Financial news

Recent surveys of the national statistical institute show that Bulgaria is the second worst performing economy in EU – the country’s GDP slumped 6.3% in Q1 2010. Although this final report is more optimistic than the earlier statements of some experts who forecast that GDP would slump by a full four percent, the only country behind Bulgaria is Latvia, whose economy sunk by as much as 5.1% at the end of the first quarter of 2010. Bulgaria’s GDP in Q1 2010 is 7.183 billion euro or 952 euro per capita. The sector of services has sunk by 1.2% and that of the industry by 0.9%, while the slump in the agriculture sector is 1.3%, owing mostly to the shrinking consumption and investments – by 5.7 and fifteen percent respectively. And while export rate has increased by 5.9%, the state expenses have also increased by 5.1%.

Russia may indefinitely delay construction of an oil pipeline across Bulgaria and Greece if Sofia does not complete its revision of the plan in the next few months, the country's energy minister has said. The possible demise of the Burgas-Alexandroupolis project would likely push Russia into the embrace of Turkey, which has been touting a competing pipeline to deliver Russian and Caspian Sea crude to the Mediterranean market, including to Southern Europe, Sergei Shmatko said. "There has to be a decision on the future of the project no later than this fall," Shmatko told. "It's quite possible that we will have to — not terminate — but freeze the project."

Will the economic potential of the Black Sea region remain a distant perspective for Bulgaria? Teodora Kamenova The recent meeting in Sofia of the Council of Ministers of the Organization for Black Sea Economic Cooperation (BSEC) once again reminded of the need for a more practical and consistent policy towards the region. The deepening crisis in Europe is yet another signal that the possibilities for economic cooperation offered by Black Sea countries are of great significance for the Bulgarian economy. In that sense, it is only logical to ask: what did Bulgaria achieve during its presidency of the organization and what steps does it need to take in order to benefit from its economic potential? Full text of the analysis You may send your comments to: bic@bia-bg.com

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Concessions

Revenues from concession payments for 71 contracts for the concession of beaches were BGN 8.33 million in the last year. The collected amount is BGN 2.3 million more than the accumulated payments in 2008 – BGN 6 million for 70 beaches. Sums paid by the end of 2009 were BGN 8.07 million and the remaining BGN 255 716 - payments, interests and penalties were paid by 15 March this year. The Control Commission found that the organization of activities was significantly better on most beaches, compared with 2008 season.

Companies

If till September Bulgaria's National Electric Company doesn't provide funding for NPP Belene project, construction costs of the nuke will rise, it emerged from the statement by Gennady Tepkyan, Vice President of Atomstroyexport at the International Energy Forum. On September 30, 2010 Annex 7, signed between the two companies expires. If the construction doesn't proceed, Bulgaria has to expect a rise in the price of the project due to the delay, it became clear from Tepkyan's words. Some of the activities could not be frozen - mainly the supply of equipment with long production term that has been ordered already and this is one more problem connected with Belene project.

For the first time since it was privatised, the Bulgarian Telecommunications Company (BTC) will not distribute dividend but retain profit and cover previous losses. The proposal, which will be voted by shareholders at a July 12 general meeting, comes as a surprise as the company was expected to make regular dividend payouts in order to return resources to the company’s owners, who purchased the company mostly through debt financing. In the past four years, Bulgaria’s former telecom monopoly handed out to shareholders a total of BGN 1.2 billion. Last year, it paid out double dividend of BGN 360 billion despite the loss by tapping into debt and reserves.

The Financial Supervision Commission (FSC) has for the second time in a row imposed a temporary ban on the tender offer for Orgachim’s shares. During its sessin yesterday, FSC also confirmed the prospectus for the public sale of stocks from Cibank’s capital increase. The issue runs up to BGN 78, 233, 180, distributed in 965, 365 units with par value of BGN 10 each.

