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: 086 - (30/06/04)
The man who would not be king
Bulgaria is an anomalous country in many respects. The biggest paradox at this time is that it has its former monarch ruling over it again after fifty years of communism - but now as premier. Simeon II was a small boy in the mid-1940s when he reigned after the demise of his father, Boris, in 1943. The Soviets soon put paid to the regency in charge.
After a successful business career in Madrid, he made the bold decision to return to Bulgaria, as an applicant for power in 1991.Being a highly intelligent man, he understood the absurdity of trying to reclaim his crown. He founded the Simeon II National Movement in early 1991 and it duly won the parliamentary elections later in the year, indicating that the monarchical heart of the Bulgarian nation never disappeared under communism.
Victory brought the problems. He must have wondered since if he did the right thing, his wife resolutely refusing to join him in his new adventure, remaining in Madrid.
He is now far from popular, the 800 days being up in which he promised the Bulgars a doubling of their living standards, which has not of course materialized.
He can of course blame extraneous factors - and with reason. The 9:11 disaster happened after his election. So did the partially consequent slowdown of the EU economy.
Anyway things have not turned out as planned. When do they ever?
The popularity stakes in Bulgaria
The president, Georgi Parvanov, remains a popular figure in Bulgaria, according to a poll by the Institute for Marketing and Social Surveys published in Novinite.com. 64 per cent of respondents approve of the way the president is handling his job.
Parvanov - of the Bulgarian Socialist Party (BSP) - was elected in November 2001, winning run-off against incumbent Petar Stojanov. The presidential term runs until January 2007.
Approval is significantly lower for Sofia mayor Stefan Sofianski, and naturally for prime minister Simeon of the National Movement Simeon II (NDSV). Yet the degree of cynicism is such that this is also true of opposition leader Nadezhda Mihaylova. The next general election is an open story.
The IMF signs on
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 proposal was part of the 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.
The Finance Ministry said that the IMF had expressed approval of the policy led by the Government of Simeon Saxe-Coburg, assessing positive factors like 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 US$300m, 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 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 last week 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 Nikolovis tentatively scheduled for June 2005.
United Airlines joins BSP system
US air carrier United Airlines recently joined the BSP Bulgaria system, New Europe reported.
The billing and settlement plan is a standardised system of the International Air Transport Association for airlines and agents, providing them with a simplified approach to the selling, reporting and administration of passenger air transportation.
United Airlines is a member of the Star Alliance airline network and a partner of Lufthansa for Sofia-Munich Sofia and Sofia-Frankfurt-Sofia services. United Airlines is the 23rd international carrier and the first US carrier to join BSP Bulgaria. Bulgarian travel agencies can now sell tickets for United Airlines flights.
FOREIGN ECONOMIC RELATIONS
Bulgaria, Serbia-Montenegro need to develop economic ties - foreign ministers
Political relations between Serbia-Montenegro and Bulgaria are excellent, the foreign ministers of the two countries, Solomon Pasi and Vuk Draskovic, noted on May 31st, BGNES web site reported.
However, both think that at this stage efforts must be made to develop economic relations. Pasi and Draskovic have been discussing priority projects, such as the construction of the Sofia-Nis highway and the Belgrade-Sofia railway. The strategic goal is to eliminate the border between the two countries, Bulgarian Foreign Minister Pasi said. Pasi and Draskovic also discussed the gas pipeline through Bulgarian territory. Draskovic pointed out that talks would be held with Russia, so that the gas pipeline could reach Serbia as soon as possible and possibly go even further.
FREE TRADE ZONE
Bulgarian president calls for Balkan free trade zone
Welcoming the participants in the 7th Annual General Meeting of the European Business Congress (EBC) in Holiday Club Riviera near Varna recently, Bulgarian President, Georgi Purvanov, called for the establishment of a free trade zone in southeastern Europe, BTA web site reported.
"I would like to stress the responsibility of all institutions for the European prospects of Bulgaria and of the Balkans as well," the president said, adding that efforts should be made to evolve a regional development strategy.
The head of state singled out energy cooperation and the establishment of a liberalized market as particularly important.
The priority tasks facing the countries in the regions are development of Pan-European Transport Corridors IV, VII, VIII, IX and X, Deputy Prime Minister and Economy Minister, Lidiya Shuleva, said in her welcoming address. She stressed the development of a regional electricity market and of the telecommunication network.
"The government will support all infrastructure development projects of the public-private sector," Shuleva stressed. She recalled that talks are underway with international consultants and financial institutions on award of concessions for three of Bulgaria's highways.
"Now that Bulgaria has joined NATO and its admission to the European Union is forthcoming, this country is an investor's paradise," Foreign Minister, Solomon Pasi, said, addressing the forum. He called on the EBC members to take advantage of this fact.
At its 7th Annual General Meeting, the EBC admitted seven new Bulgarian members: Bulgargaz, Sofiyska Voda, Chimimport, Assarel Invest, Erato Holding, Petreco Sarl and M3 Communication Group, Inc. The only Bulgarian company that was member of the Congress so far was Overgaz Inc.
Owners and chief executives of more than 70 companies from 20 countries are attending the Annual General Meeting, whose main topic is "Infrastructure as Basis for Sustainable Development."
The EBC is an international nongovernmental non profit organization, established in Bonn in 1997. Its founding members include OAO Gazprom, Deutsche Bank, Gas de France, Daimler Chrysler and Eni. Bulgaria is hosting an EBC AGM for the first time.
