"Embassy of Greece - Download as DOC"
Embassy of Greece Sofia BULGARIA MONTHLY ECONOMIC REVIEW October 2004 The Bell Tower of Bansko. The tower was built in 1850. The clock was mounted on it in 1866. I. General Outlook Bulgaria’s gross domestic product (GDP) in the second quarter of 2004 increased by 6%, compared to the same period of 2003, according to a representative of the National Statistical Institute (NSI). Preliminary data reveal that Bulgaria’s GDP at the above mentioned period amounted to 8866,8 bn. bg. leva (5463,6 bn. USD). For the first six months of 2004 GDP amounted to 16,922 bn. bg. leva. In August 2004, monthly inflation stood at 0,9%, according to preliminary data of the National Statistical Institute (NSI). In September 2004, unemployment in Bulgaria stood at 11,74% (jobless totaled 442.190 persons), according to a press release of the Employment Agency, published on September 22nd 2004. The number of jobless persons decreased by 38.691, compared to July 2003. In January-August 2004 Bulgaria’s exports stood at 5,069 bn. EUROS and improved by 14,8% (651,9 MEUROS) compared to January- August 2003. On the other hand, imports increased by 17,6% (996,5 MEUROS), compared to January-August 2003, reaching 6,674 EUROS, according to a press release of the Bulgarian National Bank (BNB). According to preliminary data of the BNB, the Foreign Direct Investment in January-August 2004 amounted to 1,386 MEUROS (7,1% of the GDP), compared to 862,6 MEUROS, at the same period during 2003. Bulgaria’s gross external debt reached 12,237 bn. EUROS (63,1% of the GDP) at the end of August 2004, a representative of the BNB said. Public sector foreign debt amounted to 6,718 bn. EUROS (34,6% of the GDP) at the end of August 2004, while private sector foreign debt amounted to 5,519 bn. EUROS (28,4% of the GDP). The current account deficit for August 2004 amounted to 181,4 MEUROS. For the period of January-August 2004 the deficit was 545,3 MEUROS (2,8% of the GDP), according to BNB data. External trade deficit for the period of January-August 2004 was 1,605 MEUROS, which is 8,3% of the GDP, according to preliminary data of the BNB. On October 27th, 2004, the BNB set the new base interest rate to 2,44%. *** II. The following information is based on articles of the Bulgarian press: (1) Greek investments Greek Investments to Bulgaria: Bulgaria ranked as Balkans No. 2 investment destination in a poll among 676 managers of Greek companies, according to an information of the Greek newspaper “Eleftherotypia”. Greek-Bulgarian Business Forum: The Forum was held on October th 12 , 2004 at “Sheraton” Hotel, in the framework of the official visit of the President of Greece to Bulgaria H. E. Constantinos Stephanopoulos. More than 50 Greek companies and NGOs participated in it. Mr. Panayotis Koutsikos, General Secretary of the Athens Chamber of Commerce and Industry talked about some of the main impediments that foreign investors in Bulgaria have to overcome. Greek Law Firms: Greek law firms “Euroconsultants” and “Kallimopoulos, Loukopoulos, Chiotellis” have set up office in Bulgaria, reported the BTA News Agency, citing company sources. The two firms will provide legal advice in the areas of real estate, mergers and acquisitions and institutional financing. Tirbul EAD: Tirbul EAD, the Bulgarian subsidiary of the Greek dairy firm Tyras, inaugurated in the beginning of October a 12 MEUROS milk processing plant in Sliven, Southeastern Bulgaria. Half of the investment was loan-financed by Alpha Bank. The facility has a daily capacity of 90 tones of milk and has been licensed to export. Zagorka and Ariana Breweries AD: “Zagorka and Ariana Breweries” AD, co-owned by “Heineken B.V.” and “Coca-Cola HBC”, swapping places with “Kamenitza” AD atop of the sales rankings, sold 117,000 hectoliters in September, adjusting output to the down-cycle that usually begins in the fall. GloBul: The Greek-owned mobile operator opened on October 14th, 2004 a new representation shop in the town of Vidin, thus increasing the number of the company’s shops in the