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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: 099 - (26/07/05)

Post-election turn-about 
Simeon Simeon Saxe-Coburg, the outgoing PM and leader of the centrist National Movement Simeon II (NMS) resigned as Prime Minister on July 11th, upon the convening of the new Parliament.
There was no special power handing in ceremony since the current government will continue to exercise its prerogatives until the election of a new one. The resignation of the cabinet will simply be filed in the National Assembly's registrar office. 
Meantime Sergey Stanishev, leader of the Bulgarian Socialist Party, which won the general elections in June said that a possible three-party coalition that would include the Socialists, Simeon's party and the mainly Turkish Movement for Rights and Freedoms (DPS), has no political logic; but other members of his party were calling for exactly that outcome to the crisis.
The Bulgarian Socialists (BSP) and the DPS party of ethnic Turks have agreed that a Socialist prime minister should head the Balkan country's next government, but they still need the backing of another party to form a parliamentary majority. It was a first step forward in coalition talks since elections on June 25th, in which BSP won the most votes, but not enough to build a cabinet alone, or even with DPS alone. BSP has 82 of the 240 seats in the parliament and DPS 34. 
Some observers still anticipate that the outgoing Prime Minister Simeon Saxe-Gotha-Coburg's National Movement would take part in a government coalition, with its 53 seats. But not only is Stanashev opposed to the idea in principle, so is Simeon, who regards the Socialists as ex-communists, with disdain. 
Yet it looks as if circumstances have forced their hand, as intensive negotiations over the weekend of July 10th-11th made the trilateral solution appear inevitable. As those in favour of it pointed out, there is the highest principle of all in its favour - that of the patriotism of all, whether an ex-king or an ex-communist.
In a related development, Bulgarian President Georgi Parvanov earlier called on the country's political parties to find a compromise in their negotiations to form a coalition government. "There are no alternatives to a political compromise," Parvanov said. At least three parties had to find a "compromise formula" to give Bulgaria "a strong and effective government", Parvanov said.
The president said that he still wanted to convene the new parliament as planned and expected that a coalition agreement could be achieved before then.

Business on board
The Business representatives met on July 5th with Socialist party officials and asked for the rapid formation of a stable government that would hear their suggestions for social and economic improvement. From his side the Socialist leader Stanishev promised to leave skeletons behind, Sofia News Agency reports, a reference no doubt to the widespread corruption in Bulgaria. 
Mr. Stanishev said that his party is committed to move ahead, leaving "the skeletons in the wardrobe and committed to a business-friendly policy within the new government." Bulgaria may have a democracy now, but of a decidedly idiosyncratic kind. In what Western state would a candidate for the highest office declare that he was going to leave the skeletons firmly in the cupboard, even if it was his intention to do so? 
The Socialist officials spoke, one may be sure without dwelling on such an unappetising topic, with representatives of the Bulgarian Chamber of Commerce, Union of Employers, Bulgarian Chamber of Commerce and Industry, Bulgarian Industrial Capital Association, the Union of Private Bulgarian Entrepreneurs Vazrazdane, Union for Private Economic Enterprise and the Bulgarian International Business Association. 
Meanwhile, the Bulgarian union of employees on the other side of the coin appealed to the political parties to build a stable government quickly and begin working on the commitments it took in talks with the European Union (EU).
Bulgaria is hard-pressed for time if it wants to join EU membership as planned, in 2007. The new parliament will have to implement key reforms to have them included in the EU annual report this autumn and avoid a possible one-year delay of the accession. The reforms include the adoption of a new penal code, which is envisaged to suppress widespread corruption and crime, as well as the liberalisation of agriculture and services markets.

Anti-semitism rears its head
Already aggravating Bulgaria's EU bid is Ataka (Attack), an extremist, anti-Semitic and anti-European party which stunned mainstream politicians and analysts by qualifying for parliament and taking 21 of the 240 seats. Ataka released a list of 1,500 Bulgarian Jews on its internet site (www.ataka. bg.com). The list - under a caption saying "Aren't we tolerant?" - was online a day after the polls, local media reported. 
Posted on a forum, it included several prominent names, including that of the Sofia Mayor Stefan Sofianski, jazz musician Milcho Leviev and painter Gredi Asa. A spokesman for Ataka told national radio that the party did not post the list and described it as a "provocation."

