Books on Bulgaria
Update No: 117 - (22/02/07)
New government does well
In June 2005, Bulgarian voters renewed the National Assembly. The Coalition for
Bulgaria (KzB)-which included Stanishev's Bulgarian Socialist Party (BSP)-secured
82 seats, followed by the National Movement Simeon II (NDSV) with 53 lawmakers.
In August, the two main parties, along with the Turkish Movement for Rights and
Freedoms (DPS), agreed to set-up a coalition administration with Sergei
Stanishev as prime minister.
In September 2006, the European Union (EU) announced that Romania and Bulgaria
would become members of the continental group in 2007, but urged both countries
to closely monitor issues such as food safety, EU subsidies and justice. The two
nations officially joined the EU in January.
Public support grows
In a poll in February 47% of respondents approved of the prime minister's
performance, up two points since December. The data was published by Angus Reid
This is an exceptionally good performance for a country in transition and shows
that the new government must be doing some things right.
Opposition, however, is coming from the Bulgarian president, Georgi Parvanov,
who in January criticized Stanishev for ordering the closure of two nuclear
reactors, saying the decision would drive the whole region into an "energy
crisis." The reactors had to be shut down as part of Bulgaria's commitments
to join the EU. As a result, Bulgaria was forced to stop sharing energy with
On February 3rd, Stanishev explained that Bulgaria "must comply with the
Accession Treaty," but acknowledged that the government would "address
proactively" the possible reopening of the nuclear reactors.
Improvements in the economy
The comparative popularity of the government is readily understandable in the
light of economic developments. The economy is on the mend.
A) growth and single figure inflation
The growth of gross domestic product (GDP) in 2007 will be about 6.5 per cent,
compared with 4% per annum on average earlier in the decade. In 2006, direct
foreign investments in Bulgaria totalled 3.5 billion euro, topping the current
account deficit by 6.2 per cent.
Inflation was a real curse in Bulgaria in the 1990s. It will reach six per cent
in 2007, a report from the Centre for Economic Development (CED) read. Consumer
prices were up by six per cent in 2006. At least a steady course, if needing
further improvement. GDP growth in 2008 is planned to be 6.2 per cent, with
inflation at under three per cent.
B) Pensions to go up?
MPs and ministers from the Bulgarian Socialist Party (BSP) decided to propose a
10 per cent increase of pensions as of July 1 2007. The news came from Labour
and Social Policy Minister Emilia Maslarova, who was part of the BSP seminar
organised at Belmeken sports base on Rila Mountain.
The BSP decision came as a surprise to its two coalition partners, the National
Movement Simeon II and the Movement for Rights and Freedoms. When the draft bill
on budget 2007 was discussed last year, the three ruling parties agreed that
pensions would be raised in July 2007 by 8.5 per cent. BSP's decision for a 10
per cent increase came after several weeks of public protests organised by
different pensioner organisations.
Talking on private bTV on February 7, Maslarova said that her party's decision
had nothing to do with the protests or with the MEP elections in May. "The
10 per cent increase will be of no danger to the balance of the budget,"
she said. Milen Velchev from NMSII and Yordan Tsonev from MRF said that indeed
pensions could go up, but they were unpleasantly surprised that BSP's decision
came via the media. Most of the pensioner organisations rejected BSP's offer.
NMSII and MRF have yet to officially approve BSP's proposal.
C) Monthly income exemption
Monthly income of up to 220 leva will be tax exempt after 2008, according to a
Government tax reduction plan. The plan makes budget prognoses for the period
On February 1, the Council of Ministers started budget planning procedures for
2008. In preparing the budget plans, different ministries will have to consider
the outlying brackets for the period 2007-2009, as decided by the Council of
D) New plan for jobs
Unemployment in 2007 is expected to be below nine per cent, against 9.6 per cent
in 2006. The employment ratio is likely to increase to more than 59 per cent,
Labour and Social Policy Minister Emilia Maslarova told reporters on February 2.
According to a Government national action plan on employment, 190 million leva
will be used for the employment of more than 82 000 people and training of some
32 000 people. About 80 per cent of the available funding will go for programmes
and projects for subsidised employment and nine per cent for training.
In 2007, the labour policy will give priority to poor jobless persons with no
education and training, unemployed young persons with little or no experience,
disabled persons without a job, and jobless over the age of 50, Maslarova said.
This is the eighth action plan the Government has adopted to increase employment
and improve labour quality and productivity.
However, among all this good news, there is a cautionary warning from the other
side of industry for the government.
The Government should urgently take measures to attract foreign workers,
because Bulgaria is facing an acute workforce shortage in the next five years,
employers told Finance Minister Plamen Oresharski on February 6. Oresharski met
with employers' organisations to discuss a national development programme until
2009. The programme has to be presented to the European Commission by March.
Even now, it is difficult to find a trained workforce in certain sectors of the
Bulgarian economy. However, the Government's current programme does not provide
for opening the labour market to foreigners.
