Financial news

Bulgaria’s MPs voted to appoint Dimitar Radev as the new central bank governor on July 14, followed by a vote to accept incumbent Ivan Iskrov’s resignation from the job three months before his term expired. Radev took the oath of office in Parliament on July 14, but will take office on July 15, in a formal “passing-the-reins” ceremony at the Bulgarian National Bank (BNB). Even though he takes office with three months left on Iskrov’s term, recent legislative changes mean that Radev will not have to finish his predecessor’s term and will begin a full six-year term in office. Radev was the first of four nominees put forth for the position and was considered the favourite from the start, given that he was endorsed by GERB, the majority partner in Bulgaria’s four-way ruling coalition. His nomination received 130 votes in favour, including 23 votes from opposition MPs, which ensured that he got the necessary majority in the 240-seat legislature; 16 MPs voted against and 34 abstained. His appointment may not be final, however, as the Constitutional Court decided last week to take on a case brought forth by 74 MPs, who argued that the central bank governor election rules breached constitutional norms in limiting only parliamentary groups (as opposed to any individual MP) to make nominations.

Bulgaria’s consumer price index (CPI) was up by an annual 0.4 per cent in June after recording 0.9 per cent deflation for the month, the second decline in a row after three consecutive months of consumer price increases, data from the National Statistical Institute (NSI) showed on July 14. Food prices shrank by 2.2 per cent in June and non-food prices were 0.4 per cent lower, while service prices remained flat compared to May. In annual terms, services prices remained the main driver of CPI growth, rising by 2.6 per cent compared to June 2014, and food prices were 0.5 per cent higher, while non-food prices were two per cent lower. The harmonised CPI figure, calculated by NSI for comparison with European Union data, were 0.5 per cent lower compared to May, while the annual harmonised CPI remained in deflationary territory for the 23rd consecutive month, down by 0.6 per cent compared to June 2014. Food and beverage prices were 0.8 per cent up, on an annual basis, and the price of utilities and rent has increased by 5.1 per cent, while transportation costs were down 5.8 per cent compared to a year earlier.

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

Concessions

Bulgaria’s Transport Minister Ivaylo Moskovski has informed that concession procedures for the airports in Sofia and Plovdiv are be opened by end-2015. Moskovski, as cited by Sega daily, reminded that an attempt to award a concession contract for the cargo terminal of Plovdiv Airport had been launched before but no candidates had applied for the procedure. He underscored that this time the procedure would cover the entire Plovdiv Airport. The program of Bulgaria’s current government only envisages a concession procedure for the civilian airport in Plovdiv, which is now used mainly by low-cost airlines, which is to be wrapped up by 2018. Speaking after a Bulgarian-Bavarian economic forum, Economy Minister Bozhidar Lukarski announced Monday that Munich Airport had expressed interest in the concession procedure for Sofia Airport.

Companies

The first reading of Energy Act amendments envisaging the establishment of an Electricity System Security Fund is to take place on Tuesday. The changes were proposed by Bulgaria’s Energy Ministry in a bid to curb the deficit at the National Electric Company (NEK). Energy Minister Temenuzhka Petkova expects that the amendments will stabilize the energy system and pave the way for the introduction of the free electricity market in 2016. The resources of the Fund will be provided through contributions of electricity producers amounting to 5% of their monthly revenues. The National Revenue Agency will be in charge of the collection of the installments. Meanwhile, right-wing formation the Reformist Bloc has proposed that electricity producers publish the terms of the contracts under which they sell electricity in a bid to boost transparency.

The European Commission said on July 14 that the EU governments have approved a package of 150 million euro in funding for gas and electricity infrastructure projects across the EU, including two in Bulgaria. A total of 20 projects were selected for funding – mainly studies that would receive a total 30 million euro, including 3.9 million euro for 3D seismic surveys as part of Bulgaria’s preparations to expand its underground gas storage facility at Chiren. The package also envisions funding for three construction projects, including 29 million euro for a new 400kV overhead transmission line in Bulgaria, linking the Maritza Istok power plants in southern Bulgaria to the Black Sea Port of Bourgas. The Commission said that the new electricity transmission line was part of a cluster of four lines increasing the connectivity between Bulgaria and Greece. The overarching goal of all projects slated to receive funding was to increase energy security and contribute to the completion of a European energy market, as well as the integration of renewable energy sources into the electricity grid, according to the Commission statement.

