Books on Bulgaria
% 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: 087 - (27/07/04)
Pro-US policy on Iraq despite hostage crisis
Bulgaria has pledged unwavering support for US policy in Iraq, despite the kidnapping of two Bulgarian civilian truck drivers in early June.
A firm supporter of the US-led invasion of Iraq, the new NATO member state currently has 470 troops stationed in the southern Iraqi city of Karbala.
Bulgarian Prime Minister Simeon Saxe-Coburg said his country was doing all it could for its nationals, without ruling out negotiating with the captors who threatened to kill them. Saxe-Coburg told reporters in Belgrade it was necessary in such situations to "engage all possible channels, means and connections."
But his foreign minister, Solomon Passy, made clear Bulgaria's staunchly pro-US policy would not change as a result of the kidnapping.
"Bulgaria is a stable state with a predictable foreign policy and we cannot expect it would change its foreign policy because of one or another group," Passy told state radio.
The IMF in a new agreement
THE board of directors of the International Monetary Fund (IMF) has approved the signing of another agreement with Bulgaria, the Finance Ministry announced on June 14. The government is not popular with the population for its austere reform measures, but it is with the IMF.
The proposal was part of an IMF report on Bulgaria, assessing the relations between the country and the Fund, approved by the board. According to the report, the new agreement should be concluded in order to support the efforts of the Bulgarian Government in implementing the series of measures and policies in the EU integration process. Bulgaria is set to join the EU in 2007.
The Finance Ministry said that the IMF had expressed approval of the policies led by the Government of Simeon Saxe-Coburg, assessing as positive factors such as the continuing macro-economic stability, the volume of direct foreign investment and continuing structural reforms. The IMF directors recommended that Bulgaria follow a policy towards limiting growth in credit supply and the current account deficit.
The new agreement with the IMF will be precautionary and for $300 million, which will not be transferred to Bulgaria in tranches, but will only be drawn on in the event that the country needs to protect its balance of payments.
The forthcoming arrangement between Bulgaria and the IMF topped the agenda of Finance Minister Milen Velchev's first meeting with the IMF's new managing director, Rodrigo Rato. Details of the meeting were made public on June 13 by Velchev upon his return from a 10-day working visit to the US and Canada.
Velchev and Rato also discussed the report on the results of the 10-year period the IMF has been working with Bulgaria. Both expressed hope that negotiations on the new arrangement would be completed soon and that it would be signed this summer.
But opposition objections
Yet Velchev's moves were not met with enthusiasm by Bulgarian opposition parties. The Union of Democratic Forces (UDF), one of the right-wing opposition parties in Parliament, said that it would insist on changing the parameters of the draft memorandum between the Government and the IMF, and on a new IMF mission prior to the signing of the accord.
The move was announced after a meeting between UDF MP Nikola Nikolov and trade unionists. The union representatives backed the UDF position and said that the parameters of the draft memorandum showed a clear intention to freeze salaries. In their view, pay should be adjusted to match normal economic growth.
According to Nikolov, the parameters of the memorandum were not good because they untied the Government's hands to intervene in the country's fiscal reserve.
The participants in the meeting said that the main goal of the arrangement should be the attainment of economic growth.
The Government should not limit bank lending and should pay debt ahead of schedule because Bulgaria needs two-digit growth, employers said at a meeting with UDF on June 11.
During the meeting, UDF leader Nadezhda Mihailova said that their letter to the IMF would present the stance of trade unions and organisations in Bulgaria that disapproved of the draft agreement and saw it as detrimental to economic development.
The agreement should be revised, said the Union of Employers, Bulgarian Industrial Association, Bulgarian Chamber of Commerce and Industry (BCCI) and Bulgarian International Business Association.
Lending should not be curbed, because the problem is not in the amount of credit but in the relations with lenders, said Union of Employers chairman Vassil Vassilev. According to him, the current account deficit is covered by amounts coming from abroad, which different assessments set at between 1 and 1.5 billion euro a year. Bulgaria should do its best to achieve GDP growth of eight to 12 per cent, he said.
The restrictions on the banking system were a necessary measure after the crisis but we should not return to that period, said BCCI deputy chairman Tsvetan Simeonov. According to the chamber, if Bulgaria is to join the euro zone quickly, it should have a low balance of payments deficit and a low inflation rate.
The draft memorandum suggested by the IMF would determine Bulgaria's economic and financial policy at a crucial moment: just before the accession to the European Union, Nikolov said.
The measures in the memorandum are aimed at reducing the current account gap by restrictions on the bank system. But the connection between the deficit and the credit increase has not been proven, he said. The deficit does not affect the macroeconomic parameters because it is accompanied by a parallel increase in Bulgaria's foreign exchange reserves, according to
J-power to heat up Sofia
Bulgaria's district heating firm Toplofikatsia Russe said recently that Japan's power wholesaler, Electric Power Development Corp (J-Power), will invest around €6.5m in expanding the heating distribution network in the city of Russe, Greek newswire Reporter said recently.
