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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)

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Update No: 121 - (27/06/07)

Cleaving to the US, not Russia
From being the staunchest pro-Moscow member of the Warsaw Pact, Bulgaria is now becoming a pro-US hawk in NATO. It has allowed the establishment of three US bases on its territory. Those with memories of the Red Army must find it all very strange.

It was after all Russia that secured Bulgaria's independence from the Ottomans in 1878, after the appalling massacres of 1877-78, that enraged Gladstone, who made a political comeback out of it. It was the USSR that liberated it in 1944-45 from the Nazis, only to impose another totalitarian system in their place. There's the rub.

The crowning moment of the new rapprochement with Washington came with Bush's visit to Bulgaria on June 10-11, a first by a US president. This must have had some oldster bystanders staring in disbelief.

Bulgaria expects the U.S. anti-missile defense system to cover all NATO states
The main topic on the agenda had been already mentioned beforehand by the number two in the Bulgarian government, a likely future premier and a powerhouse on foreign policy. NATO should consider extending the US anti-missile defence system to cover all NATO member states, Bulgarian Vice Premier and Foreign Minister Ivailo Kalfin said on June 7th. Under the principle of "the indivisibility of security" of the territory of NATO countries, Bulgaria expects NATO to further discuss the system with the United States and have it cover all NATO members, not just Poland and the Czech Republic, the BTA news agency quoted Kaflin as saying. NATO subsequently have not demurred at the US proposals

Kalfin also denied that as yet the three US military bases set up in Bulgaria were involved in the anti-missile defence system. 

The United States plans to place a radar base in the Czech Republic and 10 interceptor missiles in neighbouring Poland as part of a planned global missile defence shield. Russia has voiced strong opposition over the deployment. 

Nevertheless, NATO officials said the system is not able to protect the southeastern Europe, which is too close to Iran. 

Bulgaria willing to advocate Balkan region's interests-Purvanov 
Bulgaria has the ambition of advocating the interests of the Balkan countries and the European Union region, Bulgarian President Georgi Purvanov has said. 

Purvanov took part in an international conference on Southeastern Europe and EU, taking place in Montenegro's coastal town of Becici, Focus news agency reported. The construction of a modern transport and communication network and energy infrastructure in the region was needed, Purvanov said. 

Montenegro's president Filip Vujanovic, Albanian president Alfred Moisiu, Bosnia and Herzegovina's Nebojsa Radmanovic, Macedonian president Branko Crvenkovski took part in the forum. 

Purvanov told conference participants that despite its new status after the EU accession, Bulgaria would continue defending the interests of the region. He said that the need for modern infrastructure in the region received no attention during previous forums, but it was of key significance for the region. 

EC lacks any reason to impose safeguard clause on Bulgaria- Kalfin 
The European Union (EU) is having second thoughts about the wisdom of allowing Bulgaria and Romania to enter so rapidly before reform was further advanced. It is much more difficult to lay down conditions retrospectively.

Foreign Minister Kalfin, however, claims the European Commission (EC) lacks any reason to impose a safeguard clause on Bulgaria. Bulgaria faces sanctions because of its inefficient fight against organised crime and corruption. The foreign minister is disingenuous to say the least; everyone knows the truth.

The EC is expected to present its report soon on the reform progress in Bulgaria and Romania. Six areas in Bulgaria came under monitoring because of the slow pace of change.

Kalfin said that positive evaluation was expected and some of the areas under monitoring could be left out.

Recently European justice commissioner Franco Frattini said that the EC would try to refrain from sanctioning Bulgaria. It was best for the commission to aid the country in speeding up reforms instead of introducing a safeguard clause, he said. But the 'softly-softly' approach rarely works.

