Financial news

Bulgaria’s consolidated budget showed a surplus of BGN 257.1 mln at the end of March, equivalent to 0.3% of the GDP projected for 2015, the Finance Ministry said on Thursday. This compared with a consolidated budget deficit of BGN 874 mln at the end of the first quarter of last year. “Compared to end-March 2014, the budget position has improved by 1.4% of GDP,” the Finance Ministry said. The budget balance figure at the end of March 2015 is the first surplus recorded in the first quarter of the year since 2009. It comprised a surplus of BGN 156.2 mln under the national budget and a surplus of BGN 100.9 mln under EU funds. “The higher revenues continue to be the main factor for the improvement of the budget balance, while expenditures develop as provided for in the fiscal framework. The rate of revenue growth significantly outpaces the rate of expenditure growth which results in the reported budget balance improvement”.

The monthly per capita cost of living in a family of four with two dependent children amounted to BGN 563.21 at the end of March, the Institute for Social and Trade Union Research with the Confederation of Independent Trade Unions in Bulgaria (CITUB). A household consisting of two adults and two children need some BGN 2,253 monthly to cover their spending on food, education, healthcare and housing by average Bulgarian standards. The cost of living has risen by 0.5 per cent compared to the preceding quarter, the same level year-on-year following a trend of consistent decline for 18 months. According to CITUB, the quarterly rate of cost of living increase is indicative of slight upward fluctuations, but this is due to the higher prices of foods conditioned by the seasonal character of fresh vegetables and fruit. Non-food average levels continued to decline, both quarterly and year-on-year. This is mainly due to international oil price dynamics from the end of 2014 and the beginning of 2015.

	Mineral Fuels, Tailoring Products, Canning, Perfumery and Cosmetics, Furniture, Meat Products, Wine, Wood-processing Industry

Privatization

The sale of BSE-Sofia and the Central Depositary is facing yet another delay as the Privatization Agency (PA) is trying to get the nod of every possible government institution in the country. Following its inquiry with the Financial Supervision Commission (FSC) back in February this year as to whether it was risky selling the Central Depositary, on April 30 PA asked the State Agency for National Security (SANS) to green-light the sale. PA decided to approach SANS out of security concerns regarding the fact that the new potential owner of the Central Depositary would have access to insider data about all public companies in Bulgaria. Decoupling the privatization of BSE-Sofia and that of the Central Depositary could deal a blow to investors’ interest in the entities, which is already running out of steam.

Companies

A new bill on the bailout and restructuring of troubled lenders will be tabled before the Council of Ministers in early June this year. Jointly prepared by the Finance Ministry, BNB and the Financial Supervision Commission (FSC), the new draft legislation will transpose Directive 2015/59 into local regulations, detailing out the bailout procedure and specifying where the money will come from. The so-called asset quality assessment for the local lenders, which BNB and the Finance Ministry were supposed to run this year, will be rescheduled for 2016, and that will be stage one of the actual stress tests. The latter will have taken place by late July 2016 and we’ll know the results by September the same year. As to the asset quality assessment, the Finance Ministry should by the end of 2015 pick a company to conduct the evaluation of the local lenders, which will be at their expense. By late 2015, the Finance Ministry should select an auditor for the assets of the local pension funds, too.

Gold mining will begin in early 2016 in the Rhodopes, announced chairman of Minstroy Holding JSC Nikolay Valkanov. For the first time the precious metal will be derived from the copper mines of GORUBSO - Zlatograd and Lucky. Currently only lead, zinc and silver are extracted, and now experts in enrichment of minerals in St. Petersburg Institute develop gold-extraction. "In some deposits there are deposits of copper and it contains gold. We can draw about 700-800 tons of copper per year. The investment for this will be approximately BGN 5-6 million, which will replace all the equipment in the flotation plant to be able to process copper. With the advancement of technology we will start gold mining," said Vulkanov, owner of the mines of GORUBSO in Madan and Zlatograd. "We will invest in new equipment only in the flotation factory so that over the next 30 years it will not need additional repairs.

Companies listed on BSE-Sofia reported a combined profit of BGN 150 million for the past year, according to money.bg. The financial portal compiled data from the financial reports of all 287 public companies, traded on the local stock market. Back in 2013, however, public companies had posted a combined profit of BGN 350 million, which means their 2014 earnings were down 60%. The top 10 list of the biggest gainers last year features Chimimport, Fibank and Sopharma. Interhotels, CBA Asset Management and Neochim were the biggest losers in 2014.

