

Area(sq.k.m)
110,910

Population
7,537,929 

Capital
Sofia

Currency
Lev 

President 
Georgi Purvanov


Private sector
% of GDP
40%
 

  

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: 083 - (19/03/04)

Better placed than Romania to join the EU
The Bulgarians are concerned that they are going to be permanently associated with Romania in accession talks to the EU, which at the moment they are with 2007 as the target date for entry. Romania is a much bigger and more intractable place, having the heritage of the worst form of communism in Europe. In Bulgaria's case it was far less repressive, partly because there were more true believers. Bulgaria was liberated from the Turks by the Russians in 1878, so that there were at least at first still some Russophiles about. Bulgaria consequently had one of the more successful economies in the Soviet bloc.
European Commission President, Romano Prodi, has reassured Bulgaria that its bid to join the European Union would not be delayed by problems encountered by fellow EU hopeful Romania. "Please be sure that no country will be delayed because of the other country's problems," Prodi said at a recent meeting with Bulgarian President, Georgy Parvanov. Bulgaria and eastern bloc neighbour Romania did not make it into the European Union this year, which expands to 25 in May when 10 mostly former communist states join: but they are hoping to conclude talks this year in order to join the bloc in 2007. 

The government of Simeon II
The current government, elected in 2001, led by Simeon II, the former monarch of the country in the 1940s as a boy, pledged to maintain the fundamental economic policy objectives of its predecessor, i.e., retaining the Currency Board, practicing sound financial policies, accelerating privatisation, and pursuing structural reforms. 
A new $300 million stand-by agreement negotiated with the IMF at the end of 2001 in succession to the previous one is helping the government maintain economic stability as it seeks to overcome high rates of poverty and unemployment.
But Simeon made one fatal mistake. He promised to double living standards in 800 days. This was not achieved.

Economy in the doldrums
The government did badly in municipal elections in October, trailing on only 11% of the vote. 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. Average salaries rose by 17% in the new government's period of office so far, to 143Ecu ($168) per month. A meagre result for a poor country, conclude the population.
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. 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.
Simeon is paying the price of raising expectations unduly in the electoral campaign of March 2001, 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.

Foreign investment doubled in 2003 
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.

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AGRICULTURE

Agro minister pledges further support to farmers


Bulgarian farmers will be granted export subsidiaries for the so-called "sensitive" agriculture products, including poultry, dairy products, lamb meat, fresh and tinned fruit and vegetables, Agriculture Minister, Mehmed Dikme, stated at the recent opening ceremony of the Agra Expo in Plovdiv, novinte reported. 
He revealed that 3m Bulgarian levs were allocated for supporting the farm produce of non-EU countries in 2004. The agriculture ministry's proposal on the amount of subsidies was presented to Prime Minister, Simeon Saxe-Coburg, recently. Upon the announcement, Dikme noted Bulgaria's agricultural sector has totalled a turnover of US$1.2bn in 2003 thus closing with a positive balance, unlike the overall negative trade gap in foreign imports.

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AUTOMOBILES

ProMobile expects 2004 sales will double 


ProMobile, official importer of Renault and Dacia for Bulgaria, expects to double its sales in 2004 as compared to the previous year, representatives of the company announced at a press conference recently, novinite website reported. 
The projections are part off the company's ambitious business plan for the period 2004-2007, worth €15m. Diversifying Renault product portfolio since the middle of 2003 is the main reason for increasing the sales by an average of 55% in the second half of last year. Importers also have pinned their hopes for increased sales on the new design of Dacia. ProMobile saw an over 3.5% increase in its Renault sales in January 2004 as compared to the same period last year. Producers expect the market of new automobiles to see a significant growth following the decision of the government to limit the imports of pre-owned vehicles.

