Books on Bulgaria
% of GDP
Update No: 095 - (31/03/05)
Bulgarian leader ends Latvia visit, cites lessons for EU
Latvian President Vaira Vike-Freiberga visited Bulgaria in December 2003, a
country with which she has an especial affinity. She well understands its
intense desire to join the West, as Latvia has successfully done of late.
Bulgarian President Georgi Parvanov, who has just made a first reciprocal state
visit to Latvia, has said his Balkan state has much to learn from the Baltic
state as it makes its way towards European Union membership. "Bulgaria can
learn from the Latvian experience on its way to the EU," said Parvanov on
March 21st after holding talks with Vike-Freiberga, whom he thanked for backing
Bulgaria's accession bid.
"We have already placed a lot of effort in the reform of the judicial
system," he said. Latvia joined the EU last May. Bulgaria wants to join the
bloc in 2007, but has been warned that its accession could be delayed if it
fails to make enough progress on areas such as tackling corruption and reforming
the judicial system.
"Bulgaria serves as a stabilising factor in the Balkans and we will
continue to stress the EU perspective here," Parvanov said.
Bulgaria can also learn from regional cooperation between the Nordic countries
and the Baltics, said Parvanov, adding that regional cooperation was a crucial
first step to EU integration.
Vike-Freiberga said Latvia "has no qualms about Bulgaria's rapid move
toward the EU, in fact Latvia has always supported it."
The two leaders also attended the Latvian-Bulgarian business forum, where
Vike-Freiberga again backed Bulgaria's aspirations to join the EU. "Since
Latvia and Bulgaria both became members of the NATO alliance last year, the
stability and security of our countries has reached a new level, with a most
beneficial effect on our business climate," she said. "I am confident
that Bulgaria will soon join the EU as well. Both our countries will then share
the EU common market, with additional benefits for economic cooperation,"
Objection to Iraq war
The death of Gurdi Gurdev, the eighth Bulgarian soldier to die in Iraq, has
sparked major controversy, including a revival of the debate on Bulgaria's
continued military participation in Iraq. Gurdev, 31, was shot on March 4th
while on patrol on the so-called Tampa road near the town of Hamza, 40 km from
the Bulgarian base in Diwaniya.
Reports that initial statements that Gurdev was killed in an ambush by Iraqi
rebels were wrong, and that he was apparently killed by friendly fire coming
from a US post guarding a radio tower, caused waves of shock and resentment.
Allegations that the military leadership was hiding information followed an
anonymous letter supposedly sent by a colleague of Gurdev's in Iraq and
published on the forum of the website of the military newspaper Bulgarska Armia.
In the letter, entitled The Truth About Private Gurdev's Death, the author
alleged that on March 2 the battalion headquarters received an invitation from
the US forces in the area to discuss measures to prevent similar incidents.
"Because of the preparation and the holiday mood preceding the national
holiday March 3, the commanders did not pay enough attention to it," the
According to the letter, due to a breakdown in the GPS system, the three Hummer
armoured vehicles of the Bulgarian patrol stopped and the personnel got off to
call the base and report they were coming back.
The Bulgarians tried to wave down a fast approaching Iraqi civilian car and
after it did not, they shot twice in the air. "They simply got off in the
darkness and nobody used the night vision goggles to look at the area or they
would have seen the US radio tower," the letter said. "At the same
time the soldier guarding the tower saw the headlights of the stopping vehicles
and then heard the shots. He did not know who, at what or why, there was
shooting, and opened fire at the vehicles. This shooting killed our
Several hours after the letter was published on March 7, Defence Minister
Nikolai Svinarov held a news conference to say that Gurdev had been killed by
friendly fire coming from the US post at the radio tower.
Svinarov confirmed the parts of the letter containing information about the
actual incident but said that it was an "unfortunate accident" and the
commanders of the battalion should not be held responsible. Svinarov and
Bulgarian armed forces chief Nikola Kolev, who was also present at the news
conference, refused to answer any questions.
The behaviour of Svinarov and Kolev provoked a wave of speculation and
allegations about when they knew the truth about Gurdev's death, and whether
they would have told the truth had the letter not been published.
President Georgi Purvanov, commander in chief of Bulgaria's armed forces, held
an urgent meeting with US ambassador James Pardew and Polish ambassador Slawomir
Dabrowa. In Iraq, Bulgaria's military personnel are under Polish command.
The Presidency media office quoted Purvanov as saying that confirmation of the
details of the death of Gurdev, who was posthumously promoted to candidate
officer, led to the conclusion that there were serious flaws in the operational
co-operation among the coalition partners.