country to 24. GloBul is investing 2 MEUROS in their project for own shops chain. V+O Communication: The Greek “V+O Communication” opened an office in Bulgaria. The name of the company is an abbreviation of the names of the persons who established the company in 1999 developing it to the third ranking PR company in Greece – Thomas Varvisiotis and Iannis Olympios. Iannis Olympios is also a president of the agency in Bulgaria. The first clients of the agency in the country are “Neoset” and “Coca-Cola HBC”. Autotechnica: The official importer of Audi and Seat in Bulgaria “Autotechnica” has taken a decision to build an automobile business centre in Sofia on the “Tsarigradsko schosse” Blvd., opposite to “Metro”. It will include a 1000 sq. m. exhibition hall for the two brands of automobiles, 2500 sq. m. of repair shop, parking and administrative building. Since August 2004 the control package of shares is owned by Hertz Greece and the capital of the company has been raised to 4 mln bg. leva. Viohalco Group: Viohalco will open a company for the production of photovoltaic modules, called Energy Solution, at the premises of Stomana Industry. Viohalco has invested 600 000 Euro in the purchase of the production line and 100 000 Euro in the upgrade of the building where the line will be installed. The line will start operating by February 2005. The first photovoltaic modules produced by the company will be exported to the European Union. The company will be the first enterprise for the production of clean energy using solar power on the Balkan Peninsula. (2) Banks and Insurance Companies United Bulgarian Bank (UBB): UBB, 89.9 %-owned by the National Bank of Greece, unveiled on October 5th, 2004 an offer for mortgage loans with a first-year APR of 7.9% that will expire at the end of 2004. Mortgage credits borrowed from 2005 onwards will carry the standard 10.95 % APR. Pre-approval certificates will be available within a single business day. The borrower will know if he has received final approval within another two days. The home buyer can borrow no more than 200, 000 bg. leva no longer than 20 years. Bulgaria’s Financial Supervision Commission has licensed UBB Balanced Fund, an investment vehicle of the United Bulgarian Bank. The new open-end fund, to be managed by UBB Asset Management, will raise cash with an IPO and will invest in bonds and equities. UBB intends to set up two more investment companies before the year’s end, one will invest in equities only and the other in bonds. UBB Balanced Fund’s domestic peers are Advance Invest, Capman Capital, KD Pelican, Zlaten Lev, ELANA Eurofund and TBI Eurobond. The fund’s capital is 1.080 mln bg. leva, 45 % of which are owned by the UBB. Postbank: The bank opened a new office in Sofia on October 28 th, 2004 expanding its nation-wide network to 92 outlets. Postbank has opened and refurbished a total of 13 branches and offices so far in 2004 and plans to keeping adding new outlets until the end of the year. (3) Privatization Bulgarian Telecommunication Company (BTC): BTC and the Commission for the Protection of Competition (CPC) have petitioned the Supreme Administrative Court (SAC) in connection with the stay of the preliminary execution of the anti-monopoly commission’s decision to grant a GSM licence to BTC, a representative of the court reported on October 28th, 2004. On October 24th, 2004, a three-judge SAC panel ruled on a petition by the Supreme Administrative Prosecution Office and terminated the execution of the license. The panel also said that the nation’s two GSM operators GloBul and MobilTel should no longer be considered parties to the case, as they had no legal interest in it. The judges, however, allowed another license candidate, U.S.