BULGARIA

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Area(sq.k.m)
110,910

Population
7,537,929 

Capital
Sofia

Currency
Lev 

President 
Georgi Purvanov

Private sector
% of GDP
40%
 

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Update No: 091 - (26/11/04)

Simeon government to see out its term
Things have changed dramatically in Bulgaria, once the staunchest of former Soviet satellites. An exiled king, Simeon Saxe-Cobourg Gotha, returned home early in the present decade to form a government in 2001, which has implemented painful reforms towards a market economy. Sofia is also on schedule to sign an accession agreement with the European Union in 2007, even though Brussels remains apprehensive about Bulgaria's corruption and high crime rate. 
Bulgaria's ruling coalition stands a high chance of surviving until the end of its term in office, according to the latest country forecast, released by The Economist Intelligence Unit (EIU). The coalition of the Simeon II National Movement (SNM) and the mainly ethnic Turkish Movement for Rights and Freedoms (MRF), led by Premier Simeon Borissov Saxe-Coburg-Gotha, looks likely to survive until the end of its term in office in mid-2005, the EIU writes in an article on Bulgaria entitled "A little way to go yet".
In March the Novoto Vreme (New Time) political club, which was established by maverick lawmakers from Simeon II National Movement, defected from the ruling coalition, stripping it of its simple majority. Local reports say that the ruling Simeon II National Movement will do its best to swell its parliamentary group by four members prior to the parliamentary debate of budget 2005.

But the ex-communists are on the way back
However, the experts project that the next parliamentary election will result in the return to power of the former communists of the Bulgarian Socialist Party (BSP), probably in coalition with one or two centrist parties. Despite the changes, former communists in the BSP have remained influential. A former BSP chief Georgy Parvanov is head of state and the country's most popular political figure. 
The BSP won municipal elections in 2003 and is gearing up for next June's general elections already credited with 27% support in a fragmented political scene, the MBMD statistical institute reported in November. "BSP will win with the votes in the countryside where poverty is overwhelming. People there hope for more socially oriented policies, especially with regard to public health", forecast one physician, Ivan Georgiev. 
In its search for a new image the BSP has sent delegations to the United States and Europe to assure foreign governments of its willingness to continue reforms and lead Bulgaria into the European Union. "We aim at an absolute majority but will seek to form a coalition government with the other political parties represented in parliament", BSP leader Sergei Stanishev told the Bulgarian newspaper Capital. 
The perspective has alarmed conservative parties, who will meet Wednesday in Sofia to discuss uniting forces to counter any BSP win.Nadezhda Mihailova, president of the big right-wing party Union of Democratic Forces, insisted that "the BSP is not a socialist party of the European type. The old enemies of capitalism have now become oligarchs. They have accepted financial support from criminals in order to maintain their economic power." 
A recent report of the Centre for Study of Democracy in Sofia said there was "a symbiosis between former communist secret service agents now engaged in private bodyguard business and criminal structures involved in trafficking and smuggling". 
The BSP had returned to power in 1994 but this ended in 1997 with hyperinflation and the bankruptcy of 14 banks following an attempt at management by the state. "Voters do not think about this painful experience anymore. Their intention to vote for the BSP can be explained as an attempt to escape the present by supporting a party whose previous government is the most far removed in time", Ms Dimitrova, an independent analyst said.

Former president Stoyanov aims to foil Socialists
Not everyone agrees that a return of the Socialists is inevitable. The fractured centre-right parties will look for ways to join efforts at next year general elections to prevent the Socialist, formerly Communist, Party from returning to power, Bulgaria's former President Peter Stoyanov said on October 20th. Stoyanov told the bTV channel the main opposition Union of Democratic Forces (UDF) and parties that have spun away from it in the past three years would meet on Nov. 10 "to outline possibilities for a future centre-right government."
The Socialists, currently the front-runners in public opinion polls, have the support of about one-fourth of the voters, while the UDF accounts for some eight percent. Smaller parties like the Agrarians, the Democrats and the Free Democrats of Sofia Mayor Stefan Sofiyanski aren't sure to clear the four-percent electoral hurdle.
"If the right parties unite that will be a positive sign for politics in Bulgaria, " Stoyanov said. He said the UDF and its possible smaller allies must be ready after the elections to form an alliance with the currently governing National Movement Simeon II and its coalition ally - an ethnic Turkish party. "The right-wing parties won't collect enough votes to govern on their own," Stoyanov said. "This must be clear and understood by everybody."
He said a party led by former Prime Minister Ivan Kostov, which has seceded from the UDF and is sharply critical of it, won't join a possible centre-right bloc.