Purvanov also demanded full information from the American side and said that
Bulgaria was conducting an investigation and would demand that those responsible
be punished. Purvanov expressed his expectations that the US would apply the
same seriousness in its investigation.
After paying his respects to Gurdev's family at the funeral on March 8th, Kolev
said that the letter accusing the battalion commanders of incompetence was not
written in Iraq but by someone at headquarters or the ministry in Sofia. He
pledged to find the culprit by the end of the day. According to Kolev, the goal
of the letter was not to disclose the truth but to discredit the army command.
At a March 8th special meeting of the parliamentary committee on foreign policy,
defence and security, Kolev said that it was not true that the military and
civil leadership of the army had known at the weekend that Gurdev was killed by
American fire and that they had tried to cover up the truth.
Kolev said that even though Gurdev was wearing a flak jacket, the bullet had
entered through the side, which is unprotected and thus killed the solider.
Opposition parties demanded the resignations of Svinarov and Kolev.
The Democrats for Strong Bulgaria (DSB) demanded a public explanation, the Union
of Democratic Forces (UDF) and the Bulgarian Socialist Party (BSP) accused the
Government and the army command of irresponsibility and cluelessness.
At the March 9th news conference, Svinarov and Kolev repeated that Gurdev's
death was an "unfortunate accident" and refused to take any
The BSP, however, accused the Government of systematically hiding information
about the battalion in Iraq.
"The entire behaviour of the Cabinet can be defined as totally
irresponsible towards society and the fate of the Bulgarian soldiers," said
BSP leader Sergei Stanishev.
He said that the left-wing would insist that Bulgarian battalions would be
withdrawn from Iraq.
UDF deputy leader Nikolai Mladenov said that the party's parliamentary group
would demand the setting up of an independent commission. He accused the
Government of irresponsibility.
Prime Minister Simeon Saxe-Coburg addressed the issue on March 9th. "It
must be clear that the Government acts responsibly and is not led by rumours, on
hearsay, and this is why we had to control matters, and we still await
clarification," he said.
Saxe-Coburg rejected allegations that authorities were knowingly hiding the
truth about Gurdev's death, describing such allegations as "absurd."
Meanwhile, it is reported that US secretary of state Condoleezza Rice told
Foreign Minister Solomon Passi in a telephone conversation that the US would
conduct a full investigation into the incident and the Bulgarian authorities
would be duly informed.
In 2001 Bulgaria did an unusual thing for a long-time communist country. It
elected its former king as its premier, Simeon 11 of the Saxe-Coburg dynasty. He
leads a coalition government.
Bulgaria is on track to join the EU in 2007 if key reforms continue. So far
things are looking reasonably good; although the government, as in many
countries in transition, is far from popular. It is likely to fare badly in
parliamentary elections in mid-2005 against the Socialists.
Bulgaria's GDP is expected to increase by 5.6% this year on the previous one,
while inflation is under control. Consumer prices have risen by 2.7% since last
Dec. 31, the National Statistics Institute has said. The government has recently
reported a budget surplus of leva (BGN) 1.2 billion. Unemployment has fallen to
under 12% from over 18% over the past three years.
"All this means a stable economy and a favourable business
environment," Premier Simeon Saxe-Coburg recently said. He recalled that
Standard & Poors and Fitch investors services have assigned to Bulgaria its
first investment grade rating of BBB earlier this year.
Parliament has cut corporate tax to 15% from 19.5% as of next Jan. 1 and has
passed a law entitling foreign businesses investing more than BGN100 million in
Bulgaria to individual administrative service and state support in building
Bulgaria is currently attracting 30% of foreign investment in Southeast Europe,
Saxe-Coburg said. He said foreign investment in the Balkan country was expected
to exceed US$2bn this year up from US$1.4bn a year ago.
Overture to Japan
Simeon wishes to leave something behind him of historic importance. An
overture to the east is his current idea.
Bulgaria's prime minister has urged Japanese corporations to invest in his
country, since it is expected to join the European Union in a couple of years.
"I would like to stress that investment in Bulgaria today is investment in
tomorrow's EU," Simeon Saxe-Coburg Gotha told a meeting of 100 business
leaders during a visit to Japan, the first by a Bulgarian premier for the past
Bulgaria's government information service quoted Saxe-Coburg as saying that for
his country "Japan is a priority equal in significance to co-operation with
the EU and the United States. Now we bid to attract leading Japanese
corporations with real interests in partnership with Bulgarian companies."
Japan's Mitsui Corp. has said that it intended to bid in the forthcoming
privatisation of three major coal-fired power plants in Bulgaria. Mitsui is
already involved in a €226m renovation of Bulgaria's largest coal-fired power
station of Maritsa-East 2. Japan's International Co-operation Association is
financing a US$118-million enlargement of the Bulgarian Black Sea port of Burgas.