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AVIATION

Volare and Air One eye Bulgarian Air liquidation


Two Italian airlines, Volare and Air One, have shown interest in the privatisation of Bulgarian Air, reports said recently following a meeting between Deputy Prime Minister, Nikolay Vassilev, and Italian Minister of Foreign Trade, Adolfo Ursso, at a business forum, New Europe reported. 
Vassilev elaborated that the passing of the privatisation strategy of the Bulgarian national flag carrier was pending. Italy wants to have four more regular Alitalia flights between Sofia and Milan, and the Bulgarian air carrier Bulgarian Air is expected to open its own service between the two cities, Vassilev said further.

Lufthansa in possible joint flights with Bulgaria Air

Lufthansa is mulling over a proposal with Bulgaria Air for joint flights to Frankfurt, Dieter Grosse, Lufthansa regional manager for Bulgaria, said recently. As Bulgaria Air has no early flight to that destination, Lufthansa is set to negotiate a common ticket sale. Due to the increased number of passengers on Lufthansa's once daily flights from Sofia to Frankfurt, the air company may lease larger aircrafts, such as Boeing and Airbus, to service the Sofia destinations. Bulgarian aviation must put efforts into the boost of regional air traffic, investing into the appropriate aircraft and equipment. According to Dieter Grosse, it is a very prospective and profitable business for Bulgaria. The way to achieve it is not by increasing ticket prices, but by improving services instead, reported New Europe recently.

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BONDS

Finance ministry offers Euro T-Bonds


Bulgaria's Ministry of Finance recently started to issue to the public an unspecified amount of Euro-denominated treasury-bonds to yield 4% to 6% per year, reported New Europe recently. 
The bonds will bring to their holders, fixed revenue in the form of interest rate payable every six months, the ministry said. There was no immediate word about the amount of the issue and the maturity of the bonds. The ministry said the issue would continue for the next five years. The minimum value of bonds allowed to be purchased will be €10, the ministry said. The interest will gradually increase from 4% at the first payment to 6% at the last. The first batch of Euro-denominated bonds have already been offered, the ministry said. It said five similar issues would follow in April, June, August, September and November. The banks that will see the bonds include the Bulgarian National Bank, Commercial Bank Biochim, SG Expressbank, Economic and Investment Bank, Eurobank. Brokerage houses Elana Trading and Eurofinance are also authorised to sell bonds of the issue.

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ENVIRONMENT

EU ISPA offers €188.5m for Bulgarian water schemes


Under the European Union ISAP programme, Bulgaria can now rely on €188.5m for the construction of water treatment statements and waste dumps. Of this amount, €88,252,057 will be granted, and the rest will be provided as co-financing by the republican budget, Banker weekly reported recently. 
Under the ISPA rules, Brussels finances up to 75% of the costs of projects in the field of infrastructure and environment. A memorandum is signed by the Commission and the respective country that uses the funds for each approved project.
Six documents were recently signed by Minister of Finance, Milen Velchev, and EU Ambassador to Bulgaria, Dimitris Kourkoulas. Four of these projects refer to the purification of waste water in the municipalities of Shoumen, Varna, Balchik, and Smolyan.
The European Commission is also going to launch money for technical support of the project for improving the water cycle in Sofia. ISPA financing is also provided for the construction of waste dump in Kurdzhali.
The memo documents stipulate that the Shoumen project aims at keeping the two local rivers free from pollution.
The whole project in the town costs €30,315m, of which €22,597m was paid by ISPA.
The preservation of the Varna lake and a substitution of the main drainage collector in Asparuhovo will cost €25.62m. The Union will provide €19,074 of this amount. The ecological subsidy for the town of Balchik will reach some €21,899, of which €16,191m will come from the Commission.
The technical assistance from the Sofia municipality, which will hire consultants to carry out preliminary research of the project for water sector modernisation, amounts to €1.5bn and the EU will earmark €1.125bn.

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FOOD & DRINK

Bolyarka to produce Sinalco drinks at Veliko-Turnovo plant


The German Sinalco company recently signed a licence agreement with the Veliko Turnovo-based brewery Bolyarka VT AD, New Europe reported.
The document allows the Bulgarian company to produce and distribute soft drinks of the Sinalco brand in Bulgaria. The agreement is valid for 10 years and after it expires, it will be renovated every five years, the group release said. Sinalco soft drinks are sold in 50 countries around the world. Bulgaria has already established traditions in the cooperation with German investors, Deputy Minister of Economy Valentin Purvanov said at the official ceremony for the signing of the licence agreement. German businessmen have invested US$680m in the period 1992-2003.

