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BULGARIA


  
   

 
Key Economic Data 
 
  2002 2001 2000 Ranking(2002)
GDP
Millions of US $ 15,608 13,600 12,600 74
         
GNI per capita
 US $ 1,790 1,650 1,580 110
Ranking is given out of 208 nations - (data from the World Bank)

REPUBLICAN REFERENCE

Area(sq.k.m)
110,600

Population
7,707,495 

Capital
Sofia

Currency
Lev 

President 
Georgi Paranov


Private sector
% of GDP
40%
 

  

Background:
Bulgaria earned its independence from the Ottoman Empire in 1878, but having fought on the losing side in both World Wars, it fell within the Soviet sphere of influence and became a People's Republic in 1946. Communist domination ended in 1990, when Bulgaria held its first multi-party election since World War II and began the contentious process of moving toward political democracy and a market economy while combating inflation, unemployment, corruption, and crime. Today, reforms and democratisation keep Bulgaria on a path toward eventual integration into NATO and the EU - with which it began accession negotiations in 2000. 

Update No: 080 - (01/01/04)

Red vote ends the honeymoon for Simeon II
There is a widespread apathy in Bulgaria about politics. Recent municipal elections saw turn-out at the lowest ever since the end of communism at 32%. For sound reasons nobody thinks anyone can really master the country's grave problems of transition.
The latest party to arouse disillusionment is only three years old, the National Movement of Simeon-II. The Bulgarians have delivered their verdict on the 800 days which Premier Simeon-II Saxe-Coburg said in 2001 he would need to double their living standards.
The answer is a dramatic thumbs down at late October's municipal elections. These were won by the former communists, who gained 33% of the votes. The Bulgarian Socialist Party (PSB) was the clear winner, while the conservative opposition United Democratic Forces won second place with 21%. "There has been a clear winner in these elections," said Andre Raiechev, of the Gallup Poll Organisation. "That is the PSB. A third of Bulgaria has voted red."
The National Simeon II Movement of the premier, the former monarch of the country in the 1940s as a boy, came third on 11%. Its ally in the coalition government, the Movement for Rights and Freedom, mostly representing Bulgaria's 800,000 ethnic Turks, obtained 9%.
The result was a clear setback for the centre-right coalition that does not look likely to survive beyond the next parliamentary elections in two years' time.

Economy in the doldrums
The explanation is not hard to find. Despite positive growth rate figures for GDP of around 4% annually in the period since March 2001 when the government came to power, this has not shown up in people's living standards. Average salaries rose by 17% in the new government's period of office so far, to 143Ecu ($168) per month. A meagre result for a poor country, conclude the population.
Unemployment is in double figures at 12.98% of the work force, which is below the average for Central and Eastern Europe of 14.5%, and lower than in 2002 by 170,000 people, but too high for comfort. 
Simeon is paying the price of raising expectations unduly in the electoral campaign of March 2001, now seen as a long time away. People were expecting a royal bounty and have got a beggarly response. There was in truth little chance of the former monarch keeping his word. Bulgaria will need time to turn the corner in terms of prosperity for the bulk of the population.
An austere budget deficit of under one per cent of GDP wins the applause of the international institutions, but not of the electorate. Penny-pinching impresses the bankers, but not the poor and needy, who abound in the Balkan country.

Foreign investment to the long-run rescue 
One bright feature is that Bulgaria is at last attracting considerable interest by foreign investors. It has been low down on their priorities, compared with Hungary and the Czech Republic, which have both seen inflows of FDI of over $20bn since 1989.
Now Bulgaria is coming into their sights. The three big investor countries are Greece in first place with $692.6 million, Germany with $658.8 million and Italy with $605 million. Switzerland and Austria are also notable investors, pushing the total figure for accumulative FDI above $3bn. 
For the last 10 years Greece has been a regular investor. Between 1995 and 1999 investments were made by Delta (in the food and beverage industry), Goody's (in restaurant management), Chipita and Vitamina (in the food and beverage industry).
Greece is also well presented in the field of telecommunications (through Intracom) and in the banking sector (Union Bank).
The peak investments of Greece in Bulgaria were made in 2000 and 2001 with US$241.1m and US$240.2m, respectively. Substantial investments were made in telecommunications, banking, metallurgy and media business sectors. 

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BONDS

Primary Eurobond trading draws in foreign investors

Investment banks based in London and Frankfurt, as well as investment funds from Western Europe, have shown greater interest in the first Bulgarian Euro-denominated bonds issue designed to be sold on the domestic stock market, Deputy Finance Minister, Krassimir Katev, said in a recent statement. BTA News Agency quoted Katev as describing the issue as very positive. The bonds, maturing in 15 years' time and bringing an annual yield of 6%, were offered for sale by the Finance Ministry on November 3rd. 
According to Katev, the interest investors showed exceeded the available amount of bonds 3.5-fold: there were subscribers for 74m Euro worth of bonds, while the bonds put up for sale totalled 20m Euro. "Foreign investors are overcoming their reluctance to put money in the Bulgarian debt market," Katev was quoted as saying. Bonds of the issue will be quoted for sale this year, too. It is planned to make the issue big and liquid enough to become a benchmark for other debt instruments.