EU welcomes reforms but tells Bulgaria "keep system clean"
The EU recently praised Bulgaria's market reforms, but warned it to continue combating organised crime in the final spurt to EU membership in 2007, Deutsche Presse-Agentur (dpa) quoted a source as saying. "You must keep the system clean. It is a disaster if a country has a reputation that this is taking place," EU Competition Commissioner, Nellie Kroes, said in Sofia on May 13th, referring to crime and corruption in the economic and investment framework.
Bulgaria had progressed immensely in reforming its market and opening it to competition and faced "no risk" of entry delay over that issue, Kroes said. But it still needed to reform its inefficient judicial system and crack down on deeply rooted organised crime and corruption in the next 18 months or face the activation of a safeguard clause in its accession treaty and the postponing of accession until 2008.
Kroes stated on May 13th that in order to make the Bulgarian economy competitive on the EU market, the state support should target business innovations and R&D. She said that state support, should be channelled to small-and medium-sized enterprises (SMEs), which account for more than 95% of all enterprises in the EU and generate the bulk of the jobs. In her view, registration procedures need to be sped up and streamlined. Kroes suggested providing risk capital as state aid to start-up businesses so that they are not encumbered by banks.
The EU commissioner expressed her satisfaction with the professionalism of the Committee for the Protection of Competition and with Bulgaria's progress in the field of competition and anti-trust policy. She said that provided the institutions continue working at the same pace, there is no risk for Bulgaria's EU membership.
Meanwhile, Foreign Minister, Solomon Passy, while addressing Bulgarian farmers and people working in the agriculture sector in Pleven, said Bulgaria's entry into the EU provides new opportunities to the country's agriculture sector. Passy announced this during the national informative campaign on the prospects of Bulgaria's EU entry. Passy said: "I am optimistic as Bulgaria's agriculture does not need promotion and I am optimistic as we have traditions in that sector."
The foreign minister also pointed out that the negotiating team has done very intensive work under the guidance of former Prime Minister, Simeon Saxe-Coburg. 

Rehn says Bulgaria's EU membership not at risk 
There is no threat to Bulgaria's membership in the European Union, EU Enlargement Commissioner Olli Rehn said after meeting with Bulgarian Prime Minister Simeon Saxe-Coburg recently. The premier participated in a working meeting of the leaders of the European liberal parties in Brussels on June 16th, Bulgarian news agency quoted the government information service as saying. This was the first session of the Council of the European Union in which Bulgaria was an active observer.
Rehn said the debates on the constitution for Europe pose no threat to Bulgaria so no problems would emerge if Bulgaria perseveres with the reforms. For his part, Saxe-Coburg said that there are no reasons for concern over Bulgaria's membership in the EU. In this connection European Affairs Minister Meglena Kouneva said that for the first time "we are on the other side of the door."
Following a meeting of the European Liberal Democrat and Reform party, Saxe-Coburg compared the present situation in Europe to growing pains which are a symbol of youth. This is the reason he does not attach particular importance to the fears about the future of Europe. 
At the same meeting, Danish Prime Minister Anders Fogh Rasmussen said that the debates on the constitution and the budget on the agenda of the meetings of the European leaders would not affect Bulgaria's accession to the EU. The agreements with Bulgaria should be honoured, Dutch Secretary of State for European Affairs Atzo Nicolai told Bulgarian News Agency.

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ARMAMENTS

Sofia launches arms plant tender 

Bulgaria's Vazov Group of arms producing plants (VMZ) at Sopot, a strategic part of the country's defence industry, will be offered 100 per cent for the public sale by strategic investors under a strategy for their privatisation approved by the cabinet, Bulgarian News Agency reported recently. 
The plants will be privatised through a two-stage publicly announced tender. The candidates are expected to be legal entities with prior experience in military production, trade in military produce or the use of military equipment. These activities should have fetched them over 50m Euro in revenues in the past three years. After the completion of the sell off deal, the buyer would be obliged to retain more than 51 percent in the plant for five years. It is expected that during the five years, no changes in the shareholding structure of the buyer company will be allowed and the buyer will have to preserve his core business and service regularly all its financial obligations, including those originating prior to the acquisition. The binding offers will be ranked according to the price, investment and employment programme. Sweden's SKF acquired the bearing business of VMZ from the government in 2002. The VMZ bearing operations comprise four factories in Bulgaria, at Sopot, Kalofer, Karnare and Bogdan. To date, the Swedish leader has managed to modernise the plant and to secure its employees improved working conditions.

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AVIATION

Vassilev: New airport terminal launch is on schedule

Bulgarian Deputy Prime Minister and Minister of Transport and Communications Nikolai Vassilev and representatives of Stranag holding group recently inspected the new terminal at Sofia airport that is currently undergoing construction, Sofia news agency reported. 
After inspection, Vassilev stated the terminal is expected to open on August 31st as planned.
Bulgarian Prime Minister Simeon Saxe-Coburg and head of delegation of the European Commission in Sofia, Dimitris Kourkoulas, were also present at the inspection. Vassilev added that most probably Moststroy would construct the road to the new airport facilities.
Meanwhile, the Bulgarian premier expressed gratitude to those who had contributed to the realisation of the project.
Bulgarian Deputy Transport and Communications Minister Sofia Kassidova said the price offered by the company was smaller than the 12m levs allocated for the compulsory purchase of land and the construction works.
Asked what if Strabag demands an additional amount of money to cover expenses, Kassidova replied that the only way of settling the problem would be to refer it to the international court of arbitration in Paris.
However, Kassidova said that so far Strabag has not filed any appeal with it. There are also no requests for increasing the price of the project due to the construction of the airport's new runway. It is expected that the runway should be ready by the end of October, Kassidova concluded.

