Financial news

“Until now Bulgaria has managed to absorb 4% of the EU funds,” Bulgaria’s Minister of EU Funds Management, Tomislav Donchev said. “Within a year we must for sure reach a two-digit figure, about 10% or 11-12%. It is not a figure which could amaze somebody in the middle of the programme period,” Donchev said.  He added that this year Bulgaria has managed to negotiate more and the pay more. He believes the other member states would like it if Bulgaria’s development shows more dynamism. “Everybody is interested in Bulgaria becoming a better state,” Donchev said.  To his words, to a great extent the measures which could be taken are local responsibility. Some of the burdensome procedures are not Brussels-made but are of Bulgarian origin.

The Bulgarian government approved a package of measures put together to salvage the budget and gain the upper hand over the economic downturn. “Our aim is to make Bulgaria the best place to do private business in Europe,” finance minister Simeon Djankov said, adding that the government opted for the bumpier road instead of raising the value-added tax (VAT). The set of measures encompasses major structural reforms in the healthcare sector, education, pensions and bureaucracy, a further 20% reduction in expenditure and active infrastructure policy, Djankov explained. By implementing these measures, Bulgaria hopes to save BGN 900 million by the end of the year.

“The debts of companies in Bulgaria will reach about 190-200 billion levs end-2010,” Kamen Kolev, Deputy Chairman of the Bulgarian Industrial Association (BIA) commented. Half of these debts are among companies and they suffocate business and block economic growth. The companies suffer from a shortage of cash which impedes the payment of credits and salaries. As a result the companies just try to survive in times of crisis and have sharply reduced their plans for expanding business. Nearly 50 billion levs will total the overdue inter-firm arrears at the end of 2010, the BIA forecasts. Currently the inter-firm debts amount to 90-100 billion levs of which 40 billion levs are overdue debts.

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Companies

Government transfers to Bulgarian municipalities will be cut back by 20% but from July 1 instead of retroactively from January 1 in the initial proposal. Thus, budget allocations for local governments will be limited by BGN 92 million instead of BGN 182 million. Municipalities warned that the smaller subsidies would cause enormous financial trouble, raise debts to businesses and may lead to a suspension of public services. By June 15, the mayors’ organisation should submit with the government a package of measures to trim spending. Sofia mayor Yordanka Fandakova said that the only inconvenience associated with the 20% reduction in subsidies would be the cut in administrative expenses.

The European Commission turned down Bulgaria’s demand for a 2-year extension of the deadline for the introduction of new thermal power plant (TPP) environment standards. This means that five problematic TPP, including TPP Brikel, TPP Maritsa 3, TPP Bobov Dol, TPP Sliven and TPP Republika, will have to comply with the new regulations or will be shut down. Bulgaria’s argument for the demanded delay was the economic crisis, which brought obstacles in front of the planned investments in new environment-friendly upgrades. By closing the TPPs Bulgaria’s South – Western and South – Eastern regions may face power supply and heating cut offs, the country’s motives stated further. According to the EC, current economic problems are of no short-term nature and existed at the time of Bulgaria’s EU accession.

"Construction of the Gorna Arda hydropower cascade will be resumed latest in July," MEP from GERB, Vladimir Uruchev, said in Kardjhali. So far, investors in the project are: the National Electricity Company (NEK) and the successor of the Turkish Ceylan Holding - CCG Insaat Sanayi Yatirim Ve Turizm. The Bulgarian side owns 70% of the cascade, and Turkish side owns the other 30%. Ceylan Holding was negoting the sale of its share to the Austrian consortium EVN - Alpine Bau. "Negotiations have already been completed," specified Uruchev. According to him, the new investor has declared complete mobilization for continuing the work on the project.