United Dairy picks up shares in Vitalact Milk

United Dairy Company AD, which owns enterprises for processing of milk in the towns of Plovdiv, Shoumen, Bourgas and Stara Zagora, recently announced it has purchased Vitalact Milk AD from the Greek company Delta Ice Cream, Banker weekly reported. 
The Varna-based Vitalact Milk produces milk and yoghurt and has distribution branches in Sofia, Plovdiv and Varna. It was separated from the company Vitalact on June 18th 2003. The enterprise's proceeds from sales in 2003 exceed €3.2m, according to a press release. United Dairy Company (with €11m-plus sales proceeds last year) will keep the managerial team, personnel and products of Vitalact Milk, the holding company specified. In that way United Dairy Company will have a distribution network in the four biggest Bulgarian towns and will be able to get milk from most of the dairy regions in the country. United Dairy company is among the three leaders on the domestic milk market, producers and distributors of yoghurt. It owns the trade marks Fibela, Vereya, Roussalka and Hansko.

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FOREIGN ECONOMIC RELATIONS

Bulgaria, US discuss participation in Iraq's reconstruction


Bulgarian Deputy Prime Minister and Economy Minister, Lidia Shouleva, and US Secretary of Commerce, Donald Evans, discussed participation of Bulgarian companies as subcontractors to US companies in the reconstruction of Iraq, BTA web site reported recently.
The talks were held in Washington within the framework of Shouleva's official visit to the US, the press office of the Ministry of Economy said in a press release.
The two sides discussed ways to further boost US investment interest in Bulgaria and joint projects to promote innovations, as well as possibilities to upgrade the Bulgarian defence industry to meet NATO standards and joint production between US and Bulgarian companies in this sector. Shouleva stressed that Bulgaria has a highly qualified work force in the field of information and communication technologies and the US side expressed readiness for US universities to offer pilot projects for the development of R and D centres jointly with Bulgarian universities as well as for transfer of know-how in the building of business parks encouraging cooperation between science and business.
Possibilities for cooperation in the defence industry were discussed in a series of meetings with leading US corporations such as Northrop Grumman, Lockheed Martin and Raytheon which were also attended by representatives of companies of the Bulgarian military industrial complex. Some of these companies have already established cooperation with US partners. 
Between 35 and 50 per cent of the radars for merchant and military ships which Northrop Grumman sells every year are made in Bulgaria, said Isaac Kid of Northrop Grumman.
Another plant of the Bulgarian military industrial complex is a subcontractor of Lockheed Martin. By end-March this US company will complete its negotiations with the BDZ Bulgarian State Railways on a railway traffic control system to enhance safety, said William Sifken the company's Director for Central and Eastern Europe.
Shouleva also met Robert Dunn of the Carlyle Group who showed interest in privatisation in the Bulgarian energy sector and possibilities for cooperation in the defence industry and information technologies, and John Emans of Eximbank. At Eximbank Shouleva discussed possibilities for facilitate the access of small and medium-sized enterprises to financial resources.

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Bulgarian, Estonian foreign ministers sign cooperation agreement

An Agreement on Cooperation in Education, Science, and Culture between Bulgaria and Estonia was signed by Foreign Ministers, Solomon Pasi, and Kristiina Ojuland recently, BTA web site reported.
During her official visit to Bulgaria, Foreign Minister, Ojuland discussed with her counterpart their countries' forthcoming accession to NATO, the Bulgarian Chairmanship-in-Office of the Organization for Security and Cooperation in Europe and its interaction with the authorities in Tallinn, and the expertise Estonia can share to help Bulgaria complete its membership negotiations with the EU.
The two foreign ministers underscored the need for an invigoration of bilateral economic cooperation and interaction in defence, telecommunications, and information technology. 
Foreign Minister Ojuland was also expected to confer with President, Georgi Purvanov, National Assembly Chairman, Ognyan Gerdzhikov, and Prime Minister, Simeon Saxe-Coburg-Gotha.

