The European Commission has recommended to Bulgaria to improve tax collection and ensure stability in the banking sector through effective supervision, in compliance with the Stability and Growth Pact in 2019 and 2020. Bulgaria should improve tax collection in areas such as fuel trading and labour activities by undertaking additional targeted measures in order to reduce the still large share of shadow economy in the country, the Commission said in country-specific recommendations, part of the European Semester 2019 Spring Package. According to the Commission, Bulgaria needs to improve banking and non-banking supervision and work on the successful enforcement of the Anti-Money Laundering framework. In order to achieve stability in the banking sector, Bulgaria must also promote adequate valuation of assets, including bank collateral as well as a functioning secondary market for non-performing loans. Bulgaria is also advised to focus investment-related economic policy on research and innovation, transport and water, waste and energy infrastructure as well as strengthen employability by reinforcing skills, including digital skills. Other recommendations to Bulgaria include upgrade of the state-owned enterprise corporate governance, improvement of the access to health services and increased investments in clean energy infrastructure.

The World Bank has maintained its 2019 GDP growth forecast for Bulgaria at 3% in its latest Global Economic Prospects report. It also kept its GDP growth projections for 2020 and 2021 at 2.8% y/y. The WB’s projections remain the most pessimistic, as other IFIs such as the IMF and the EC projected a stronger 3.3% growth in 2019, while EBRD and the Bulgarian government expect 3.4% economic expansion this year. The WB described general risks to the Central European economies, which we think can apply to Bulgaria’s projection, as well. Expectations for moderating growth in Central Europe are related to slowing economic activity in the eurozone, political and economic uncertainties especially following Brexit, as well as financial pressures in Turkey. Any potential new escalation in trade conflict between the US and China, or other major trading partners, could also result in spillovers, negatively weighing on Central European economies, the WB said. Oil prices’ stability or volatility is another major factor to affect the GDP growth in the region. The WB noted that domestic capacity constraints continue to be the main risk on the domestic side. It highlighted particularly shrinking working-age population, insufficient structural reforms and weak private investments as the main challenges to countries in Central and Eastern Europe.

A joint venture between the Bulgarian company Infrastructural Construction AD and the Spanish Marco Obra Audience will probably win the contract for modernization of the railway section between Orizovo and Mihaylovo, which is part of the major rehabilitation of the Plovdiv-Burgas line. At an estimated value of BGN 248 million without VAT, the group Euro Rail Infrastructure has offered a bid of BGN 217.9 million. For 2017 Infrastructural Construction AD has revenues of BGN 35 million and 60 employees. Their partner, the Spanish Marco Obra Audience, works in Mexico, Africa and South America. This order is the largest that the National Railway Infrastructure Company announced in 2018. The construction will have to be completed for four years. The order is financed under the Operational Program "Transport and Transport Infrastructure" and is part of the large project "Rehabilitation of the Plovdiv - Bourgas Phase 2 railway line" for EUR 414 million.

Welde Bulgaria, a unit of Austrian wooden products manufacturer Welde Gesellschaft, said that it is planning to increase its capital to BGN 1.38 million from BGN 404,634 through a new share issue. All 977,915 offered shares will be subscribed for by the company's sole owner - Austria's Welde. The shares will be subscribed for at par value. Welde produces plywood and hardboard and trades in timber and wood-based products. In Southeast Europe, it also operates in Romania and Serbia. Welde Bulgaria was delisted from the Bulgarian Stock Exchange in August 2017.

Moody's Investors Service said that it has downgraded the long-term deposit rating of Bulgaria's First Investment Bank (Fibank) to B2 from B1, maintaining the stable outlook. Moody's downgraded Fibank's baseline credit assessment (BCA) and Adjusted BCA to b3 from b2, its long-term Counterparty Risk Rating (CRR) to Ba3 from Ba2 and the long-term Counterparty Risk (CR) Assessment to Ba2(cr) from Ba1(cr). The bank's short-term deposit rating and CRR were affirmed as Not-Prime and the short-term CR Assessment at NP(cr). The reason for the downgrades is Moody's view that the bank's high level of problem loans and significant repossessed assets, predominantly foreclosed properties, continue to pose a risk to the bank's capital base. Moody's previous assessments of Fibank incorporated an expectation that these nonperforming assets would have already declined to a materially lower level. The long-term deposit rating of B2 continues to benefit from one notch of uplift from Moody's expectation of a moderate likelihood of government support.