The EBRD Board of Directors has approved a EUR 30 M loan to Citygas Bulgaria, to finance the development of a gas distribution network in the south of the Bulgaria. Majority-owned by the Italian gas distribution and supply utility Gruppo Societa’ Gas Rimini Spa, Citygas Bulgaria is the holder of a 35-year renewable concession to develop and operate the gas distribution network in Trakia region and the municipality of Karzhali, with a population of approximately 900,000. The gas distribution network in Bulgaria remains under-developed with large parts of the country not covered by the network. The EBRD loan will finance the construction of 833 kilometers of the gas distribution network and associated infrastructure in 27 municipalities in the Trakia region and in the municipality of Kardzhali by 2012.

The government decided to transfer the charge of Heat Supply-Sofia to Sofia Municipality, the press office of the Council of Ministers announced. Until now owner of the entire capital of the company was the Ministry of Economy, Energy and Tourism. The government proposes the municipality to take local thermal power company with all its assets and liabilities. The government's decision about Heat Supply Sofia is explained by the fact that the company was established as a municipal enterprise, and its infrastructure is part of the engineering infrastructure of the capital.

Europe

French bank Societe Generale reported higher-than-expected profits but revealed it had an exposure of three billion euros to Greek government debt. Societe Generale posted a net profit of 1.06 billion euros for the first quarter of the year, compared to a loss of 278 million euros in the first three months of 2009, the company said in a statement. "The beginning of 2010 has provided further evidence of the improvement in the global economic outlook, albeit with considerable disparities from one region to another," it said, warning also of uncertainty over new regulation. "The pick-up in activity in developed European countries is much less pronounced than in the other areas of the world and is likely to be constrained by the indispensable measures to reduce public deficits and debt," it added.

America

Nissan Motor Co., Ford Motor Co., and Chrysler Group led the US industry to a 20% sales increase in April. Overall sales totaled 982,302 units compared to 819,692 units sold a year ago. The seasonally adjusted annual sales rate was 11.5 million, which is the second strongest of the year behind the 11.7 million recorded in March. Ford’s retail sales increased by 32% en route to a 25% overall gain, its fifth straight month of 20% or higher. No-interest loans and discount leases result to Toyota’s sales rising sharply for the second straight month. Chrysler’s 25% increase is its first double-digit jump in nearly five years. Nissan Motor had a 35% increase, and the Hyundai Group went up by 24%. TrueCar.com analyst Jesse Toprak said that he is helping put together the fundamentals for a “full-blown recovery.

Asia

The Reserve Bank of Australia raised its benchmark interest rate by a quarter point to 4.5%, saying inflation will move into the top half of its target 2% to 3% range in the coming year. The increase was anticipated by economists, according to a Reuters survey. Still, the Australian dollar weakened after Reserve Bank Governor Glenn Stevens said borrowing costs are now at about “average” levels, suggesting the RBA has less need for further increases in interest rates. The increase is the sixth in seven meeting for the RBA board, which has led the world in hiking interest rates in the wake of the global economic crisis. Australia skirted recession, helped by demand from China for minerals such as iron ore and coal and today Stevens said economic growth in Asia has continued to be strong, “contributing to pressure on prices for raw materials.”

Sandanski

The town of Sandanski is situated in south-western Bulgaria, at the bottom of Pirin mountain, 173 km away from Sofia, and 22 km of Kulata, the cross-border checkpoint with Greece. The town is best known as a leading international spa and natural healing centre because of its climate and the hot mineral springs. Over 200 Mediterranean plant species not found elsewhere in Bulgaria can be seen in the city park "Sveti Vrach" which is of particular note. On the place of the present town there was an old Thracian settlement that had sprung up near the hot mineral springs. The town history has been also marked by the Romans and the Byzantines. According to the legend the old name of the town -Sveti Vrach, is connected with two folk healers and actually means Saint Healers. Today, Sandanski is one of the most significant centers in Europe for treatment of diseases of the upper respiratory track and the lungs.

On that day:  Hadji Dimitar (10 May 1840 – 18 July 1868) Georgi Obretenov