Bulgarian nutritional supplements producer Fortrex Nutraceuticals opened on Tuesday a pharmaceutical plant near Sofia in which it has invested BGN 5 million so far. The plant, with an area of 2,100 sq m, has an annual production capacity of over 2.5 million packages. The plant includes clean rooms, chemical and microbiological laboratories, along with special areas for the production of nutritional supplements and solid pharmaceutical forms. By the end of the year, Fortex Nutraceuticals plans to have registered 10 pharmaceutical products. Fortex Nutraceuticals has nearly 20 years of experience in the production of nutritional supplements and cosmetics. The company exports its products to over 15 countries in Europe and Asia. Its portfolio features more than 100 products. The company has an annual turnover of almost BGN 8 million, it said without specifying for which year. Fortex Nutraceuticals employs 70.

The new owner of Bulgarian establishments of the coffee retailer Starbucks is the Polish AmRest, after the deal for acquisition, was terminated some days before. The contract for transfer of ownership is from 24th of June. The new name of the company is AmRest coffee. The takeover is actually with a focus Romania, as the deal is package, as the chain there is rather bigger. The buyer said that there is no concrete plan for development in Bulgaria. The Polish group acquired Starbucks’ business from the Greek Marinopoulos Coffee Company in two countries-five establishments in Bulgaria and 14 in Romania. The terminal price of the deal is EUR 16.4 million. In that way a total of 23 establishments will be managed in two countries. The Polish giant manages more than 70 sites of Starbucks in Poland, Czech Republic and Hungary. AmRest coffee will be managed by a new management, which will be entirely Polish. It will be responsible for the Romanian business, too. The Bulgarian company has more than 60 employees. As Starbucks’ business in Bulgaria is small, the buyer has no need to have permission for the deal by the local Commission for Protection of Competition.

Europe

Greece geared up for a crucial parliamentary vote on draconian reforms demanded by eurozone creditors in exchange for a huge new bailout, in what could be Prime Minister Alexis Tsipras's toughest political test yet. The embattled premier said he took "full responsibility" for signing an accord he did "not believe in, but which I signed to avoid disaster for the country" as it teetered on the brink of crashing out of the common European currency. The last-ditch deal struck Monday saw Tsipras agree to sweeping changes to labour laws, pensions, VAT and other taxes -- many of which had been rejected by voters in a public referendum -- in exchange for new funds to keep Greece's struggling economy alive. The parliament in Athens must approve the deal before the 18 other eurozone leaders start negotiations over what Greece is to get in return: a three-year bailout worth up to 86 billion euros ($95 billion), its third rescue programme in five years.

America

Wells Fargo & Co, the largest U.S. mortgage lender, reported a drop in profit for the second straight quarter as employee costs and other expenses rose at a time when it is struggling with slow revenue growth. Lower interest rates have crimped the bank's net income for the past two quarters, ending its five-year run of rising profits that was driven by a mortgage refinancing boom. Although Wells Fargo and other major U.S. banks have been making more loans, their net interest income growth has been sluggish due to low lending rates. Banks' net interest income has been under pressure also as lower-yielding loans replace higher-yielding assets. Wells Fargo's net interest income rose 4 percent in the second quarter ended June 30, a massive drop from the 97.5 percent growth it reported for the first quarter of 2009. The bank expects the acquisition of a $9 billion commercial loan portfolio from General Electric Co to add to its interest income in the current quarter, Chief Financial Officer John Shrewsberry said on a conference call on Tuesday.

Asia

The latest growth numbers show that China's economy is trundling along, expanding at a pace that is slightly faster than analysts expected. Gross domestic product expanded by 7% in the second quarter, compared to the same period last year, according to data released Wednesday by China's National Bureau of Statistics. While the growth rate is slightly faster than the 6.9% figure expected by economists, it matches the 7% GDP growth rate from the first quarter, as well as Beijing's growth target for the full year. Looking ahead, economists expect to see 6.95% annual GDP growth for this year, and even slower expansion at 6.5% in 2016, according to a CNNMoney survey. China's central government has already cut interest rates three times this year -- most recently, just two weeks ago. Experts say the rate cut came earlier than expected, likely as a defense against a worrying stock market plunge over recent weeks.

Agushevi konatzi

The Agushevi konatzi fortress is situated in the small village of Mogilitza, only 25 km away from the town of Smolyan, in the beautiful and mysterious Rhodopi mountain. “Konak” is a Turkish word and means big palace, big house. The Agushevi Konatzi represents a unique medieval feudal castle, consisting of a number of buildings with different functions, many yards, halls, corridors, tunnels, and hiding places. It is the only one of its kind on the Balkan peninsula. It was built in the middle of the 19th century by Bulgarian masters for the Turkish feudal Agush Aga and his three sons, who most probably used it as their summer residence. The “konak” is surrounded by a thick wall, equipped with a number of defence towers. One of the external towers is very interesting and is the only one of its kind in the whole Rhodopi mountain. It is vary tall, wider in its tallest part and has a number of windows, just like a kiosk. All the external walls and eaves are decorated with different paintings.

On that day:  Seven Rila Lakes