Italy's PharmaNutra has extended the scope of its distribution agreement with Amicus Pharma regarding the Bulgarian market. Amicus Pharma is already PharmaNutra's exclusive distributor for a number of Eastern European and Baltic countries. No further details were disclosed. Amicus Pharma, which decided to rename itself to Swixx Biopharma last month, generated sales of EUR 71 million in 2018 and expects to pocket EUR 120 million this year. The company operates in Southeast Europe through several local wholly-owned subsidiaries. PharmaNutra, established in 2003, specialises in the the development of nutraceutical supplements and medical devices.

PricewaterhouseCoopers Audit Bulgaria said that its net profit rose to BGN 365,000 in 2018 from BGN 42,000 in 2017, following a rise in revenue. PwC Audit Bulgaria's operating revenue rose to BGN 12.8 million last year from BGN 12.0 million in 2017, the company said in an annual financial statement. The audit company's operating expenses increased to BGN 12.3 million in 2018 from BGN 11.9 million the year before, following a rise in personnel costs. Total assets grew to BGN 5.3 million at the end of 2018 from BGN 4.9 million a year earlier.

The European Commission presents the 2019 country-specific recommendations (CSRs), giving economic policy guidance to all EU Member States for the next 12 to 18 months. The Commission also recommends closing the Excessive Deficit Procedure for Spain and adopts a number of documents under the Stability and Growth Pact. The European economy is growing for the seventh consecutive year and is set to continue expanding in 2020, with all Member States' economies growing despite less favourable conditions and global uncertainties. The number of people in employment is at a record high and unemployment at a record low. At the same time, there are still significant differences between countries, regions and population groups. Against this backdrop, the Commission calls on Member States to build on the progress made in recent years. Effective reforms, accompanied by well-targeted investment strategies and responsible fiscal policies, continue to provide a successful compass for modernising the European economy. The recommendations give guidance to Member States to respond adequately to persisting and new economic and social challenges and to deliver on their shared key policy objectives.

Venezuela has defaulted on a gold swap agreement valued at $750 million with Deutsche Bank AG, prompting the lender to take control of the precious metal used as collateral and close out the contract, according to two people with direct knowledge of the matter. As part of a financing agreement signed in 2016, Venezuela received a cash loan from Deutsche Bank and put up 20 tons of gold as collateral. The agreement, which was set to expire in 2021, was settled early due to missed interest payments, said the people, who asked not to be named speaking about a private matter. In the meantime, opposition leader Juan Guaido’s parallel government has asked the bank to deposit $120 million into an account outside President Nicolas Maduro’s reach, which represents the difference in price from when the gold was acquired to current levels. As part of efforts to unseat Maduro, the U.S. and more than 50 countries have recognized Guaido as the legitimate leader of Venezuela even though he still doesn’t control key institutions at home, including the central bank. “We’re in touch with Deutsche Bank to negotiate the terms under which the difference owed to the central bank will be paid to the legitimate government of Venezuela," said Jose Ignacio Hernandez, Guaido’s U.S.-based attorney general.

The International Monetary Fund (IMF) cut its 2019 economic growth forecast for China to 6.2 per cent on heightened uncertainty around trade frictions, saying that more monetary policy easing would be warranted if the Sino-US trade war escalates. The downgrade came just two months after the IMF raised its China growth forecast to 6.3 per cent from 6.2 per cent, partly on then-brightening prospects for a trade deal with the United States. A sudden escalation in the Sino-US trade tensions last month underlined the risks for the world's second-biggest economy from higher US tariffs on billions of dollars of Chinese goods. Washington has levied higher tariffs on a total of US$250 billion of Chinese imports since mid-2018, accusing China of forced technology transfers and intellectual property theft. China, which denies the accusations, has retaliated with tariffs on about US$110 billion of US goods. "Growth is expected to moderate to 6.2 per cent and 6.0 per cent in 2019 and 2020, respectively," said the IMF's Deputy Managing Director David Lipton.