Toplofikatsia Russe, a state-owned company operating in the Danube city of Russe, currently supplies heating for some 15,000 clients.
The heating company had not discussed the project's financial details with the Japanese investors who are due to visit Russe, in northern Bulgaria, in mid-June. "The project is scheduled by end-2006," Toplofikatsia Russe Executive Director, Rossen Atanassov, told seenews. J-Power spent US$60,000 on feasibility studies for the project that is expected to hook over 6,000 new customers to the Russe heating network.
The project is aimed at bringing down Toplofikatsia Russe's greenhouse gas emissions under the Kyoto Protocol, an international agreement to control carbon dioxide emissions. The protocol commits 38 industrialised countries to cut their emissions of greenhouse gases between 2008 to 2012 to levels that are 5.2% below 1990 levels.
FOREIGN ECONOMIC RELATIONS
Greek minister views economic cooperation with Bulgaria
Bulgaria ranks first in terms of performance within the Greek Plan for the Economic Reconstruction of the Balkans, Greek Deputy Foreign Minister, Evriphidhis Stilianidhis, said in an interview, BTA web site reported.
Stilianidhis, in charge of the plan implementation, was in Sofia as an official representative of the Greek government for the Olympic flame relay across Bulgaria.
Under the five-year Greek plan a total of 550m euros are extended gratuitously to Bulgaria, Albania, Bosnia and Herzegovina, Macedonia and Serbia and Montenegro for the implementation of infrastructure, social and business projects.
According to an August 2002 intergovernmental agreement, the allocation for Bulgaria equals 54.29m euros, of which 20 per cent are designed for private investments and 80 per cent for government projects.
In the private investment sector Bulgaria is showing the best results of all participants, Stilianidhis also said.
Major Greek companies wished to invest in Bulgaria due to the stability of the local market, the Greek deputy foreign minister further said. All envisaged funds in this category to the amount of some 10m euros have been utilized, he added.
According to Stilianidhis, relations between Bulgaria and Greece may serve as an engine behind the southeastern European market. Speaking about the government projects, the Greek deputy foreign minister mentioned several big infrastructure projects which are equally important for both countries. He singled out the project on the reconstruction of the Lom Port, co-financed by Greece, under the plan, and the European Investment Bank.
Bulgarian premier, Serbia-Montenegro president discuss bilateral ties
Bulgarian Prime Minister, Simeon Saxe-Coburg, and President of Serbia and Montenegro, Svetozar Marovic, assessed at a recent meeting the bilateral relations in positive terms. Saxe-Coburg was on a two-day official visit in Serbia and Montenegro. After the meeting, Marovic told journalists that there were no open political issues between the two countries. He added that democracy is the common goal for both countries and the experience of Bulgaria on its way to the EU is very useful for Serbia and Montenegro, he added. Marovic found the idea for setting up a joint European integration commission a very useful one.
The Serbia and Montenegro president underlined the importance of the infrastructure projects and especially of the Nis-Sofia highway construction project. Saxe-Coburg emphasized infrastructure issues. He expressed satisfaction with the good bilateral relations development. Bulgarian European Affairs Minister, Meglena Kuneva, and Serbia and Montenegro Foreign Minister, Vuk Draskovic, also met in Belgrade to discuss Eurointegration issues and the Bulgarian experience in this regard.
World Bank approves PAL 2
The World Bank Board has approved a US$150m second programmatic adjustment loan (PAL 2) for Bulgaria, the Standart local daily reported recently. The total amount will be disbursed in two tranches. PAL 2 will be disbursed in Euro with 17 years maturity including a five-year grace period. The first tranche of €103.7m will be disbursed in the first instance. The second tranche of €20m is floating and will be disbursed after satisfactory progress in privatisation of the Bulgartabak company.
This is the second in a series of PALs that is providing a single umbrella of support to reform across different sectors of Bulgaria's economy.
BTC sale price, 3rd GSM licence award under review
The negotiated price of Bulgarian Telecommunications Co (BTC) and the third GSM licence award will be re-evaluated, New Europe reported recently.
The Protection of Competition Commission (PCC) will appoint independent experts from the University of National and World Economy, PCC sources said.
The reason for the deadline extension is so that the anti-trust commission can determine a position as to whether the awarding of the licence without holding any tender or competition is a state aid.
A claim has been lodged by the Netplus telco to the PCC. Net-plus maintains that the non-tender issuance of a licence to BTC is an inadmissible state aid. Bulgaria's anti-trust commission has extended by two months the deadline for conducting checks into the third GSM licence issue, Sofia news agency reported recently. The state communications watchdog awarded Bulgaria's third GSM licence to the local telecom carrier at its meeting on June 7th. BTC was handed the document several days later after it remitted the fee, amounting to 54.16m levs.
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