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FOREIGN LOANS

Bulgaria to get US$150m World Bank loan by end of 2004


By the end of 2004, Bulgaria will receive a Programmatic Adjustment Loan (PAL 2) of US$150m from the World Bank (WB), Deputy Prime Minister and Economy Minister, Lidiya Shuleva, told the media returning from a six-day official visit to the USA, BTA web site reported. 
This emerged at a meeting Shuleva had with Shigeo Katsu, WB Vice President for Europe and Central Asia. The Board of Directors of the Bank will consider PAL 2 in June this year and will approve the whole amount. The loan will be floated in two tranches. The first one of about US$120m will be extended after the PAL 2 consideration by the WB directors.
The second tranche will be provided by the end of 2004, after the transactions for the privatisation of Bulgartabac and the electricity distribution companies are completed, Shuleva said. The WB officials she met praised the macroeconomic parameters Bulgaria had achieved and its progress in carrying out structural reforms. The PAL programme is comprised of three loans for a total of US$450m. PAL 1 is targeted at improvements in the business environment, the restructuring of infrastructure sectors and further deepening of financial sector. PAL 2 will aim at strengthening public administration, the judiciary, and anti-corruption initiatives, and PAL 3 will emphasize on building human capital and improving delivery of social services. 
The US government supports Bulgaria's efforts to implement reforms and attract foreign investments, Shuleva said. Secretary of Commerce, Donald L. Evans, and Under Secretary of State for Economic Affairs, Allen Larsen, have assured her that the US government will give the signal to American businesses that Bulgaria is a good place for investments.

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NUCLEAR ENERGY

Bulgaria to resume construction of second nuclear plant 


Prime Minister, Simeon Saxe-Coburg-Gotha, will sign a decision in May on resuming the construction of the Belene Nuclear Power Plant. This was announced on 1st March by Veselin Bliznakov, chairman of the National Assembly Commission on Power Engineering, Khorizont Radio reported.
To be able to adopt the decision, the prime minister should receive all the relevant information from the Ministry of Energy no later than the end of April.
The US company Parsons is preparing a technical-economic analysis, which will be presented within this period. The Consultative Council of the Ministry of Energy will present it to the prime minister in the form of a report. The construction will last about four years.
The experts will decide whether a 600 or 1,000-MW reactor will be used. The exploitation period will be no shorter than 40 years.
The construction is a strategic project, Bliznakov pointed out, because through it Bulgaria will present its leadership position in the Balkans as the largest exporter of electric power.
The construction could begin as early as the end of 2004, and exploitation of the plant in 2009.

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STOCK EXCHANGE

BRS shares to float on Sofia stock exchange


Bulgarian River Shipping (BRS) offered 30% (268,621 shares) of its capital for sale on the stock exchange recently, the company said in a recent statement, Banker weekly reported.
Minimum price per share, set by the Privatisation Agency (PA), is 87 Bulgarian levs in compensation instruments, which are currently traded at almost 24% of their par value. The real price of the paper will be 20.88 levs a piece, or 5.6m levs for the 30% stake. According to analysts' forecasts, both small and more serious investors will be interested in the company's stocks. Bulgarian River Shipping is engaged in cargo and passenger transportation along the Danube. Presently, the company's fleet includes 18 motor ships and 140 barges (excluding those that are out of service), as well as the Bdin ferry which effects transportation between Vidin and Kalafat. Bulgarian River Shipping also owns land and buildings, but restitutional claims have been laid for them. Bulgarian River Shipping reported 400,000 levs in loss for the first nine months of last year. According to Executive Director, Dragomir Kovachev, the negative financial performance was due to the high prices of fuels, which appreciated after the war in Iraq in the first three months of last year, and the prolonged drought in the summer which disturbed sailing for at least six months.

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