S&P: Robust economic growth prospects emerge in Bulgaria
International rating agency, Standard & Poor's said recently that it has
revised its foreign and local currency outlooks on Bulgaria to positive from
stable. The rating agency affirmed the BBB- long-term and A-3 short-term foreign
currency, and the BBB long-term and A-3 short-term local currency sovereign
credit ratings on Bulgaria. "The outlook change is based on Bulgaria's
robust economic growth prospects, as well as debt reduction that is proceeding
faster than previously expected," said Standard & Poor's analyst,
Moritz Kraemer. "At the same time, external liquidity has improved,"
he added. Despite extra government spending in late 2004, buoyant revenues have
led to a general government surplus approaching 1 per cent of gross domestic
product (GDP), Standard & Poor's said in the report, New Europe reported
According to the agency, conservative revenue estimates in the 2005
election-year budget are likely to lead to a balanced budget, notwithstanding
politically driven pressures for extra spending. General government debt has
fallen fast, and this decline was further accelerated by the weaker US dollar
and buy-backs of Brady bonds in 2004 and 2005. Accordingly, the debt ratio will
fall further to 30 per cent of GDP in 2005, from 80 per cent as recently as
The ratings remain constrained by Bulgaria's relatively low level of development
and the sovereign's weak external liquidity. The central bank has more than
doubled foreign exchange reserves since 2002, to an estimated 10bn Euro by
year-end 2004, but about one half of this sum is needed to back the currency
board. Taking account of such an adjustment, the 2005 gross external financing
requirements (current account deficit plus short-term debt plus long-term debt
maturing within one year) will amount to 120 per cent of uncommitted reserves
and will gradually rise in the run-up to EMU entry, most likely to take place in
"The consensus surrounding sound economic policies more than outweighs the
volatile political landscape and institutional weaknesses that still
characterise Bulgaria," Kraemer said. A successful continuation of the
public debt reduction strategy while safeguarding external sustainability will
lead to a rise in the rating over the next 12 months. Conversely, sustained
increases in economic imbalances or significant policy slippages would preclude
an upgrade, as would a delay to the projected EU accession beyond 2007 or 2008.
Standard & Poor's assigned an investment grade to Bulgaria last June, the
tenth sovereign currently rated by the agency that has made the transition from
Siemens to revamp power station
German engineering giant Siemens signed a contract worth nine million Euro
recently for the expansion and reconstruction of the Plovdiv power utility
substation in southern Bulgaria, Sofia News Agency reported.
The facility is owned by the state National Electricity Transmission Company (NETC).
Siemens will equip the substation with up-to-date and more reliable
technologies. The project contracted with Siemens is part of the NETC's
programme for reconstruction and rehabilitation of the nation's electricity
transmission network. It is jointly financed by state-guaranteed loans from EBRD
Energy investments grow
Investments in Bulgaria's energy sector have increased nearly 6 times over the
last 4 years, Bulgaria's Energy Ministry announced on February 3rd, Sofia News
A specially prepared study underlined that the increase was due to the positive
reforms in the financial health of most of the energy plants. A total of 2.6m
levs have been invested in Bulgaria's energy since 2001 to 2004. Data shows that
more than 550m levs were invested in 2001, where as in 2002 their number dropped
to 504m levs. The amount of the investments in 2003 rose to 629m levs and in
2004 they stood at 960m levs.
Kovachev pursues thermal power plants sell-offs
Bulgaria's newly appointed Economy Minister, Milko Kovachev, also the former
energy minister, recently announced the privatisations of Varna, Bobov Dol and
Russe thermal power plants as being high on his agenda, New Europe has reported.
Twelve companies have filed the required documentation for participation in the
privatisation of Bulgaria's three power utilities. Czech group CEZ, Austria's
EVN, Germany's E.ON, Greek Public Power Corporation along with Russian PAO, Enel,
Japanese corporation Mitsui and J Power and English International Global
Development, French Dalkia, AES and India's National Thermal Power have declared
an interest in the three power utilities.
Bulgaria and Romania stress adherence to EU obligations
Bulgaria and Romania's Europe Ministers, Meglena Kuneva, and Ene Dinga, stressed
their countries' adherence to obligations stipulated in European Union accession
treaties, BTA News Agency reported.
