Financial news

Only the ministries of foreign affairs and the environment unveiled cost-cutting measures in line with the Bulgarian government’s plans to curtail administrative costs by 20%, a move that would prevent the much-feared hike in value-added tax (VAT). However, both ministries are a far cry from the cost-cut target set by finance minister Simeon Dyankov. All of Bulgaria’s ministries were due to present ways to trim costs by the end of the year at yesterday’s session of the Administrative Reform Council, which is chaired by Dyankov. This is the latest round of cuts in Bulgaria’s government expenses and is aimed at saving BGN 900 million. Up until now, ministries have managed to squeeze out a mere BGN 426 million in proposed savings.

It is highly likely that Bulgaria will lose between EUR 40 – 70 million of funding under the ISPA preaccession programme due to the delay in the implementation of the Plovdiv – Svilengrad high-speed rail project, the Minister of Transport Alexander Tsvetkov announced. The minister explained that the project is estimated to be finished after the programme term ends in 2010. He placed the blame for the delay on both the state and the company responsible for the implementation of the project. Minister Tsvetkov attended Tuesday the official ceremony marking the beginning of the first project under OP Transport – for a 17 – km rail section between the city of Svilengrad and the Turkish boarder. The project is valued EUR 86 million and should be completed by June 30th.

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

Companies

The Bulgarian state will allocate gratuitous financial support to investors, who are developing priority projects in Bulgaria. This is possible following the latest amendments to the regulation for encouragement of investments. One of the most important amendments being that the investors in priority projects will be reimbursed with 50% of the money they've put in staff training or scientific research, but not earlier than the third year since the project's start, or upon fulfillment of 25% of the investment. The priority investors in the sector of industry will be allocated gratuitous aid from the state in the amount of ten percent of the investment's value after the third year, or upon implementing 50% of the project.

The three banks in which the assets of the state-run companies in Bulgaria have been mainly deposited, will be audited thoroughly, PM Boyko Borissov announced in the coastal city of Bourgas. The audits will begin soon, he added. The banks that will be first probed are the Corporate Commercial Bank, the Central Cooperative Bank and the Economic Investment Bank. The audits will be coordinated by the ministers of economy and finance. They have to find out if all the conditions and criteria have been met and whether there are breaches. "We will take urgent measures if we find out that some of the conditions have not been met," the PM said. 'It is inadmissible that the money of the state be kept in only one bank', UDF Leader Martin Dimitrov warned.

Bulgaria’s Ministry of Economy and the European Investment Fund (EIF) will from June accept indicative offers to manage the first risk fund under the Joint European Resources for Micro to Medium Enterprises (JEREMIE) initiative, deputy economy minister Evgeni Angelov said yesterday. Speaking at the Private Equity in Bulgaria and the Region, Angelov said the state is aware that equity financing could provide a much-needed shot in the arm of small enterprises but acknowledged the fact that it is as scarce as hen’s teeth at the moment. Angelov admitted that Bulgaria has some of the lowest levels of equity financing from its GDP compared with the European average. He hopes the managers for the three funds that will be structured under JEREMIE could be selected by the end of the year.

Bulgaria's top cable providers Eurocom and CableTel, which merged earlier in the year after the acquisition by Swedish investment fund EQT V, have been rebranded as Blizoo. Sweden-based private equity firm EQT acquired two of Bulgaria's major cable TV and Internet operators in a EUR 210 M deal at the end of October last year and merged them to form the country's biggest cable operator. Under the deals EQT through its EQT V fund acquired 100% of Eurocom from US private equity firm Warburg Pincus and 70% of privately-owned CableTel. “Blizoo has the ambition to turn into Bulgaria's leading digital television operator and the biggest broadband Internet provider,” said Istvan Polony, chief executive of Blizoo.

“Bulgartabac, being the company with biggest market share, is directly affected by the sale of illegal cigarettes at the local market. We are observing the market and report to authorities when we detect such cigarettes, which is something we do every week in reports filed to the competent authorities – the Interior Ministry and the National Customs Agency,” said the executive director of the tobacco holding Ivan Bilarev. Bulgartabac reports 30% drop in sales in the first months of the year. “Looking in Q1 2010 and 2009, our cigarettes report some 30% drop in sales,” Ivan Bilarev remarked.

Europe

UK foreign minister William Hague has pledged support for the EU's diplomatic service and economic growth agenda in a surprisingly mild policy statement. "It is true that we in the Conservative Party were not persuaded of the case for the new EU External Action Service as a service, but its existence is now a fact ...Britain's Conservative government will work closely with the high representative, whom we wish well," he wrote on Tuesday (18 May) in a column for Europe's World, the house journal of the pro-federalist Friends of Europe think-tank. He spoke warmly of EU Council President Herman Van Rompuy's ideas on economic reform: "Herman Van Rompuy has accurately said, 'we need more economic growth, now and in the future' and has rightly identified competitiveness as a key issue."

America

In less than a year, General Motors Co. has roared back from bankruptcy to a quarterly profit. Now comes the hard part: Sustaining the income and repaying billions of dollars in government aid. There are signs that GM is on track to do just that. Revenue is up 40 percent over the first quarter of last year. U.S. sales rose 17 percent for the quarter, and the automaker made an operating profit in North America, which had been a cash incinerator. Units in Asia and Latin America posted strong numbers, too. As a result, the automaker announced Monday, its net income rose to $865 million, a dramatic reversal from the $6 billion the company lost in the same period last year.

Asia

Mitsubishi UFJ Financial Group Inc., Japan's largest bank, said it climbed back to the black last fiscal year thanks to cost cuts and a recovering global economy. The Tokyo-based company booked a net profit of 388.7 billion yen ($4.2 billion) in the 12 months through March 31. The result marks a dramatic turnaround from last year's 257 billion yen loss. The bank, known as MUFG, said better business in corporate lending and financial products offset lower deposit income. It also benefited from companywide cost cuts and rising stock markets, which bolstered equity investments. Its results follow similar rebounds by rivals Mizuho Financial Group Inc. and Sumitomo Mitsui Financial Group Inc., both of which recovered from deep losses to post annual profits.

The Slavova fortress

The Slavova fortress is 1 km away from the small town of Melnik. It is supposed that it was built in the 11th century. In the 13th century, during the reign of despot Aleksi Slav, the fortress was broadened and improved. The near town Melnik was important cultural, trade and religious center during the Middle Ages. During the Roman period it had a statute of emperor’s estate. During the age of the Second Bulgarian Kingdom Melnik was recognized as episcopal and metropolotan center. The object of the Savova fortess was to protect the wealth of the region, which was also a residence of despot Aleksi Slav and despot Dragota for a while. The area of the fortress was about 3000 sq. m. and was like long irregular polygon. Today only parts of the western walls are in good shape. During the excavations, parts of the south and the east walls were also found.

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