Maritzatex, the Plovdiv-based manufacturer of fabrics from cotton yarn, will suspend its core operations due to accumulated losses and unprofitability. The proposal to shatter the company’s textile and related capacities will be voted at a general shareholders’ meeting. Maritzatex closed 2009 with a loss of BGN 800,000, narrowing from almost BGN 5 million for 2008. Boris Borisov, executive director of Doverie United Holding, which owns the textile maker, said the group has not yet come up with a clear idea on what to do with Maritzatex’s production site but said it will most likely be converted into a warehouse.

Bulgaria’s government has approved a decision to set up a new industrial zone in the Bozhurishte Municipality locate to the west right outside Sofia on lands currently owned by the Defense Ministry. Four plots owned by the Ministry with a combined area of 191.4 hectares will be contributed as non-cash assets to the state-owned National Company Industrial Zones, which manages the establishment of new industrial parks around the country. According to analyses of the Bulgarian government, the area near Bozhurishte has a great potential for development as an industrial zone. Largely because of its location right off the E-80 international road, part of the Trans-European Corridor No. 10 connecting Istanbul and Central Europe.

Europe

Germany turned down General Motors Co.’s request for 1.1 billion euros in aid for its money-losing Opel division, forcing the automaker to seek new ways to reorganize the unit. “I’m convinced GM has sufficient financial resources,” Economy Minister Rainer Bruederle, a Free Democrat, told reporters in Berlin yesterday, in explaining why he rejected GM. “The state is not the better entrepreneur.” Bruederle said the Detroit-based carmaker has about 10 billion euros in free liquidity after paying back credits from the U.S. and Canadian governments. GM earned $865 million in the first quarter, its first profit in three years, while Europe was its only money-losing division. The refusal throws into question how GM will fund the 3.6 billion-euro reorganization after abandoning an agreement supported by German Chancellor Angela Merkel to sell a majority stake in Opel to Magna International Inc.

America

Federal Reserve Chairman Ben Bernanke pleaded with Congress to cut the federal budget deficit — but not now. In his testimony before the House Budget Committee, the central bank chief warned that the U.S. deficit is on an unsustainable path. “Achieving long-term fiscal sustainability will be difficult. But unless we as a nation make a strong commitment to fiscal responsibility, in the longer run, we will have neither financial stability nor healthy economic growth,” he said. The key phrase there is “in the longer run.” In his testimony Bernanke defended the stimulus spending passed during the financial crisis. “The exceptional increase in the deficit has in large part reflected the effects of the weak economy on tax revenues and spending, along with the necessary policy actions taken to ease the recession and steady financial markets,” he said.

Asia

China's exports and its trade surplus jumped in May, putting new pressure on U.S. Treasury Secretary Timothy Geithner to placate congressional critics who say Beijing is keeping the yuan unfairly undervalaued. Imports also grew robustly, testifying to underlying strength in the world's third-largest economy despite government steps to cool the red-hot property market. Some economists questioned whether the momentum could be sustained given debt problems in Europe, the country's biggest overseas market, but several said it would revive the debate about the timing of a long-awaited resumption in the appreciation of the Chinese currency. China's exports rose 48.5 percent in May from a year earlier and imports were up 48.3 percent, the General Administration of Customs said on Thursday, giving China a trade surplus of $19.53 billion, up from just $1.7 billion in April.

The Flat Hill – village Yunatsite

The village hill near the village of Yunatsite, also known as the Flat Hill, is located in Northwestern Thrace and is the biggest one in Western Bulgaria. The first excavations of the place were made as early as 1939. The discoveries made during the excavations were highly evaluated by the European science and resulted in the permanent establishment of the term “Yunatsite culture”. Due to them, a series of extremely precious pieces of information about the ancient history of the Balkans and the whole region of Southeastern Europe, became known. The village hill is a sort of an open-air museum and is included in the system of international cultural tourism.

On that day:  The Preobrazhenski Monastery