Financial news

Bulgaria's cabinet is forecasting a 3,9% deficit from the Gross Domestic Product (GDP) in 2010, according to the updated budget approved by the Council of Ministers Wednesday. The amendments in the State Budget Act limit to 20% the expenditures and the subsidies transferred to different institutions, not including the funds for social assistance, for the State Railroads - BDZ, and for the National Health Insurance Fund (NZOK). The updated budget includes an additional BGN 148 M for compensations and assistance, paid by the Ministry of Labor and Social Services. It also keeps the promised subsidy in the amount of BGN 116 M for tobacco growers and the BDZ subsidy. NZOK is to receive BGN 220 M despite the fact hospitals owe the State BGN 110 M from 2008 and 2009. 

Bulgaria’s Ministry of Finance (MoF) approved no orders at Monday’s auction of ten-year government securities due to a high median return of 7.04%, according to ministry figures. Investors offered a median BGN 86.28 per BGN 100 nominal, with some going up as high as BGN 82.50. The bond bears an annual coupon of 5%. The high return indicates that investors are still bearish about the Bulgarian economy. It could be tracked down to a bulging deficit, plans by the government to dip into the fiscal reserve and slim chances to enter the eurozone any time soon. Still, the auction sparked strong interest, with orders totaling BGN 95.5 million against the BGN 30 million offered.

Vague government priorities: a barrier to Bulgarian foreign policy? Teodora Kamenova Recently, the Bulgarian foreign minister Nikolai Mladenov completed his tour of the Western Balkans, and then met with the foreign ministers of Greece and Romania. What did Mladenov achieve by putting an accent on the region in a time when the economic crisis is still casting its shadow on Bulgaria? Where does he need to concentrate his next efforts and what are the obstacles Bulgarian foreign policy is faced with? Full text of the analysis You may send your comments to: bic@bia-bg.com

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

Concessions

As of the beginning of next year, municipalities would be able to use deposits of state-owned mineral waters for free. This was voted by lawmakers yesterday together with the amendments to the Water Act passed on the first reading. According to the Minister of Environment and Water, Nona Karadjova, currently, under 30 % of the Bulgarian mineral water deposits are used. Thus, the recent Water Act amendments will facilitate those mayors who want to use the mineral springs. These will be determined annually in a list issued by the Minister of Environment and Water. This option refers to springs which are not granted under concessions and to mineral waters not used for drinking water supply. Local parliaments, in turn, would be able to set the prices or to lease out gratuitously the deposits for a 25-year term.

Companies

Bulgaria will launch three new procedures under Competitiveness operational programme, said the Department of European Funds for Competitiveness at the Ministry of Economy. The largest measure, with a cash pot of EUR 40 million, will provide financing for technological upgrades at big companies. Businesses will be able to tap into BGN 1 million to BGN 4 million each. In June, Bulgaria will begin accepting applications under measures for companies to comply with internationally acclaimed standards and encourage business cooperation and clusters. The combined cash pot is set at EUR 25 million. The former measure will fund new or existing clusters by between BGN 100,000 and BGN 2 million. Companies will also be eligible to receive between BGN 10,000 and 150,000 each under the latter measure to improve management and standardisation.

The crisis in real estate and tourist market has led to a boom in demand for hotels on the sea. Offers outside district towns are about 300, as hundred of them for over EUR 1 million, and 16 - over EUR 5 million. Demand is high and interest is primarily in real estate with price of EUR 3-4 million and it is from Bulgarian companies wishing to invest their money in real estate. Offering of hotels increased last year and it is related to the crisis. The most bids for the sale of hotels are in Sunny Beach. Currently in the largest summer resort in Varna - Golden Sands, offers for sale of hotels range from EUR 350 000 to 9 million, according to statistics. The cheapest is only with 11 rooms. The highest bid is for hotel with 180 rooms, spa center and restaurants.

