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BULGARIA


  
  

 

In-depth Business Intelligence

Key Economic Data 
 
  2003 2002 2001 Ranking(2003)
GDP
Millions of US $ 19,859 15,608 13,600 69
         
GNI per capita
 US $ 2,130 1,790 1,650 106
Ranking is given out of 208 nations - (data from the World Bank)

Books on Bulgaria

REPUBLICAN REFERENCE

Area(sq.k.m)
110,910

Population
7,517,973 

Capital
Sofia

Currency
Lev 

President 
Georgi Purvanov

Private sector
% of GDP
40%
 



Update No: 095 - (31/03/05)

Bulgarian leader ends Latvia visit, cites lessons for EU bid
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," she said. 

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 letter read. 
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 colleague."
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 responsibility. 
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. 

Bright prospects
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 their infrastructure.
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 34 years. 
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. 

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CREDIT RATINGS

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 recently.
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 2000.
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 2010.
"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 speculative grade.

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ENERGY

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 and EIB.

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 Agency reported. 
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.

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EUROPEAN UNION

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, she added.

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TELECOMMUNICATIONS

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 in 2003.
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 services.

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TOURISM

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.

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TRANSPORT

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 term.

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