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FOREIGN AID

EU grants 85m Euro for Kozloduy NPP decommissioning

Bulgaria will receive 85m Euro in grant aid from the European Union for decommissioning of units one to four of the Kozloduy nuclear power plant, under an approved financing memorandum between the government and the European Commission and under a special Phare programme 2004, the government information office said at a cabinet meeting recently, Sofia News Agency reported.
Under the memorandum, Bulgaria will be assisted in the decommissioning of the units in line with the western European approaches to this activity. The money will be spent according to a 2001 framework agreement between Bulgaria and the European Bank for Reconstruction and Development (EBRD).
Daily management will be effected after consultation between the financial institution and Bulgaria's Ministry of Energy and Energy Resources. The Council of Ministers mandated the finance minister to sign the financing memorandum in his capacity as national coordinator of the assistance.
Kozloduy's work should be finished by 2007 in order for Bulgaria to be accepted into the EU. Bulgaria approved the project for building a new nuclear power plant, in the town of Belene last April. The next step will be the opening of an international tender for a supplier and constructor.

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FOREIGN LOANS

World Bank approves loan for key social areas

The World Bank approved on June 2nd a US$150m third programme adjustment loan for Bulgaria, the last in the series of PALs that is providing a single umbrella of support to reforms across different sectors of the Bulgaria's economy while assisting the advancement of Bulgaria's reform agenda, a World Bank statement read recently. The loan signed for PAL 3 is to be paid over in 17 years, including a 5-year grace period, New Europe reported.
PAL 3 plays an important role in moving forward Bulgaria's structural reform agenda, which would help improve prospects for Bulgaria's successful EU integration, the World Bank Sofia Office said. The World Bank urged that more efforts be made in reforming the judiciary and reducing corruption for a better business environment.
The reforms supported by the PAL programme have helped Bulgaria fulfil important achievements in the areas of large-scale privatisation, infrastructure, improvement of the business climate, banking and non-banking financial sector reform, public sector governance, enhancing the access to quality education and health services, and increasing the effectiveness of social assistance. Public service delivery at national and local levels needs to be enhanced to provide quality service to citizens.
Bulgaria should deepen the reforms in education and health to ensure equal access, quality and fiscal sustainability and to strengthen the skills and human resources necessary for a competitive economy.
A flexible labour market would help improve employment opportunities. Investments in infrastructure are needed for enhanced transport and water services. Reforms in the social protection and social services should continue.
The total amount of the 3 loans under the PAL programme is US$425m. PAL 1 for US$150m was approved in February 2003 that was aimed to improve the business environment, the restructuring of infrastructure sectors and further deepening of the financial sector. PAL 2 added another US$125m equivalent and main target was public administration reform. PAL 3 is equivalent to US$150m in value.

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MINERALS & METALS

Cambridge Mineral Resources strikes gold in Bulgaria 

Cambridge Mineral Resources (CMR), a London-based mining company, recently announced an important gold discovery in Bulgaria. According to the company, Cambridge's Bulgarian subsidiary found gold mineralisation at its Polski Gradets permit in the east European country, New Europe reported.
The Polski Gradets permit is located in central Bulgaria near the town of Topolovgrad. Exploration has led to the discovery of a style of gold mineralisation little recognised in Bulgaria that has strong affinities to the world class Carlin-type gold deposits of Nevada, the company said. A substantial drilling campaign is being planned and is to be completed over the summer. Currently, CMR is evaluating the Lomero-Poyatos gold-rich polymetallic deposit in southern Spain, developing the Marcelita-2 gold mine in Peru and has further exploration interests in joint venture with Ivanhoe mines in Bulgaria and Serbia.
The Polski Gradets permit is included within CMR's joint venture agreement with Ivanhoe Mines, which is currently earning into the project by providing the exploration funding. Mineralisation was historically known to occur as quartz vein systems up to 2,000 metres in length, which have been explored by the State for tungsten and gold. Meanwhile another UK firm, Orchid Developments, has planned to raise 20m Euro for investment in Bulgaria from a flotation on the alternative investment market of London, Bulgarian news agency reported. Orchid Developments is a UK-registered property developer and hotel operator active in Bulgaria, the latest in a string of companies that is searching to raise capital to access the relatively untapped property markets of Eastern Europe.
The flotation at AIM could value the company up to 100m Euro. The company also stated that it would raise debt from European Bank of Reconstruction and Development (EBRD), which gave a nod for 30m Euro of senior debt available for five of Orchid's projects.