"The inspections on the power distribution companies (PDC) in Bulgaria will be finalized within a week or two and then I will call the PDC in to have a talk," stated Bulgaria's PM Borissov. The PDCs will have to prove they have made at least 10 big investment projects each in the last years. "I want to see the big investment projects of the PDCs. If they are buried in the earth I will dig for a while but will find them," PM Borissov warned. "The PDCs have to stick to Bulgarian laws and regulations, if not to go somewhere else. I might be a PM for one more day but until then the laws will be observed," PM Borissov was explicit. PM Borissov warned that the German investors could be a model example for Bulgaria but not to start working in a Bulgarian way when they come over here.

Projects worth over half a billion levs have already been financed under credit lines and investment lines available for small and medium-sized firms. The funds have been lent to the commercial banks by the Bulgarian Bank for Development. The banks, on their part, have approved investment loans for BGN 80.5 million, which is more than half of the total value of the active projects as of April 2010. The Bulgarian Bank for Development also has BGN 67.3 million free capital to lend in the form of investment loans or credit lines.

BUSINESSEUROPE: FURTHER UNILATERAL EMISSION TARGETS ARE NOT THE WAY FORWARD

Europe

On the eve of the European Commission's unveiling of a key study on how the EU can sharply ratchet up its climate promise of cuts in greenhouse gas emissions, the bloc's two most powerful members have torpedoed the initiative. The EU has long promised to move from its current level of cuts in emissions of 20 percent up to 30 percent on 1990 levels by 2020 - but only if other major powers make comparable reductions. The paper is widely expected to show how the EU can make the leap with little additional cost and with large benefits in terms of providing incentives for the development of green technologies. Brussels is very concerned that China, the US and other states are stealing a march on the old continent in this new realm of investment. But Germany and France jointly dismissed the proposals ahead of their publication.

America

The outlook on the United States' coveted AAA credit rating remains stable, though the government's financial strength is weakening due to its support for the financial system, Moody's Investors Service said. Structural fundamentals, political stability and favorable economic prospects are supporting the stable outlook, despite rising debt ratios, Moody's said. The United States' finances have been substantially worsened by the credit crisis, recession, and government spending to address these shocks, Moody's said. "The ratios of general government debt to gross domestic product and to revenue are deteriorating sharply, and after the crisis they are likely to be higher than the ratios of other Aaa-rated countries," the agency said. The ratio of debt to revenue has more than doubled over the past three years, reaching well over 400 percent and indicating potential stress on government finances in the future, Moody's said.

Asia

Japan's exports jumped 40 percent in April, rising for a fifth straight month, fueled by brisk overseas demand for cars and high-tech goods in a fresh sign that the global economy is recovering. Led by shipments of cars and semiconductors, exports rose to 5.9 trillion yen ($65 billion), the Ministry of Finance said. Automobile exports more than doubled from a year earlier, while semiconductor shipments rose 35.5 percent. "The figures underlined a steady recovery in the global economy. It is heartening to see Japanese car exports sharply up in every key region," said Hiroshi Watanabe, economist at Daiwa Institute of Research. Robust global demand, particularly in Asia, is feeding a turnaround in Japan's economy offsetting weak demand and falling prices at home.

Kormisosh Reserve

The Kormisosh reserve is one of the legendary hunting places in Europe. It is situated in the western part of the Rhodopi mountain, near the village of Borovo, and occupies an area of around 42 000 hectares. It is inhabited by an extraordinary variety of animal species – from bears to muflones, from roes to wood-grouses. Here are the largest populations of brown bear, wolf, red deer and wild goat in the Bulgarian mountains. Kormikosh is the place where the world record for wild boar trophy – 158.20 points, has been obtained. Besides the amazing variety of fauna, the reserve is also distinguished for its exceptional flora and the gorgeous views it offers - abandoned villages, perching on the rocks, numerous peaks, offering unforgettable sites.

On that day:  Catholic cathedral St. Louis Montana Public Holiday – Sveti Duh (Holly Spirit) Simeon the Great