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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: 106 - (23/03/06)

Countdown to January
Bulgarian Prime Minister, Sergey Stanishev, in a meeting in March with European Union (EU) envoys was affirmative on all institutions' commitment to work for achieving the accession to the EU next January. This is the lynchpin of the programme of his new government, elected in March 2005.
Ambassadors of EU countries to Sofia gathered at a working lunch with the Austrian Ambassador H.E. Karl Diem on March 16th. The primary importance attached to the success of the judicial reform here was signified by the attendance also of Justice Minister, Georgi Petkanov. 
Emerging from the meeting, the EU envoys expressed their satisfaction with the broad and open conversation they had with the Bulgarian prime minister. Stanishev had accentuated the progress made particularly in the EC red-flagged areas. 
The foreign diplomats received a report on Bulgaria's achievements over the last few months. Yet, Sergey Stanishev warned the ambassadors a decision to delay Bulgaria's entry by a year - until 2008 - would send off a very negative signal to the entire region.
The Bulgarian premier took part in the spring session of the European Council in Brussels March 23-24, the Government's press service announced. The meeting focused on the Lisbon Strategy for enhancing the economic growth and increasing jobs.

Continuous EU monitoring of reforms in place
It is not just one meeting of ambassadors that counts, however, as much as the regular presence of EU monitors. The strict monitoring the European Commission exercises over Bulgarian reforms will prepare the country for its upcoming EU membership, said Prime Minister Sergei Stanishev during his meeting with the director of the EC enlargement directorate-general, Michael Lee.
Lee's previous visit to Bulgaria occurred in 2001. Now new positive developments can be observed, said Stanishev.
Stanishev said the ruling coalition has accepted nearly 60 new laws and regulations since the beginning of its mandate, the Bulgarian National Radio reported. The non-governmental sector exercises additional control over reform implementation, said Stanishev.
The EU is experiencing the birth of new sentiments and thoughts concerning the enlargement process, Lee said. The EC will follow its duties and present an objective analysis of the Bulgaria and Romania's readiness to join the EU.
Since November 2005 Bulgaria's progress is visible through the acceptance of new regulations and the appointment of a new Prosecutor-General, said Lee. 
The country still needs to increase its capacity to utilise EU funds, Lee said. 

Getting businessmen on side
In a meeting with industrial businesses from the European Round Table (ERT), Prime Minister, Sergey Stanishev, declared his government's commitment to wrap up all pre-accession engagements stating that Bulgaria is readier for EU accession than the ten newcomers to the bloc upon their entry in 2004. 
Bulgaria will work even stronger to set up a friendlier business climate here, the premier stated in a cutting-distance manner of speaking English fluently. 
He admitted there are still fields to expect results from, such as the judiciary system, infrastructure and communications development and administrative capacity, but they are on the right track and will learn from the experience of EU10 latest member states, Stanishev pointed out. 
The forum of ERT put forward also tentative issues in the field of education and healthcare, urged the government to further cut the red tape, protect the intellectual property rights and adopt steps to reduce the VAT rate. 
Under-financed education system and brain drainage are creating shortages of skilled workers, noted Baron Daniel Janssen, Chairman of the Board of Directors of Solvay S.A. 
While praising Bulgaria's tremendous achievement in the single market area, he stressed the need of a strengthened dialogue between the government and the private sector, including a more sector-based approach. 
Over the last seven years, the ERT has held annual meetings with three Bulgarian governments, putting forward a different view on the country's desirable steps towards business and economic progress. 
The European Round Table is a forum of some 47 European industrial leaders aiming at promotion of the competitiveness and growth of Europe's economy. 
Companies of ERT members cover a wide range of industry sectors, with headquarters situated in 18 countries of Europe. 
Their combined turnover is 1,500bn Euro, employing about 45 million people worldwide. 

Foreign companies in Bulgaria face problems with corruption
Foreign companies operating in Bulgaria face corruption and the grey economy as their main problems, chairperson of the European Round Table of Industrialists (ERT) Baron Daniel Janssen said recently. 
The ERT delegation met for the seventh time representatives of the Bulgarian Cabinet, the Bulgarian National Radio reported. Representatives of European companies demanded more efficient measures against these two problems. A country with economic indicators like Bulgaria should attract more foreign investment, Janssen said. 
Prime Minister Stanishev listed the measures undertaken so far to counter the negative developments. Political will for change is present and the process will continue after the issuing of the European Commission report on Bulgaria's readiness to join the EU, Stanishev said. 
The high trade deficit remains one of the main problems to Bulgaria's economic development, Stanishev said. Still, it does not pose a major threat as budget surpluses and foreign investment counter its negative effects, the prime minister said.
Bulgaria's government aims at improving the environment for investors and business development, he said. National policies will focus on limiting bureaucratic hindrances to business establishment and operations and on aiding foreign investment initiatives. 

