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Books on Bosnia & Herzegovina
REPUBLICAN REFERENCE
Area (sq.km)
51,129
Population
4,007,608
Capital
Sarajevo
Currency
Convertible Mark
President
Borislav Paravac
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Update No: 098 - (01/07/05)
Socialists win the elections
The elections to parliament on June 26th have been won by the former communists,
now called Socialists, who took 31% of the vote. The outgoing National Movement
of former king, Simeon 11, obtained just under 20%, while the Muslim-based
Movement for Rights and Freedoms got 12.7%.
Sergei Stanishev, the head of the Socialists, is ready to form a government with
the latter, although they need a minor party to back them in the 240-seat
parliament to make up a majority.
Magnificent record
Actually, Bulgaria has made progress by leaps and bounds under the able and
pragmatic leadership of Prime Minister Simeon Saxe-Coburg (former king Simeon
11). But being in power in Bulgaria invariably brings unpopularity. Highly
unpopular reforms are always necessary. His predecessor government had been
highly competent but were punished by loss of office for the same reason, that
people did not feel the benefits of an improved economy
From the financial wilderness and political uncertainty of the past decade, the
reformist Saxe-Coburg-Gotha government has brought Bulgaria a long way in a few
years to its present healthy state, offering a stable and transparent economic
environment plus legal and operational framework oriented towards the needs of
business. In addition state-sponsored temporary job programmes and a rise in
private sector employment helped to cut unemployment from 17.21% in October 2001
to just about 11% now.
The overall readiness of the country on the verge of the European Union
accession on January 1st 2007 is evident from the European Commission's latest
progress report, eulogising Bulgaria's improvement in the political arena, its
economic fast track and adoption of EU laws.
Saxe-Coburg in a recent publication aptly pointed out, "Bulgaria today has
returned to the world stage. Our strategic geographical location, backed by a
strong and growing economy, allows us to punch above our weight in the Balkans,
in Europe and in our relationship with other continents and trading blocks.
Economic growth averaging five per cent for the past few years, combined with
falling unemployment now down to 11.5%, inflation below 6% in 2004 and a stable
currency pegged to the Euro have earned us the approval of the international
financial institutions."
Within the last few years, Bulgaria has managed to come out of the shadows of
post-communist economic blues to experience brisk economic growth, rising
consumption levels and a sustainable stable market economy thus ensuring a
steadily increasing inflow of foreign capital investment.
IMF approval leads to FDI
This is evident from the successful completion of the stand-by agreement (SBA)
with the International Monetary Fund (IMF) in spring 2004 and replacement by
another SBA running for two years from September 2004 - thus covering the EU
accession period until January 2007.
Interesting to note that the SBA has been of "precautionary" nature
with money disbursed not automatically but only if it is actually needed. This
IMF approval also helps the country to attract foreign direct investment (FDI)
and keeps a leash on governmental spending.
Moreover, with the EU accession being formalised, Bulgaria will be a net
recipient of EU funds and this will impact real economy and the policy-forming
environment. With EU funds comes the stale outlook and the vibrant economic
development can be gauged by the fact that the credit rating of Bulgaria has
been increased 112 times in the past three years.
This resulted in Bulgaria notching up the most attractive foreign direct
investment destination spot in eastern Europe and gobbling up nearly two billion
Euro in 2004 alone. According to data available, with foreign investment
accounting for 9.2% of its GDP, Bulgaria can boost of the highest FDI per-capita
levels in the region.
The pragmatic policies of the Saxe-Coburg government brought this windfall of
foreign investment. Moody's credit rating agency listed reasons to invest in
Bulgaria as, "strategic location, skilled labour, excellent technical
qualifications, competitive cost, robust legal framework and expected EU
membership."
According to financial pundits the global outlook for FDI is bright. Pavel
Ezekiev, chairman of Invest Bulgaria Agency was quoted by local media as saying
that the government's strategy at the moment is to attract investments from
countries that have not made significant contributions to its local FDI. The
focus was cited as on the United States, Canada, United Kingdom, Ireland and
Sweden as well as on Spain and France.
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FOOD & DRINK
Coca-Cola bottling branch buys Bulgarian mineral water plant
The Coca-Cola Hellenic Bottling Company (CCHBC) has acquired the Bulgarian
mineral water company Bankia, New Europe reported recently.
The Athens-based CCHBC, one of the world's largest bottlers of Coca-cola
products, bought bottling facilities on the outskirts of Sofia and the Bankia
mineral water brand-name. The value of the deal was not disclosed, reports said.
CCHBC is one of the largest bottlers of non-alcoholic beverages in Europe.
Operating in 26 countries with a total population of more than 500m, CCHBC was
created in August 2000 with the merger of the Athens-based Hellenic Bottling
Company SA, with Coca-Cola Beverages plc. CCHBC's product line includes
carbonated (CSD) and non-carbonated (non-CSD) soft drinks, juices, water, sports
and energy drinks, and ready-to-drink beverages such as teas and coffees. With a
geographical range that stretches from the Republic of Ireland to the
eastern-most parts of Russia, and from Estonia to Nigeria, CCHBC is focused on
meeting the demands and local tastes and cultures of all of its markets.
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SHIPPING
Bulyard to build 3 ships for NMB
Bulgarian shipping company, Navigation Maritime Bulgare (NMB), and the new
shipbuilding consortium, Bulyard, on May 22nd signed their first mutual
contracts for the building of three ships. Transport Minsiter, Nikloay Vassilev,
who attended the signing ceremony told Sofia News Agency that the ships worth
58m Euro will be ready in two years.