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CONSTRUCTION

Peshov says construction to witness glory days

Growth in construction services in Bulgaria is expected to reach 15 per cent over the next two years, Dnevnik daily reported.
The share of this sector in the country's GDP will double from four per cent to eight per cent over the same period.
Bulgarian Chamber of Construction Chairman, Simeon Peshov, made this forecast. In 2002, the gross added value accumulated by the sector was estimated at 24.5 per cent of Bulgaria's GDP. Following the two-year booming period, the growth in construction will hover around 10-12 per cent, Peshov predicted. The new estimates are based on expected investments from the EU pre-accession funds and the budget in a number of infrastructure projects such as the reconstruction of the Sofia airport, the restructuring of roads across the country and the concessions for the Trakia and Hemus highways.
Meanwhile, all 1,250 member companies of the chamber will enjoy preferences in getting bank guarantees under an agreement the organisation recently signed with Roseximbank, part of the biggest wholly Bulgarian-owned financial group DZI-Roseximbank.
Construction companies, willing to participate in tenders and international competitions, are obliged to present three main bank guarantees under the Public Procurement Act. The signed contract provides the best possible financial conditions for local construction companies, Peshov commented.

Ambitious mall to open in Sofia

A total of 50m Euro will be invested in a project for the construction of Sofia's largest trade and business centre, designed to include 120 shops, a hypermarket, 12 multiplex cinemas, IMAX cinema and six floors of offices, novinite reported recently.
The first phase of implementing the project - demolishing a huge old building on the site where the mall of Sofia will be erected - was recently conducted successfully by municipal company, Sofinvest.
The trading and entertaining area of the mall will spread over 35,000 sq.m, while the offices will take up some 10,000 sq.m The construction of the mall is scheduled to be completed in 2005. 

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FINANCIAL NEWS

IMF backs economic expansion strategy

The International Monetary Fund (IMF) recently offered its support to Bulgaria's economic strategy for innovations, including the use of budget sources as it is aimed at improving the competitiveness of the companies and the business climate of the country. That was made clear after the recent meeting of the IMF mission leader in Bulgaria, Jerald Schiff and Bulgarian Economy Minister, Lidia Shuleva, bnn News Agency has reported.
The IMF representatives are interested in Bulgaria's bills are aimed at attracting more investments into the country. Schiff stated that in his opinion the programme for improving the country's competitiveness would have a key role for its future entry into the European Union. 
He also said that the IMF backs the recommendations of the World Bank that Bulgaria should improve its business climate and remove all the obstacles for foreign investors. "Bulgaria has made considerable economy growth but it could develop further," he was quoted as saying. 

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FOREIGN INVESTMENT

France keeps its distance from aggressive investments in Bulgaria

France ranks 13th among foreign investors in Bulgaria, France's trade attaché to Sofia announced recently, novinite reported.
The fact that Bulgaria is not very well presented in France was pointed out as the main reason for the low level of investments. However, French officials explained that several initiatives for presenting Bulgaria's investment and business climate to the French business have already been launched. Bulgaria's strategic geopolitical situation was highlighted as the countries major advantage for attracting more French investment. However, it was recommended that Bulgaria should be promoted abroad and its image improved.

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FOREIGN LOANS

World Bank to allot US$50m for second road projects

The World Bank is expected to allot a US$60m credit to Bulgaria for he reconstruction of 400km of the country's secondary road, Director of the Roads Agency, Palev Dikovski was quoted as saying by novinite recently.
The ratification of the contract would take place in 2004, while the reconstruction would begin in 2005, Dikovski explained. He also added the World Bank experts aimed their efforts at the country's secondary roads as the fist class road in Bulgaria meet the European requirements.
Over six percent of the country's secondary roads will be reconstructed if Bulgaria's government and the World Bank agree on the conditions and the International Monetary Fund approves them. 

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MINERALS & METALS

Kremikovtsi deals metallurgic deliveries Marcegaglia

Bulgarian steel maker, Kremikovtsi, is to sign a one billion Euro contract with the Italian Marcegaglia company, Kremikovtsi director, Valentin Zahariev said in a recent statement, novinite news agency has reported.
Under the contract, Kremikovtsi would have to deliver metallurgic production to its Italian partner, which has been among Kremikovtsi's larger clients over the last five years.

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TOURISM

TUI-Great and MyTravel initiate tourist packages

Effective from the beginning of 2004, TUI-Great Britain and MyTravel will offer summer holidays in Bulgaria. As of 2005 Thomas Cook will start sending tourists to Bulgarian winter resorts. This emerged after a recent meeting between Deputy Econmy Minister, Dimiter Hadjinikolov with leading tour operators at the world tourist exchange in London, BTA News Agency reported recently.
Bulgaria was defined as the fastest developing tourist destination by the Federation of British tour operators, Hadjinikolov said at a news conference. In the past two years, Bulgaria secured a firm foothold on the British market which is evident from the number of British tourists visiting this country. They were 111,000 in 2002 compared to 150,000 in the first nine months of this year alone, according to dat released by the economy ministry.
Hadjinikolov singled out improvement of infrastructure, investments in cultural tourism development of green, rural and balneological tourism as some of the key tasks for the upcoming 2004. "Our goal is to turn Bulgaria from a developing destination into a well-known tourist country," Hadjinikolov was quoted as saying by BTA.

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