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TELECOMMUNICATIONS

Telekom Austria acquires MobilTel

Telekom Austria signed on June 1st a share purchase agreement for the acquisition of 100% of Bulgarian leading wireless operator Mobiltel AD. The acquisition of MobilTel is part of the Austrian telco's strategy to expand in Central and Eastern Europe, Sofia News Agency reported.
The deal is expected to be finalised presently instead of in the fourth quarter as the Austrian telecom accelerated its planned purchase of Mobiltel through early exercise of the call option acquired on December 17th.
The deal totals 1.6bn Euro, including the call option price of 80m Euro paid by Telekom Austria in the first quarter of this year, two payments of 182m Euro and 100m Euro deferred until the fourth quarter of this year as well as the net debt of Mobiltel which will be assumed by Telekom Austria at closing. In June 2004 it totalled 450m Euro.

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TOURISM

Bulgaria's image grows as an alternative tourism destination

A recent analysis carried out by the Bulgarian Association for Alternative Tourism (BAAT) said the country's rich history and tradition coupled with abundant natural resources has made Bulgaria a preferred alternative tourism destination. A SWOT analysis of the alternative tourism in Bulgaria identified the key need for up-to-date management to feed its successful growth, Standart reported.
Safety, an increasing number of tour operators and programmes for alternative tourism and enhanced media awareness are cited as the strengths of alternative tourism in Bulgaria, which includes tourism packages and individual tourism services for natural and cultural tourism. The friendly nature of Bulgarian people and the excellent cuisine also counts.
BAAT called for the development and adoption of new tourism laws, improved infrastructure and services, the introduction of common quality standards and an evaluation system for accommodations and other services. In order to utilise these available opportunities, the establishment of new education and training centres for qualification of mountain guides, activities coordinators and managers of guesthouses is recommended. Experts said the massive construction projects on the Black Sea may lead to an exodus of tourists from there and also from Bulgaria.
BAAT said Bulgaria will become a leading alternative tourism destination among the Balkan and Eastern European countries by 2007.
Meanwhile, in a special report, Bulgaria's Culture and Tourism Ministry announced on June 2nd that Czech tourists prefer Egypt and Bulgaria for their holiday destinations. Last year about 100,000 Czech tourists visited Bulgaria and their number is expected to jump up this summer season. Interest of Czech holidaymakers to go to Bulgaria has been growing 25-30% annually, the ministry said. There are more than 20 Czech tour operators that offer holidays in Bulgaria this year.
A special video presenting the Bulgarian tourism potential was shown in an event in Prague in which Czech journalists and representatives of the leading tourism agencies participated. The event was co-organised by the Czech and the Bulgarian side, and introduced Prague's media to the latest development in the Bulgarian tourism industry. The number of Czech tourists visiting Bulgaria increased 65% in January-April 2005.
Air travel is the most preferred mode of transport. Summer flights exceed 450, serviced by 3 Bulgarian and 2 Czech air carriers. Bulgaria has succeeded in regaining its position in the Czech tourism market, with the bulk of holiday makers headed for the Black Sea.

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TRANSPORT

Bulgaria approaches TERNA to renovate railway 

The Bulgarian government contracted Greek company TERNA for the construction and modernisation of Krumovo-Parvomaj railway road, a key part of a European transport corridor, New Europe reported recently. 
The Bulgarian Transport Ministry told Standart that this is one of the biggest projects for railway infrastructure upgrade since 1999 in Bulgaria. The Plovdiv-Slivengrad road project is worth 340m Euro and is co-funded by European Investment Bank (150m Euro), ISPA programme (153m Euro) and the state budget (34m Euro). The new and renovated railway road would allow passengers' trains to run at a speed of 120 km/h. The project that is being inspected by the European Commission, envisions the construction and modernisation of the Krumovo-Parvomaj stretch of the Plovdiv-Svilengrad railway.

EU approves Lyulin motorway tender dossier

The Bulgarian Regional Development and Urban Planning Ministry recently announced that the European Union Commission approved the tender dossier of Lyulin motorway, Standart reported.
The route of the motorway runs along the Pan-European Transport Corridor IV in its Vidin - Sofia - Koulata section. It will link Sofia ring road - Malo Bouchino - Golyamo Bouchino - Daskalovo and will have a total length of 19km. The value of the project stands at 148.45m Euro, including 111.338m Euro grant from the budget of the European Commission and Bulgaria offered 37.112m Euro.

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