DIRECT FOREIGN INVESTMENTS
World Bank gives high ranking on foreign investments
According to a World Bank report, Bulgaria ranks first among the 10 newest EU
member states for the amount of direct foreign investment it has attracted,
Sofia News Agency reported.
The report said that foreign investment aided the country to increase
productivity and compensate for the high current account deficit, the news
agency said. For the period January-November 2006, the state exchequer received
3.2 billion Euro investments, Bulgarian Economy and Energy Minister, Rumen
Ovcharov, was cited as saying.
The gross domestic product (GDP) rate was highest in Poland, Slovakia and
Romania, the report said. Slovenia and Bulgaria also registered significant
growth in comparison with the levels for the previous year. The sum stands at 13
per cent of GDP and more than 100 per cent of the current account deficit, he
told participants at the session of the Economic Growth Council. The body
convened to discuss the strategy of the government and all partnering
organisations to prolong economic reforms, enhance the fight against corruption
and improve the workforce quality. According to the analysis of investment
reforms prepared by the Organisation for Economic Cooperation and Development (OECD),
Bulgaria has been most progressive in its investment and trade policies. Yet,
the new EU member has to work more actively to limit registration and licence
barriers to the business, it was reported.
Conditions set for Trakia Motorway construction
The consortium, comprising of Bulgarian and Portuguese companies, responsible
for the construction of the Trakia Motorway will make a speedy decision on
government demands for annexes to the already signed contract, Sofia News Agency
The cabinet demanded late modifications to the signed agreement. Among the
demands is the removal of state guarantees for traffic, it was reported.
Bulgarian Prime Minister, Sergei Stanishev, was cited as saying at a news
conference that conditions are being set to concessionaire Magistrali Trakia AD
for the construction of the Trakia Motorway, which it has to accept.
Under the requirements, the concessionaire must fully assume the construction
and availability risk. Moreover, the agreement clauses providing for open or
hidden state guarantees are to be revoked. The concessionaire must accept the
requirements unconditionally, and they need to be reflected in an annex to the
agreement. If this fails to take place, the government will stop work on the
agreement, Stanishev was cited by the news agency as saying.
Bulgarian Regional Development Minister, Assen Gagauzov, said that if the
demands were not met, Bulgaria would consider other options for the construction
of the highway. A new tender procedure for the selection of a concessionaire
could be launched, Gagauzov said, adding that another option was the
construction of the highway, using loans from foreign institutions. The
consortium has already received information on the state demands. Shareholders
would discuss the modifications and make a fast decision, a press release said.
At the same time, the Council of Ministers gave a very short period for the
making of a major decision, the consortium said, according to the news agency.
The initially contracted price for the construction and rehabilitation of the
main road connecting Kalotina, the northern section of the Sofia ring road,
Orizovo, Stara Zagora, Nova Zagora, Yambol, Karnobat and Bourgas, remains
unchanged. The financing of the project will start within three months following
the signing of the annexes to the agreement. The sections of the new motorway
will go into operation as they are ready.
236m Euro deal inked for Danube Bridge
Bulgaria on January 30th signed a 236 million Euro deal with a Spanish firm and
a British-French consortium to build a crucial bridge on an international route
across the Danube, Deutsche Presse-Agentur (dpa) reported.
The Spanish Fomento de Construcciones y Contratas SA would design and build the
bridge, while the consortium of Ingerop and High Point Randel would maintain it.
The bridge linking Danube cities Vidin in Bulgaria and Calafat in Romania is a
major element of a pan-European road and railway corridor linking eastern
Germany and Turkey. Once completed, it would reduce the pressure on the
currently most-used route running to the east across Serbia. The overall cost of
the bridge construction would be mostly funded by EU programmes, the European
Investment Bank and other international and national financial institutions. The
construction of the Vidin-Calafat Bridge has been delayed by cross-border
squabbling even after Romania and Bulgaria, both EU member states since January
1st, finally agreed to build it in 2000. The work is now scheduled to start in
May and the bridge completed in 2010.
Construction of Lyulin highway begins
The construction of Lyulin highway was due to begin at the end of January 2007,
Vesselin Georgiev, head of National Road Infrastructure Fund recently announced,
according to Sofia News Agency.
The highway is to be around 19 kilometres long and will connect Sofia's
ring-road and European corridors IV and VIII, the news agency said. According to
Georgiev, the best guarantee for profitability of the highway was the traffic
increase through the other 200 kilometre of the highway already constructed.
Studies on the environmental impact of the Strouma highway, which would connect
Lyulin highway to Koulata border checkpoint, would be ready within two months.
Studies on the environmental impact of Cherno More highway, connecting the
coastal cities of Varna and Bourgas, and the unfinished part of Hemus highway
were also being prepared. Georgiev also commented on another highway project.
Negotiations on the Trakia highway and the responsibilities of the state in the
project are still under negotiation. Bulgaria should not be obliged to pay the
concessionaire compensation in case of insufficient Trakia highway traffic,
Georgiev was cited by the news agency as saying. The highway concessionaire, a
consortium of Portuguese and Bulgarian companies, wanted Bulgaria to guarantee