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AVIATION

Govt adopts strategy for Bulgaria Air Privatisation 

At its regular meeting on February 2nd, the council of ministers adopted a strategy for the privatisation of flag carrier Bulgaria Air, Transport Minister, Peter Moutafchiev, said, Sofia News Agency reported. 
He said the strategy for privatisation of Bulgaria Air is much better than the previous one. This is the third attempt to privatise Bulgaria Air. A total of 30,159 shares will be offered at a tender and the state will retain only one share so that it could participate in the supervision of the company. Mutafchiev said there were four basic criteria, according to which the investor would be selected, offered price in the privatisation deal, investments, which the future buyer intends to make, the increase of destinations and the finances of the airline company and most important the social strategy of the investor will all be taken into consideration. The aim of the company's privatisation is to guarantee a long-term development of Bulgaria Air and its competitiveness on the aviation market, Mutafchiev said.

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BANKING

Banking sector most dynamic in Central and E. Europe 

According to a press release of UK Standard and Poors credit rating agency, Bulgaria is one of the most dynamically evolving financial sectors in Central and Eastern Europe. The agency rated Bulgaria at an average BB at end 2005 from B+ at year end 2001. S&P believes that since the 1996 banking crisis, the Bulgarian banking sector has strengthened. The credit agency also said that the explosive credit growth that Bulgarian banks have experienced since 2001 but simultaneously believes that the banking operates with improved risk-management frameworks supported by the know-how from its western parents, benefits from stronger financial standing of households and corporations, and stronger regulatory regime. According to the credit analysers future creditworthiness and an increase in ratings will depend on managing the evolving credit environment, maintaining prudent capitalisation, meeting the growing demands for financial products, and accessing funding, New Europe reported. 
It is expected that high economic growth will continue and EU reforms will support positive trends in the macroeconomic stability, employment, and investments - both foreign direct investment (FDI) and domestic. The agency pointed out that the banking sector is characterised by intense rivalry among large and midsize banks, fighting for market share which in turn will benefit consumers in terms of attractive new products and pricing but has led to pressure on capitalisation and the balance between risks and rewards. According to S&P data, the largest market share with total assets of 14 per cent holds DSK bank, owned by Hungary's OTP bank followed by Bulbank (11 per cent), the United Bulgarian Bank (10.1) and Raiffeisen Bank. The report noted an increase in the deposits of non-financial institutions, including household deposits, which were supported by improved wealth levels and high corporate liquidity. "In addition, the Bulgarian National Bank's (BNB) liquidity draining measures have started to bite, particularly for domestic banks with aggressive growth strategies or weaker commercial franchises," the report read. According to the report, some banks even adopt high pricing strategies to attract depositors into longer term saving accounts. Interest rates on current accounts averaged three per cent while savings accounts over two years offered up to seven per cent in November 2005.

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ENERGY

Bulgaria, Russia discuss gas transit after 2010 

The Russian and Bulgarian governments have started to discuss conditions for gas transit after 2010, Industry and Energy Minister, Viktor Khristenko, said after a meeting with Bulgarian Economics and Energy Minister, Roumen Ovcharov, Interfax News Agency reported.
"We are interested in having transit relations with Bulgaria for 20 years ahead," said Khristenko, who is also a Gazprom board member. "Transit questions were brought up during negotiations, so that based on their answers a decision can be reached on potential for the period after 2010," the minister said. "If the negotiators agree that it is necessary to change the current transit conditions, they will be changed. Especially if this is important for future relations between Russia and Bulgaria in the gas sphere; that is after 2010," he said. The Russian minister thanked Bulgaria for meeting the conditions of the gas transit agreement in full. "All conditions in contracts to transit Russian gas by Bulgaria are being met. In this sense Bulgaria is not a risk for European consumers of Russian gas," he said.
He also said that consultations on gas transit conditions will continue in the near future. "The main task is to establish the characteristics of our future relations in the gas sphere. For these characteristics to be established, it is necessary to start negotiations now," he said. 
"One of Russia's main positions is that long-term transit should be connected with cash payments. I do not see disagreements on this issue with my Bulgarian colleague," Khristenko said. In turn, the Bulgarian minister said that Bulgaria is spending a lot of effort on finding alternative fuel supplies. "Every state should have alternative fuel supplies. Bulgaria will look for them, but this will in no way influence projects being jointly implemented with Russia," he said. Gazprom earlier proposed to Bulgaria to end a barter agreement for payment of transit services. The state gas corporation Bulgargaz said it rejected this proposal from Gazprom to review the conditions of a 12-year contract signed in 1998 to transit Russian gas through Bulgaria, Turkey, Greece and Macedonia. According to the current conditions of the contract between Gazexport and Bulgargaz, the Russian gas giant pays for transit services through Bulgaria with gas. 
Gazprom supplies gas to Bulgaria at 258 Euro per 1,000 cubic metres, while the price of gas supplied as payment of transit is 83 Euro per 1,000 cubic metres.