Assets of the insolvent CorpBank have bulged by BGN 37.29 million or 2.07% in the first quarter of the year to BGN 1.838 billion, according to the company’s financial report for Q1 this year. The increase in the lender’s assets was largely due to the spike in the US dollar against the euro in the given period and the fact that much of its assets is in US currency. Meanwhile, however, the credit portfolio of the failed lender has deteriorated even further in the first quarter of the year. The toxic loans in CorpBank’s portfolio currently exceed 99%. The negative shareholder equity of the bank is BGN 3.8 billion.

Swiss building materials producer Holcim said the volume of its cement and clinker sales jumped by an annual 29.4% in Romania and fell by 2.5% in Bulgaria in the first quarter of 2015. Aggregates sales volume surged 117% on the year in Romania while growing 27.4% in Bulgaria, Holcim said in its first-quarter report. According to the report, domestic cement prices fell by 4.7% on the year in Romania and increased by 1.5% in Bulgaria. Aggregates prices declined by 8.5% in Romania and by 8.2% in Bulgaria in the period under review.

Europe

Russian energy giant Gazprom has confirmed it has received $40 million from Ukraine's Naftogaz as a prepayment for Russian gas deliveries, a source in Gazprom told RIA Novosti on Wednesday. "We received $40 million," the source said. Earlier in the day, Naftogaz said the company had transferred $40 million to Gazprom. In summer 2014, Gazprom switched Ukraine to a prepayment system for gas deliveries over Kiev's outstanding gas debt of more than $5 billion. In October 2014, Moscow and Kiev signed the "winter package" agreement, providing Ukraine with gas supplies until the end of March with a $100-discount per 1,000 cubic meters. On March 31, Moscow extended the deal for the second quarter of 2015. In March, Russian Energy Minister Alexander Novak said Naftogaz owed Russia $2.4 billion for 2014 gas deliveries and in nonpayment penalties.

America

BNP Paribas SA was sentenced to five years probation by a U.S. judge on Friday in connection with a record $8.9 billion settlement resolving claims that it violated sanctions against Sudan, Cuba and Iran. U.S. District Judge Lorna Schofield in Manhattan formally ordered the French bank to forfeit $8.83 billion and pay a $140 million fine as part of a sentence that also called for BNP Paribas to enhance its compliance procedures and policies. Some of that money could now go to people harmed by the three sanctioned countries under a program the U.S. Justice Department announced in court. Georges Dirani, BNP's general counsel, told the judge that the bank accepted "full responsibility for its conduct," and was under CEO Jean-Laurent Bonnafé's personal supervision already improving its policies. "There's no question the organization will not tolerate the kind of behavior we have seen in this case," Dirani said.

Asia

Central bankers and finance ministers from China, Japan and South Korea said they remained committed to policies to support demand in the face of moderate and uneven global growth. The policymakers for the three North Asian economies held a trialateral meeting, chaired by Japan's Deputy Prime Minister and Finance Minister Taro Aso, on the sidelines of an Asian Development Bank Meeting in Baku, Azerbaijan. Their joint statement noted that global economy was passing through an uncertain phase, and growth remained moderate and was following divergent paths. "We are committed to continue implementing timely and effective macroeconomic policies in order to help boost demand," the statement said. "Structural reforms to increase potential growth should continue to remain a high priority for a sustainable and balanced growth." Many economists have warned that expected interest rate hikes by the U.S. Federal Reserve at a time when many other central banks continue to pursue loose monetary policies could cause volatility in capital flows and exchange rates.

The Silkosia reserve

Created in July 23, 1931, Silkosia is the oldest reserve in Bulgaria. The territory was protected with the purpose of saving the evergreen bushes in its highest parts. The area of the reserve is 396 hectares, covering part of the catchment basin of Veleka river. There are 260 species of high plants, 16 relicts and 3 endemic. They are 22,6% of all the vegetation in Strandzha Mountain. Large part of the plant species is similar to the plants in Asia Minor and Western Caucasus. For some plants, for example the bear blueberry, this region is their only habitat in Europe. The phenomenon plant inversion is observed in Silkosia. Normally the beech trees are in the colder areas, at higher altitude, and the oak trees are in the lower areas. The situation is just the opposite in the reserve. There you can also see more than 50 protected animals. There are deers, wild-boars, hares, foxes, weasels, squirrels, hedgehogs and many others.

On that day:  The Big Island – Dourankulak Lake