During a meeting in the Bulgarian city of Rusa on the river Danube recently,
Kuneva and Dinga discussed their scheduled cooperation before signing the EU
treaties on April 25, according to the report. Dinga emphasised the need for
both countries to convince the EU that they would not deviate from the treaties'
obligations. The two ministers spoke of cooperation before accession, planned
for 2007. Both countries would celebrate together on the day of signing their
treaties with the EU, Kuneva said. The festivities would be held simultaneously
in Ruse and in the opposite Romanian city of Giurgiu and on the Danube bridge,
BTC acquires Mobikom telco
Bulgarian Telecommunications Company (BTC) recently acquired the local analogue
mobile carrier Mobikom after obtaining the remaining 12 per cent stake held by
state company, Radioelectronic Systems. This step was taken after BTC acquired
British Cable&Wireless's 49 per cent stake in Mobikom, for a total 88 per
cent stake in the joint venture, Sofia News Agency reported.
The formerly state-owned BTC, 65 per cent of which was bought last year by Visa
Ventures, never revealed the price of the deal. "To be leaders on the
telecommunications market in Bulgaria, as well as in Europe, we are aware that a
key success factor for BTC is the responsible and benevolent attitude towards
its customers," said Tony Robinson, BTC's chief commercial officer.
Mobikom's clients will use the cellular services on the same conditions as
before, but will also have the opportunity to join BTC's new GSM service.
Bulgaria to invite tender for 3G licences
Bulgaria has decided to sell 3 mobile phone licences for the operation of 3G
services in the country that would allow companies to roll out networks using
UMTS technology, it was reported recently. "The tender for the 3 licences
will be held by the end of March," the head of the Commission for
Regulation of Communications, Gergana Sarbova told Sofia news agency.
The 3 licences consist of one Class A licence (with capacity 2x10 MHz + 1x5 MHz)
and 2 Class B licences (with capacity 2x5 MHz + 1x5 MHz). The bidding for the
Class A licence opened on March 30th while the Class B licence is scheduled for
April 5th. The fee for the Class A licence starts at 70m levs with incrementing
bids of 2m levs. The other 2 licences are worth 42m levs each and an increment
of 1m levs.
Eligible bidders must deposit 2m levs and prove they have at least 500,000
service subscribers to their telecommunication services and a turnover of €50m
5 companies have expressed interest in bidding for the new Bulgarian licences
including Bulgarian operator Mobiltel, the Bulgarian Telecommunications (BTC),
Greek-owned Cosmo Bulgaria Mobile, Britain's First Place IR and Swedish telecom
Tele2. The 3 licences last for 20 years and will be awarded to the highest
bidders, with each candidate allowed to bid for only one licence. Winners should
be able to launch 3G networks within 2 years after acquiring their licence.
Bulgaria has a population of 8m with around 3m people using mobile phone
Bulgaria proving to be attractive vacation spot
The Bulgarian tourist industry continued to boom in 2004, with 4.6m foreign
visitors, up 13.5% compared to 2003, the Bulgarian Economy Ministry said
recently, Deutsche Presse-Agentur (dpa) reported.
The data reflects a 23.90% rise in the number of tourists from the European
Union countries (new member states not included) to Bulgaria.
Most of the foreign tourists, were Greeks, 707,000, followed by 565,000 Germans
and 259,000 Brits. Foreigners have spent 1.6bn Euro in the first 10 months of
2004, a huge 20.77% more than in the corresponding period the previous year.
Bulgaria offers a broad mix of holiday destinations, including summer sea-side
resorts, ethnic and health tourism and skiing in the winter, all in luxury and
economy versions. After years of steady, rapid growth, tourism has become one of
the Balkan country's major sources of revenue.
Meanwhile over one million stays in hotels have been registered Sofia in 2004,
according to data from the Bulgarian Hotel and Restaurant Association. In
comparison, hotel stays in 2003 were 970,000 and in 2002 - 640,000. In 2004 the
number of hotels in Sofia was 86, while in 2002 there were just 62.
Bulgarian railways to face private competition
Bulgarian state railways (BDZ) may face the private competition of a
Bulgarian-Romanian consortium, if the Bulgarian Railways Company (BRC) is
awarded the requested licence for cargo transport.
Last November the consortium was registered and comprises Romania's Grup
Feroviar Roman (20%) and 5 Bulgarian firms with 16% of stock each.
Executive Director of the company is Vladimir Dunchev, former chief of the state
railways, and Belgian-born Philippe Rambo heads the consortium's Management
Board, Sofia news agency reported.
The consortium is holding negotiations for the acquisition of carriages and
locomotive engines made by both Bulgarian and Romanian producers. So far the
only private company licensed for cargo transport in Bulgaria has been the
Russia-registered Transcom Bul-market operation on railway lines to the
north-east of the country.
The company was awarded the licence estimated at about 10,000 levs last May with
the state engagement to monitor its activities every 5 years to prolong its