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FOREIGN COOPERATION

Bulgaria to deepen transport cooperation with Armenia 

On the second day of its official visit to Armenia, a Bulgarian parliamentary delegation, headed by National Assembly Chairman, Georgi Pirinski, met with Armenian President, Robert Kocharian, and speaker of the Armenian Parliament, Artur Baghdasaryan, in Yerevan, the National Assembly press office said, Sofia News Agency.
The sides discussed the intensive political dialogue between the two countries, the development and strengthening of transport ties and cooperation in education and culture. Pirinski proposed to organise a conference on co-operation in transport in mid-2006. For his part, Baghdasaryan said that Armenia needs deeper transport co-operation with Bulgaria as it will facilitate the development of economic contacts. In this context, Baghdasaryan proposed holding discussions by the two countries' parliamentarians in the summer.

Romania, Bulgaria to improve trade 

A delegation of the National Union of the Romanian Employers (UNPR), led by its president, Marian Petre Milut, met with Bulgaria's ambassador to Romania, Konstantin Andreev, and with the embassy's secretary on trade and economic issues, Atanas Stamtov. The meeting is part of UNPR's strategy to support trade relations and secure borders considering the anticipated EU accession, reported Sofia News Agency. 
During the talks, both sides agreed to promote a cross-border cooperation action plan that will look at the development of infrastructure, protection and management of the environment, economic development and bilateral actions between citizens, institutions and small communities. The PHARE CBC programme grants financial support to cross-border cooperation during the pre-accession period. After EU accession, both countries will receive structural funds to continue the programmes. The programme focused on financing large investment programmes until now but the new programme due to end in 2009, will direct the available funds to supporting initiatives in the domain. Andreev said that visas should be eliminated for businesspersons that invest in the two countries and continue trans-border projects to create business offices along the Danube. He added that trade relations between Romania and Bulgaria are minimal and entrepreneurs of Bulgaria should create proper conditions for the development of the business environment. 
"Through a public-private partnership we should succeed in creating the needed infrastructure for a business environment," said Milut. "The Danube should become a business environment and not a border. Starting in 2007, once the Euro regions have been created, the Danube will become a highway that should be used with the purpose of creating business opportunities," he added. Bulgarian Prime Minister, Sergey Stanishev, and his Romanian host and counterpart, Calin Popescu Tariceanu, during an official visit to Bucharest, believed that the Danube bridge at Vidin-Kalafat is a priority in the bilateral relations of Bulgaria and Romania.

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FOREIGN DEBT

Bulgaria pays in advance part of IMF debt 

An economic boom in 2005 has enabled Bulgaria to continue repaying its debt to the International Monetary Fund (IMF) ahead of schedule, the Sofia News Agency quoted Bulgarian finance ministry as saying. 
On February 1st, Bulgaria paid in advance 151.4 million Euro from its International Monetary Fund (IMF) debt, representatives of the Finance Ministry said. Bulgaria has covered six tranches of the Two-Year stand-by agreement with the IMF. This is the second time in the last couple of weeks that Bulgaria has provided advance payment. At the end of 2005 the country made three payments to IMF totalling 147.4 million Euro. Bulgaria's debt to the IMF after the transactions is nearly 393.7 million Euro. The finance ministry explained, that owing to the nation's booming economy last year, the fiscal reserve of Bulgaria is on the rise. Repaying its debts ahead of schedule will reduce both the country's foreign debt and its state guaranteed debt, which totalled 5.39 billion Euro as of December 31, 2005. 

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FOREIGN RELATIONS

Italy, Bulgaria discuss cooperation in infrastructure 

Regional Development and Public Works Minister, Assen Gagaouzov, met Italy's Infrastructure and Transport Minister, Prof. Pietro Lunardi, the regional development ministry press centre said, Sofia News Agency reported.
During the meeting, both sides discussed the possibilities for cooperation in infrastructure, cultural exchange and rehabilitation of underdeveloped urban zones. Their talks focused also on Bulgaria's bid to join the EU. Lunardi stressed that currently Italy is engaged in a large-scale plan for infrastructure recovery and is open to joint initiatives with Bulgaria. Italy has good companies in the field of construction and roads and could be useful in the implementation of similar projects in Bulgaria, Lunardi added. "We are grateful to Italy and we shall rely on its assistance," Gagaouzov said. He informed his Italian counterpart that a strategy for the development of Bulgaria's infrastructure was being prepared, which is to be approved by the council of ministers.

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TELECOMMUNICATIONS

Vodafone partners with Bulgaria's Mobiltel 

Vodafone Group PLC, one of the world's leading mobile operators has signed a partnership agreement with Mobiltel, the Bulgarian mobile operator of Telekom Austria, reported Sofia News Agency. 
Under the terms of the agreement, Mobiltel will be able to provide its customers with Vodafone products and services for international voice and data roaming, business and consumer propositions. It also provides all of Vodaphone's subsidiaries with access to the company's international mobile services while travelling in Bulgaria. Vodafone's products and services will be dual branded in Bulgaria by Mobiltel, combining Mobiltel's nationally recognised brand with Vodafone's global brand. Arun Sarin chief executive at Vodafone said that it intends to develop its partnership agreement with Mobiltel to ensure that both Vodafone and Mobiltel customers get the best in mobile services. 

 

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