Macro-economy faring well, according to the EUI
The Economist Intelligence Unit (EIU) forecasts a slowdown in real GDP growth to 4.2% in 2005 and 2006 (from an estimated 4.7% in 2004), as domestic demand growth eases and exports are hit by the strong lev and by a fall in import demand in Turkey. Inflation should fall back after its recent rise, but the main concern is the current-account deficit, which was running at nearly 9% of GDP in early 2004. Although the trade deficit will rise further, the current-account deficit is projected to fall to 7.3% of GDP in 2004-05 and to 7% of GDP in 2006.
The forecast points out that the latest European Commission report on Bulgaria's readiness for EU accession was generally positive, but repeated earlier criticism of Bulgaria's justice system and of the level of corruption.

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CREDIT RATINGS

S & P assigns BB long-term rating to NEK

Standard & Poor's Ratings Services has assigned a BB long-term corporate credit rating to Bulgaria's electricity transmission company NEK, New Europe reported recently. 
NEK is a 100% state-owned joint stock company and the outlook is stable. The ratings on NEK do not factor in any significant government support and primarily reflect the company's stand-alone credit quality, the ratings company said in a statement. It pointed out that NEK's new debt is not expected to be covered by government guarantees, although some of its existing debt is. "The ratings on NEK reflect its exposure to Bulgaria's still-weak transition-economy environment, the short operating track record of the company and the regulator, as well as the company's significant, partly debt-funded investment needs," said Standard & Poor's credit analyst Magnus Pettersson. According to Sofia news agency, he emphasised that these factors are mitigated by the company's strong business position and strategic importance as the state-owned monopoly electricity transmission grid operator and electricity exporter.

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ENERGY

Bulgarian, Greek, Russian experts agree on pipeline project

At a trilateral expert meeting in Athens, the representatives of Bulgaria, Russia and Greece reached an agreement on the signing of a memorandum on the Burgas-Alexandroupolis oil pipeline project, the Ministry of Regional Development and Public Works said, BTA web site reported.
In the past few years Bulgaria made considerable efforts for the updating of the project's economic and technical indicators, the message said. Economic efficiency and expedience, reliability of transiting in the middle and long term and balance of interests of all interested sides are the main principles on which the Bulgarian position is based. The memorandum is expected to be signed in Sofia in the near future.

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FOREIGN ECONOMIC COOPERATION

Shuleva: Bulgaria-China business ties can bear fruit

Bulgaria's Economy Minister, Lydia Shuleva, inaugurated the Bulgarian business forum in Shanghai, China recently. At the opening of the forum Shuleva underlined that Bulgaria can offer China high quality goods at acceptable prices, Sofia New Agency reported.
Car assembly, IT equipment, the clothing industry and household appliances production are among the most prospective sectors for business cooperation between Bulgaria and China, Shuleva pointed out. She also stressed Bulgaria's economical progress pointing out that the Chinese investments in Bulgaria are future investments into the European Union (EU).

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INFORMATION TECHNOLOGY

Israel offers Bulgaria enhanced cooperation in high technologies

Israel invited Bulgarian specialists to visit the country and get acquainted with its model for attracting investments in the IT sector, it emerged during the meeting between the Bulgarian Deputy Prime Minister and Transport and Communications Minister, Nikolay Vasilev, and Israeli Deputy Prime Minister and Minister of Industry, Trade, Labour and Communication, Ehud Olmert, the Bulgarian Transport and Communications Ministry said, BTA web site reported. 
Vasilev said that he expected a large number of Israeli companies to take part in the Bulgarian-Israeli IT forum in Sofia. Bulgaria is especially interested in Israel's experience in setting up conditions for starting high-technology companies, Vasilev said. During the Telecom 2004 exhibition, Vasilev conferred with Amnon Dick, CEO of the Israeli telecom, Bezeq, which is undergoing privatisation and presented the model of the Bulgarian Communications Company [BTK] sell-off.
During the first day of his visit to Israel, Vasilev met the Israeli Transport Minister, Meir Sheetrit, Chairman of the Israeli parliament, the Knesset, Reuven (Rubi) Rivlin and Deputy Prime Minister and Foreign Minister, Shimon Peres.
Vasilev invited his Israeli counterpart to take part in the transport ministers round table, which will take place in December in Sofia. Vasilev and Sheerit exchanged information on the transport sector development in both countries.
In connection with the increased tourist flow during the recent years, Vasilev offered to increase the number of flights between the two countries. Currently, Bulgarian and Israeli flag carriers, Bulgaria Air and El Al, respectively are flying regularly between Sofia and Tel Aviv.