-registered Taffeta, to remain a party to the case. The SAC has scheduled an public hearing on the case for December 9th. The CRC is due to announce on November 2nd, whether the no-bid award of the license to BTC against a charge of 54 mln bg. leva can be regarded as state aid. Meanwhile, the expertise ordered by various parties to the dispute over the price of the third GSM license and the BTC have already become eight in number. Besides the assessment prepared by the privatization consultant Deutsche Bank, the analysis of the group of experts from the University of National and World Economy in Sofia and the report of the American Appraisal, the telecom has obtained four more expertises worked out by Diamon-Cluster, Capgemini, Bulgaria’s Industry Watch and a team of four experts from the American University in Blagoevgrad. In addition two weeks earlier the CPC ordered a report to the Hungarian branch of McKinsey&Co. The expertise given vary on the cost of the license from 5.6 mln USD to 15.8 mln USD. The Transport and Communications Minister Nikolai Vassilev announced on October 27th, 2004 that Bulgaria has decided to issue simultaneously three UMTS license in a bid to avoid the negative market repercussions caused by the huge gaps between the licensing of the nation’s two GSM operators. Vassilev said also that negotiations for the listing of 20% of the telecom’s shares on the Bulgarian Stock Exchange are under way with Viva ventures, the majority owner of the BTC, but approval has not yet been given by them. BTC has introduced three new subscriptions plans to its clients, company’s Trade Director Tony Robinson said on October 4th. The plans called BTC 12, BTC 15 and BTC 20 have already been approved by the Commission for Regulation of Communications. The BTC 12 plan includes 60 impulses a month at a price of BGN 12, the second plan offers 100 impulses for BGN 15, and under the third one the subscribers are charged by 20 BGN for 170 impulses. According to Robinson the company will introduce a new payment plan each month from now on. The BTC has repaid 53 MEUROS to the World Bank, EBRD and EIB under a long-term loan facility provided by the three lenders in 1993 for the implementation of a digital overlay network. The contract for the privatization of BTC obliges the new owner, Vienna-based Viva Ventures, to wipe clean all outstanding payments to creditors within six months of signing the document and thus release the state guarantees that have been granted. According to the company, it has currently reached a 30% rate of digitalization. (4) Projects under pre-accession EU programmes, Investments Funds Lom-Thessaloniki Highway and Railway Link: The ports of Lom and Thessaloniki will be connected with a highway and railway links, announced the Minister of Regional Development and Public Works Valentin Tserovski. The road will include also the “Struma” and “Ljulin”. Highways and will pass under the Stara Planina Mountain. Three variants of the tunnel’s project are discussed with the length of 3, 6 and 9 km. The project is evaluated at 420 MEUROS, whereas most of the money are expected to come from EU sources. According to the Deputy Foreign Minister of Greece, Mr. Evripidis Stylianidis, the Lom’s port will be financed with priority by the Greek Plan for Economic Reconstruction of the Balkans. CADSES: Bulgaria was admitted to the management structures of the European Commission’s Interreg III B CADSES (Central European, Adriatic, Danubian, South-eastern European Space) programme at a meeting of the programme’s monitoring committee last week, a representative of the Finance Ministry said on October 18th, 2004. The programme is an EU initiative for cross-border co-operation in regional development and landscape. 18 CADSES countries are participating in it. Cross-border Check Points: The construction of the Greek section of the approach road to Makaza-Nimfea border will start in late 2005 and will be completed by 2008 at the latest, announced the Bulgarian Deputy Finance Minister Lyubomir Datsov after meeting with the president of “Egnatia Odos”, the Greek contractor that will be involved in the project. The Ilinden-Exohi crossing on the border with Greece is scheduled to open in 2005. M&A CEE Fund: Representative of the “Eastern European Mergers and Acquisitions Network” (M&A CEE) said on October 11th, 2004 that the Network will set up a 