Fast Reads

© Capital

No confidence

On 4 February President Rumen Radev announced he is officially withdrawing his confidence in the government. Besides the institutional crises that led to water shortages in the town of Pernik, he indirectly criticised the use of the prosecution as a political instrument. He was also critical of what he perceived as the government "quietly pushing" for reform of the Currency Board, while poverty and inequality deepening.


The Bulgarian Postal Service, which was charged with distributing newspapers by the government in October 2019, is planning to subcontract this activity to a private company and pay 30 million euro for a period of four years for the service. The decision of the government to nationalise print media distribution came as a response to the regular criticism of the Reporters Without Borders media watchdog about the dominance of media mogul Delyan Peevski over newspaper ownership and distribution.

Patriotic quarrels

After Ataka - one of the three nationalist parties that used to form the United Patriots group in parliament - left the coalition in September 2019, tensions between the disgruntled MPs of the faction and their former allies have been brewing. At the beginning of March, Desislav Chukolov from Ataka accused Defence Minister and head of the other nationalist party, VMRO, Krassimir Karakachanov, of allegedly "turning the Defence Ministry into the largest real estate firm on the market."


The new environmental minister Emil Dimitrov, known for his nickname "Revisoro", is already at odds with the majority ruling partner GERB that backed unanimously his appointment. The reason is that a deputy of Mr Dimitrov from the GERB quota, Krassimir Zhivkov, blamed Tsvetelina Kaneva, head of the Plovdiv Water Directorate, for failing to comply with her obligations which led to her arrest by heavily armed and masked police.

Chinese statistics

The Bulgarian National Statistics Institute (NSI) has under-reported data about oil products imports, leading to a record amount of "errors and omissions" in the balance of payments data of the Bulgarian economy last year. This was announced by Socialist MP Rumen Gechev, who said that if the data were correct, the growth of the Bulgarian economy would only amount to 0.8-1%, compared to the present optimistic estimates of 3.7%.

Refugee push

So far, Bulgaria has been spared from the increase of pressure on the border after the effective suspension of the EU-Turkey statement from 2016 that brought the flow of migrants and asylum seekers to a halt on 28 February. Prime Minister Boyko Borissov immediately flew to meet Turkish President Recep Tayyp Erdogan as tensions on the Turkish-Greek border escalated in the first days of March. Despite failing to organize a multilateral meeting between the leaders of the EU, Greece and Turkey in Sofia, Mr Borissov got assurances that the migratory flow will not be directed against Bulgaria.

Developed economy

The US Trade Representative Office announced on 10 February that it is no longer designating Bulgaria a developing country and now considers it a developed one. The measure makes it easier for Washington to launch investigations and impose customs and other penalties if it finds unlawful subsidies or commercial practices. The USA contends that Bulgaria and Romania should not be treated as developing countries since the whole EU is considered to be a developed economy in trade. This comes even though the two countries still don't pass the threshold of the World Bank that only categorizes states where annual income per capita exceeds $12,375 as developed.

Lukov march

The first successful suspension of the annual march dedicated to the memory of a pro-Nazi sympathising Bulgarian WWI era general Hristo Lukov, regularly attended by representatives of domestic and international far-right groups, attracted international acclaim. This included praise from the US and Israeli embassies to Sofia, as well as several high-profile Jewish organisations. For the first time since the first Lukov march, as the event is known, Sofia Municipality managed to ban it - and uphold the ban both in court and in practice.


The municipal council of the city of Ruse has issued preliminary approval for the sale of the local airport to Eonmetall Bulgaria. The company plans to develop the site into a logistic and airport facility for a price of 57 million levs (€29.1 million). Eonmetall Bulgaria, established in August 2019, has five shareholders, all of them private individuals: two Malaysian citizens, two US citizens and one Bulgarian citizen. The Bulgarian investor owns a 33.2% stake, while the four other shareholders own 16.7% each. Among Eonmetall Bulgaria's shareholders is Cheng Huat Goh, board member of Malaysian machinery producer Eonmetall Group, which is listed on the Malaysian Stock Exchange.


Dutch-based telecommunications and media company United Group will place €1.22 billion worth of bonds to finance the acquisition of Bulgarian Telecommunications Company (BTC). The issue has been already contracted with JPMorgan being a lead manager. A number of other banks, as well as the KKR fund, which is a minority shareholder in United Group, have committed to subscribe to the bonds. According to Moody's and S&P, the deal will amount to at least €1.2 billion. However, the final price will depend on BTC's financial results for 2019 and will be a bit higher - just below €1.3 billion - so a small portion of the deal will be financed with the buyer's own funds.