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MINERALS & METALS

Bulgarian gold field project begins

A Canadian company has launched a large-scale campaign highlighting its gold digging plans at the Ada Tepe site, near the town of Krumovgrad, southern Bulgaria, after local residents protested against digging works because of environmental concerns, it was reported recently by Sofia New Agency.
The group also started working with a 17-member committee assembled by local authorities. The infill-drilling programme launched by Dundee Precious Metals Inc at the Ada Tepe gold project has seen a move to the next stage of drafting the feasibility study.
Dundee Precious Metals will invest US$45m and plans to hire nearly 300 people. The contract for a feasibility study of the Krumovgrad gold project was awarded to Ausenco Ltd, an Australian engineering company. The socio-economic impact assessment was prepared by a Bulgarian consulting group and was due for completion by end-October. 
Balkan Mineral & Mining AD, a wholly owned subsidiary of Dundee Precious, was awarded the Krumovgrad Licence area in 2000. The Bulgarian project is to start at the end of 2006.
Geologists see the Rhodopes mountainous area as a virgin place for extracting precious ores in the country.
Gold beds have been found near Krumovgrad, Tatul, along the riverbed of Arda.
Several generations of geologists and historians confirmed that the Rhodopes were the local Klondike in ancient times where the important sanctuary of Perperikon was also constructed.

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NUCLEAR ENERGY

Bulgarian Environment Ministry experts approve second n-plant construction

The Supreme Expert Environmental Council with the Environment and Waters Ministry decided recommend to the environment minister that he approve the implementation of a project for construction of the Belene Nuclear Power Plant, BTA web site reported.
An environmental impact assessment (EIA) report says project implementation and normal operation would not substantially impact on the environment and local people, trans-frontier impact included. The decision is in line with the EIA experts' recommendations contained in the report, the written opinions received and public discussions in Bulgaria and Romania. Experts say the Belene plant site is suited to the purpose and has the necessary environmental potential for construction of 2,000-megawatt nuclear capacity.
The parties concerned may appeal the decision according to the procedure established by the Administrative Procedure Act and the Supreme Administrative Court Act within 14 days of its publication, the Environment Ministry said.
However, environmentalists claim the approved EIA report is very unsatisfactory and gives no compelling proof that the nuclear power plant will be safe. Representatives of the Environmental Information and Training Centre, the Public Committee for Environmental and Economic Protection of the Svishtov Region, and the Earth Environmental Movement and EcoGlasnost National Movement protested in front of the Environment Ministry while the EIA report was under discussion. 
Construction of Bulgaria's second nuclear power plant at Belene started in 1982. The project was mothballed in May 1990 and financing was limited. As Bulgaria started to prepare the decommissioning of the two oldest reactors at the Kozloduy n-plant, in December 2002, the government decided to revive the project.

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TOURISM

Tourism industry reports shining numbers for 2004

Bulgarian ministers gathered in a popular seaside resort on October 9th to examine the results of the last tourism season. Economy Minister Lidiya Shuleva said in Nessebar that summer 2004 was the country's most successful holiday season in 20 years. Shuleva, Deputy Premier Plamen Panayotov, Environment Minister Dolores Arsenova and Deputy Economy Minister Dimitar Hadzhinikolov also conferred on Bulgaria's advantages as a tourism destination and on the fresh challenges in that sector.
The top statesmen outlined a national strategy for tourism development over 2005-2007. In the forthcoming years, Bulgaria would spend levs 15m (around €8m) on tourism advertising. The country has been enjoying boosted interested by international travellers over the last several years. Infrastructure and services require improvement, moreover, noisy construction works along the coastline have emerged as another major problem for Bulgarian tourism.
Sofia news agency quoted local experts as saying that the European Commission recommendation for abolishing the existing double pricing practice in the Bulgarian tourism sector was made under pressure from the country's tourism rivals. Existing practices in the local tourism sector, namely double pricing, are discriminatory measures according to the acquis and should therefore be abolished, the latest European Commission's annual report on Bulgaria's progress to accession read.
The tourism act sets one price for all, but companies are free to follow their own pricing and discounts policy, Dimitar Hadzhinikolov commented. He vowed that a requirement for a single pricing would be included in the regulation for hotels categories in a bid to avoid double interpretation. Experts project that prices for Bulgarians and foreigners will gradually become equal by 2007.

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TRANSPORT

New road links Bulgaria & Macedonia

A new road will connect Bulgaria and its western neighbour Macedonia, New Europe reported recently.
Bulgaria's Foreign Minister, Solomon Passy, and Macedonian politicians symbolically launched the construction of a new road and a border checkpoint near the Black rock countryside in the Kyustendil region on October 24th. The new project would shorten the journey from Bulgaria to Macedonia by nearly 50 kilometres.

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