100 MEUROS investment fund to function in the Balkan States and Russia. The money comes from British and U.S. banks. The fund will start functioning between September and October 2005. Bulgaria is represented in the fund by the private company Forem Consulting, whose Managing Director is Mario Al-Jebouri, who said that a total of 20 MEUROS has already been invested in the country through the M&A CEE directed to the foodstuff industry, mechanical engineering and communications. (5) Tourism Bulgaria’s tourism revenue for the first seven months of 2004 amounts to 976.2 MEUROS, up 23.8 % on the year-ago period, preliminary data of the Ministry of Economy shows. For the same period, Bulgarian citizens spent 418 MEUROS on trips abroad. The international tourism showed a surplus of 558.2 MEUROS. Bulgaria was visited by 3.342 mln tourists in January-September, up 17.43% year-on-year base. The information shows that the number of tourists and revenue exceeded the more modest forecast of a 10-12 % year-on-year increase, Deputy Economy Minister Dimitar Hadjinikolov commented. The poor infrastructure and the pell-mell construction that ran right through the active tourist season are the main problems for the tourist industry. The country collected 1.176 MEUROS from trophies in 2003, despite the problems with the increased number of predators in the local forests and could generate a revenue of 50 mln bg. leva a year from hunting tourism, Ilia Simeonov of the National Forestry Administration said on October 26th,2004. The urgent need of investments in the sector needs legal framework for the entry of the private capital to the reserves, Simeonov added. *** For further economic information and the Embassy’s business newsletter (in Greek), please link www.bulgarianeconomy.gr (6) BULGARIA’S PROVISIONAL ECONOMIC DATA FOR 2003 AND JANUARY-SEPTEMBER 2004 Value in bg. leva Value in Euros Value in USD in percent persons (%) GDP [for the first six months of 16.922.329.000 8.630.387.790 10.701.680.859 2004] (1) per capita: 2129 per capita: 1104.5 per capita: 1356 GDP generated from the agriculture (in percent). 1.199.554.000 611.772.540 758.597.949 7,1% For the first six months of 2004 (1) GDP generated from the industry (in percent). 4.647.098.000 2.370.019.000 2.938.824.000 27,5 % For the first six months of 2004(1) GDP generated from the services (in percent) 8.716.314.000 5.491.277.000 6.809.184.000 51,5 % For the first six months of 2004 (1) Public sector ratio toward GDP (1) 3.679.573.000 1.876.582.000 2.326.961.000 21,8 % Private sector ratio 10.883.393.000 5.550.530.000 6.882.657.000 64,3% toward GDP (1) Gross external public debt in value (till August 2004 ) 23.862.150.000 12.237.000.000 15.033.154.500 (2). (5) Gross external public debt (as % of the GDP)(1) 63,1% Public sector foreign debt till August 2004 (as % of the GDP)(1) 13.100.100.000 6.718.000.000 8.253.063.000 34,6% Imports (January-August 2004) 13.014.690.000 6.674.200.000 18.104.22.1680 (1) Exports (January-August 2004) 9.884.745.000 5.069.100.000 6.227.389.350 (1) Foreign trade deficit (January-August 2004) 3.129.945.000 1.605.100.000 1.971.865.350 (1) Current account deficit (August 2004) (3) 353.730.000 181.400.000 222.849.900 Foreign Direct Investments (January-August 2004) 2.702.505.000 1.385.900.000 1.702.578.150 (3) Foreign tourists in Bulgaria (Jan-September. 2004) 3.799.424 (4) Income from tourism (Jan.-June. 2004) 1.260.285.000 646.300.000 793.979.550 (1) Inflation rate or September 2004 (1) 0,9% Inflation rate (for 2003) 5,6% (1) Unemployment rate (in September 2004) 11,74% (1) GDP: Gross Domestic Product Note: All accountings are made according to the (1) source: Bulgarian National Statistic Institute Bulgarian National Bank rates of foreign currencies (2) source: Bulgarian Ministry of Finance against the Bulgarian lev. Applicable on November 1st (3) source: Bulgarian National Bank 2004 as follows: 1 USD: 1.57 bg. leva; 1 EUR: 1.24 USD (4) source: Bulgarian Ministry of Economy 1EUR: 1.95 bg.leva (5) Gross external debt includes public and private dept