NMB fleet has grown to more than 83 owned ships totalling over 1.8m dwt, making
the company the biggest ship owner in Bulgaria and one of the largest in the
Black Sea and Eastern Mediterranean region.
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TELECOMMUNICATIONS
Telekom Austria takes over Bulgaria's Mobiltel
Telekom Austria (TA) and its mobile phone subsidiary Mobilkom Austria signed an
agreement recently for the 100% takeover of Bulgaria's mobile phone network
operator Mobiltel, Deutsche Presse-Agentur (dpa) reported.
The signing of a share purchase agreement was earlier than expected, said TA
spokesmen. The Austrian group had already had a purchase option since December
2004. The transaction was due for completion in July. Mobiltel, estimated to be
worth 1.6bn Euro, was owned by a consortium of Austrian and international
investors.
M-Tel wins UMTS licence
Bulgaria's Deputy Prime Minister and Transport Minister, Nikolay Vassilev handed
on May 11th the 3G/UMTS licence to the three wireless operators in the country.
Bulgaria's first and largest GSM operator MobilTel was granted a licence to
launch the first UMTS 3G network in this country, Sofia News Agency reported.
MobilTel was issued a 3G/UMTS licence, Class A, which it won at a tender with an
offer of 78m levs (40m Euro). MobilTel won the UMTS Class licence tender for a
20-year term on March 31st, 2005. The tender included a secret bidding and took
two hours. The UMTS licence was granted to M-Tel CNO, John Treuge, by the
Chairperson of the Communications Regulatory Commission (CRC), Gergana Surbova.
Deputy Prime Minister, Nikolay Vassilev, attended the festive ceremony. Vassilev
said he is pleased to know that there are still companies in Bulgaria which have
the financial stability to pay tens of millions levs for licence rights and to
invest hundreds of millions Euro in the construction of their networks.
Telco signs treaty with Bulgarian cable operators
Bulgarian Telecommunications Company (BTC) has struck a deal with national cable
operators to settle the dispute over the terms and price of usage the telecom's
subterranean duct infrastructure, New Europe reported recently.
Under the agreement signed on May 5th, cable operators were due to declare by
May 20th all cables placed into the underground duct system of BTC. In turn, the
formerly state-owned telecom agreed to delay the introduction of new charges for
usage of that system giving cable operators two months to legalise the
additionally placed cables.
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TOURISM
New resort near Borovets
Bulgaria is planning to build a new resort near popular Borovets; this is part
of the government's special strategy for the development of Borovets until 2015
which was published on May 12th, according to Sofia news agency.
The new holiday settlement will be located between Borovets and Samokov and is
expected to have an accommodation capacity for about 7,000 people. In the first
phase of the project, the number of people employed in the local tourism
business should double. The accommodation potential should increase by 2007,
while the ski runs will be broadened to match European standards. The second
phase will be related to the building of the new resort. Following will be the
modernisation of the area with an altitude of 1,400 metres.
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TRANSPORT
CPC approves Trakia highway concession
Bulgaria's Commission for the Protection of Competition (CPC) endorsed the
Trakia Highway concession agreement that will be valid for 35 years, New Europe
reported recently.
The CPC's favourable opinion on the deal was one of the necessary conditions, so
that the Trakia Highway concession agreement, which was signed in April, can
come into force.
Three Portugal-based firms - MSF-Moniz da Maia, Lena Engenharia e Contrucoes and
Somague Concessoers e Servicos, along with two Bulgarian state-run companies
Technoex-portstroy and Avtomagistrali, took the concession of the highway
without holding a tender or bidding. In April the government signed the contract
for granting a 35-year concession for the Trakia Highway to a Portuguese
consortium.
The cost of the project is estimated at 720m Euro with 590m Euro planned
investments until end-2007 and another 125m Euro until end-2009. The deal has
been challenged by observers, including Transparency International Bulgaria, a
non-governmental organisation (NGO) devoted to combating corruption.
In the agreement, signed by Minister of Regional Development and Public Works,
Valentin Tserovski, the state is to pay compensations to the concessionaire, if
the traffic rate on the highway is very low.
At the same time, the Portuguese are guaranteed 12% of the annual profit. The
highway will cost 717m Euro. The money will be taken on loan from the firms. The
favourable opinion of the European Investment Bank is also necessary for the
concession agreement to come into force.
The EIB is to grant a loan of 100m Euro to the state for the construction of two
sectors of the Trakia highway and an other 60m Euro for the construction of
other road sectors. "We are aware of the fact that there are certain
contradictions in the Trakia highway concession agreement. We are conducting
negotiations with the Bulgarian authorities, mainly over the phone for the time
being," an EIB representative told Standart.
Experts claim that it is likely that the EIB will allow building projects,
financed by the European Bank with low-interest loans, to be granted as a
concession. Bulgarian state officials are presently mulling over the possibility
of how to outmanoeuvre the EIB in the Trakia highway deal, Standard quoted a
source as saying. The idea is that the loans worth 160m Euro, to be repaid
together plus the interests, provided in case of pre-term repayment. Thus, these
sectors of the highway will be included in the concession agreement, but the
loans will be taken for their construction, in which there will be higher
interests and the price of the Trakia highway project will rise further.
The majority of the CPC members voted that in the agreement there was no illegal
state assistance in favour of the concessionaire.
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