MINERALS & METALS
Kremikovtzi negotiates with Ispat on higher steel output
Indian steel giant Ispat's CEO, Pramod Mital, recently met Bulgaria's largest steel plant Kremikovtzi's chief, Valentin Zahariev, to talk about options for boosting the local steel production up to 2.2m tonnes per annum.
Currently Kremikovtzi's output amounts to some 1.2m tonnes, Sofia News Agency reported.
The Sofia-located metallurgical plant, 71% owned by Fin-metals Holding, seeks a co-management deal that would bring Kremikovtzi investments worth US$170m.
The Bulgarian-Indian steel corporation began in February 2004, with streamed Indian raw materials supply and Bulgarian semi-manufactured products used for Ispat's international engagements. Kremikovtzi imanagement is confident of an increase of sales over the previous year, further stricter payment of outstanding debts and renewed investments into the steel production facilities.
Watchdog gives thumbs up to telecom sale
Bulgaria's Commission for the Protection of Competition (CPC) green-lighted the acquisition of 65% stake in BTC (Bulgarian Telecommunications Company) by Viva Ventures recently, Sofia News Agency reported.
The commission has set no conditions on the concentration on main business activities, but had added additional requirements for BTC activities as an operator. The government signed last February an agreement to sell 65% of BTC to Vienna-based Viva Ventures Holding GmbH for 230m. Viva, which is owned by US-British equity house Advent International, has pledged to increase the company's capital by 50m and invest additional 700m in the BTC. Exceptions can be made only in case of national security, defence or protection of personal data.
The company should prepare conditions for free access to the subscribers' network to come into force as of January 1st, 2005. The conditions must be based on objective criteria to guarantee the equal treatment of all players on the telecommunications market. The commission is expected to come up with a stand on whether the issuing of a third GSM licence without holding either bidding or competition on the telecommunications market.
The communications regulatory commission and the supreme cassation prosecutor's office were the ones to make a request that the CPC to come up with such a stand. "We believe that this deal will encourage competition and will be favourable for all participants in the market of telecommunication services in Bulgaria," the statement said.
MobilTel EAD attracts strategic investors
A consortium comprising some of the existing Austrian shareholders of Mobiltel Holding GmbH and seven private equity investors have finally signed definitive documents regarding the acquisition of Bulgarian mobile operator MobilTel EAD for a total consideration of 1.2bn in cash, Reporter newswire said recently. ABN Amro Capital, Citi Group Investments Inc and Communications Venture Partners Ltd are leading the new investors, according to the report. The consortium also comprises Sandler Capital Management, Innova Capital, Global Finance and 3TS Venture Partners.
The offer was placed through BidCo AD, the Bulgarian bidding vehicle of the consortium, and is financed through 450m in contributed equity, 650m in acquisition debt and MobilTel's estimated net cash balance of 100m at closing. The 365-day term facility will be refinanced later this year through a Eurobond marking Bulgaria's inaugural corporate bond issue.
The deal is expected to be finalised in July and after that the company will be ready to conduct another round of negotiations, according to MobilTel EAD Chairman, Herbert Cordt.
GloBul customer base doubles up
Bulgaria's second leading mobile operator GloBul recently announced that it had doubled the number of its subscribers, at 1,148,484, New Europe reported.
The profit of the company for the first three months of the year reached 32.9m euro. Profit before interest and allowances for depreciation and tax levy amounted to 8m euro in the same period and was up 268% compared to the same period in 2003. GloBul Financial Director, Atanas Dobrev noted that after the payments of 8m euro for depreciation and 2m euro of interest on credit, the financial result of GloBul faced a net loss of 2.325m Euro.
Bulgaria invites tender for Danube bridge link
Bulgaria has finally launched a long-delayed tender for a bridge over the Danube river to ease a transport bottleneck between the European Union candidate and western Europe. The two-kilometre bridge linking the Bulgarian town of Vidin with Romania's Calafat, near Serbia, will afford the Balkan state better export access to the European Union, its main trading partner, which will finance much of the estimated 230m Euro required in the investment of the construction.
The new bridge will have two motorway lanes and one rail track in each direction. It will be part of a EU-defined transport corridor originating in Dresden and splitting in Bulgaria towards terminations in Greece's Thessaloniki and Turkey's Istanbul.
Indicative offers from companies from the EU, Bulgaria, Romania and Turkey were due by June 14th, and up to eight bids will be short-listed and sent for approval by the European Commission, the transport ministry said in a statement recently. "I expect to have a signed deal with a major European construction firm in January or February of next year," Deputy Transport Minister, Sofia Kassidova, said.
Kassidova added that the bridge should be finished by the end of 2007. Bulgaria and Romania aim to join the EU at the start of that year.
The project has been stalled for 14 years because of red tape and a dispute over the bridge's location and financing between the Balkan neighbours.
A single, heavily congested two-lane road-rail bridge spanning the river posts of Rousse and Guirgui now links the two countries, between which the Danube forms a natural border. Romania has insisted on building the new site further east near the Black Sea. It retracted its position in 2000 when Bulgaria agreed to foot the bill, but the project has been delayed for four more years by red tape. Bulgaria will pay up to 58m Euro for the project, and is counting on significant EU-backed financing for most of the rest.
The Union's ISPA pre-accession programme and European Investment Bank will grant up to 70m Euro for the bridge.
Apart from this, German and French development lenders Kreditanstalt fur Wiederaufbau and Agence Francaise de Development will also contribute, the ministry said.
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