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BANKING

UniCredit says economy will remain strong in 2007

Italian banking group UniCredit believes Bulgaria's economy will continue growing strongly in 2007, but with limited progress in slowing down inflation, Sofia news agency reported. 
The marked drop in inflation from the beginning of the year, however, is unlikely to be long-lived and end-year inflation is forecast at 5.1 per cent, versus 6.5 per cent in 2006, it was reported. Buoyant individual consumption and strong investment activity, largely financed by FDI, are the main drivers of growth for the two newest EU member-countries Bulgaria and Romania, the latest CEE Quarterly report of UniCredit New Europe Research Network concluded. 
UniCredit Group economists expect 6.2 per cent real gross domestic product (GDP) growth in 2007, compared to last year's 6.1 per cent for Bulgaria, as well as about a 13 per cent increase in GDP per capita to 3690 Euro by the end of 2007. Without wage hikes, UniCredit forecasts a slight drop in the current account deficit to 15.5 per cent of GDP. Strong economic growth with good corporate profitability and rising household income and consumption, yet some remaining gaps of fiscal penetration in the region, suggest a positive outlook in terms of banking sector development in 2007, the UniCredit CEE report said. 
The EU entry adds to the appeal of Bulgaria, which already offers low production expenditure, according to the report. At the same time, the access to EU funds will also play a role. Yet, the utilisation capacity of Bulgaria and Romania is expected to remain low in the first years after their accession, it was reported. Opportunities to take down the current account deficit in 2007 also remain limited. Higher natural gas expenditures and a change in the structure of the used energy sources after the closure of Kozloduy nuclear power plant units will exercise pressure over imports. 
Improvements are expected in 2008, when the country's production capability will go up, it was reported. The report also cautioned Bulgaria against removing restrictions on wage hikes in the state sector, which the cabinet recently lifted. "The risks for macroeconomic stability will run high as a sudden increase in incomes in the public sector has the potential to undermine competitiveness and unleash uncontrolled pressure on fiscal spending," the report read. UniCredit forecasts a retail lending growth of 33.2 percent year-on-year in 2007 for the region, with volumes increasing from 258 billion Euro at the end of 2006 to 344 billion Euro at the end of 2007 for the whole CEE-17. 
Corporate lending is likely to also benefit from the very positive macroeconomic outlook, despite relatively tight monetary policies and companies' direct access to alternative forms of financing. UniCredit Group economists forecast 20.4 percent corporate lending growth in 2007, with total volumes rising from 426 billion Euro in 2006 to 513 billion Euro in 2007. Overall, total bank lending in the region will expand by 24.4 per cent to 921 billion Euro at the end of 2007. Strong growth is expected also on the deposit side, based on sound corporate profitability and moderate increase in households' income, despite increasing investment in real estate and more focus on diversification of the savings portfolio. UniCredit Group forecasts at the regional level 16.2 per cent year-on-year growth in retail deposits to 512.6 billion Euro at the end of 2007 and 19.3 year-on-year growth in corporate deposits to 317.5 billion Euro.

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ENERGY

Bulgaria ratifies Bourgas-Alexandroupolis agreement

The Bulgarian parliament on May 30th ratified a 280-kilometre, US$1.211-billion pipeline deal with Russia and Greece to link terminals in the Black Sea and the Aegean. Ratification of the agreement by the Russian Duma was expected to take place in the near future, while the Greek Parliament has already ratified the agreement, New Europe reported. 
Representatives of the three countries will soon be meeting in order to set up the international company that will construct and operate the pipeline. The project between Bourgas in Bulgaria and Alexandroupolis in northeastern Greece would be completed in 2011 with an initial annual capacity of 35 million tonnes, with a potential for 50 million. It would bypass the congested tanker route through the Bosporus and bring mostly Caspian fields oil shipped from the Russian terminal at Novorossiisk to the terminal in the Mediterranean. According to the three-way agreement initialled in March, Russia would control 51 per cent of the pipeline operator, with Bulgaria and Greece equally splitting the rest. The construction, including the 166-kilometres stretch through southeastern Bulgaria, is scheduled to start this year. The transit fees would be negotiated at a later date.

BTC Mobile, Intracom Bulgaria ink 3 agreements

JSC Sitronics (Sitronics), a leading provider of telecommunications, IT and microelectronic solutions in Russia and the CIS with a growing presence in other EEMEA emerging markets, recently announced that Intracom Bulgaria S.A., a provider of information and communications technology services in Bulgaria, has signed three framework agreements with Bulgarian Telecommunication Company Mobile S.A. (BTC Mobile), a Bulgarian mobile operator, Sofia news agency reported. 
Intracom Bulgaria S.A. is a part of Intracom telecom, which is a subsidiary of Sitronics. 
Within the framework of the agreements, Intracom Bulgaria will supply telecommunications infrastructure design and installation services, and provide shelter equipment to BTC Mobile, it was reported. The total value of the contracts is 13.6 million Euro. The projects are expected to be implemented over the next two years. Founded in June 2004, BTC Mobile operates under the trade mark "Vivatel" and provides GSM and next generation telecommunication services to 700,000 subscribers in Bulgaria. 
BTC Mobile has had contracts for network sharing with the two leading Bulgarian mobile networks, MOBILTEL (MTel) and Cosmo Bulgaria Mobile (GLOBUL), since 2005. Alexander Lutsenko, SITRONICS chief of strategy, was quoted by the news agency as saying: "We are pleased to announce the deal with BTC Mobile, which is one of the most dynamic mobile operators in Bulgaria. These agreements will allow us to provide a wide range of telecommunications solutions to one of the key players in this market, thus broadening our portfolio of projects and strengthening our presence in one of our high priority regions." 
Sitronics is a former Scientific Centre Concern as the largest scientific complex in the microelectronics sector. It covers the Czechia-based Sitronics TS, NIIME, Greece-based Intracom Telecom, Micron, VZPP Micron, Kvant, Kvazar Micro, Elax, Elion.

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