South Korean electrical equipment manufacturer Hyundai Electric& Energy Systems has sold its unit Hyundai Heavy Industries Co. Bulgaria to International BEZ Group (IBG), the Bulgarian company said after consulting firm CMS announced earlier that the buyer was Russia's SVEL Group. Hyundai Heavy Industries Co. Bulgaria did not specify if the two companies were connected but according to media reports from 2018, the Russian group was preparing to acquire of Slovakia-based IBG. There is no information if the deal was finalized. Late last year the Korean group said it would sell its Bulgarian unit for $24.5 million in order to improve its financial structure.


Belgian mineral water bottling group Spadel will invest €17 million in the construction of a new logistics center and the replacement of two production lines at its plant in the Bulgarian town of Devin. The investment will enable the company to meet its growing production needs by 2028, Spadel said. According to Marc Du Bois, CEO of Spadel, the Bulgarian market has significant growth potential. Spadel acquired Devin in 2017. The company bottles and sells a wide range of products including mineral water, spring water and table water under its Devin and Divna brands. It is also the official distributor of Red Bull energy drinks and fruit-juice brand Granini in Bulgaria.


Bulgaria-based IT and BPO services provider Bulpros has acquired local company Beam, an integrator of SAP business management solutions, for an undisclosed sum. The addition of SAP expertise is of strategic importance for Bulpros as it complements the portfolio of digital solutions offerings for corporate clients in the company's core markets. The beam is the sixth company to become part of Bulpros since it was founded in 2010. The group has a wide range of competences with a focus on financial and professional services and telecommunications. It operates on a global scale and has more than 1,300 employees, working across 20 offices in Europe and North America.


Bulgarian logistics company Dreams Trans has launched the construction of a 25 million levs (€12.8 million) logistics park in the Bozhurishte industrial zone near Sofia. The project, part of which is financed through a loan provided by DSK Bank, is expected to be wrapped up in the middle of 2021. DT Logistics Park will include a spacious storage base and other buildings, all spreading on some 35,000 sq. m. The park will have a capacity of 40,000 euro pallets. It will be carbon-neutral, as it will be equipped with 1.1 MW photovoltaic rooftop installations. The company already operates warehouses in Germany, North Macedonia and elsewhere in Bulgaria.


Bulgaria's Ministry of Finance supports the establishment of a so-called regulatory sandbox - an instrument which tests new business models not covered by existing regulatory frameworks. According to Minister of Finance Vladislav Goranov, the aim is to adapt the regulatory environment to the dynamic growth of the most innovative companies in a way that does not stifle fintech companies with rules, but at the same time does not diminish consumer protection. Sofia RegTech Sandbox dialogue development platform would be the first in the region to allow global companies to test their products and services in a secure regulatory environment.


At the end of January, after the first headlines asserting that the exchange rate of the Bulgarian lev could be amended before Bulgaria enters ERM II, the training grounds for the adoption of the euro, a considerable amount of lev-denominated assets were converted into euro. This is evident from Capital Newspapers review of the Bulgarian National Bank's (BNB) monetary statistics, although the effect cannot be calculated accurately. Household deposits in January decreased by 352.5 million levs (180 million euro) and increased by 259 million euro. Business deposits did not change substantially, but overall the deposits in banks shrank by almost 1.2 billion levs while increasing by 353 million euro. The transfers in the savings and checking accounts can't be verified due to a major statistical revision conducted by the BNB.


The Bulgarian National Bank's statistics show that the amount of bad and restructured loans in Bulgaria's banking system decreased by 21% in 2019 and their share in total loan portfolio fell from 10% to 7.35%. In December alone 281 million levs of non-performing loans (NPLs) were written off, which is probably due to the Fibank efforts to clean its balance sheet. Thus, after a decline of almost 1.14 billion levs in 2019, the amount of NPLs in the system fell to 4.3 billion levs - the lowest since December 2009. The drop is due mainly to the cleaning up of bad corporate exposures, which fell from 3.5 billion levs to 2.74 billion levs last year. On the other hand, bad household loans decreased by about 400 million levs to 1.56 billion levs last year.


State-owned Bulgarian Energy Holding (BEH) has transformed 598 million levs (306 mln euro) of outstanding loans to its whole-owned subsidiary Maritsa Iztok 2 thermal power plant into new shares. The capital increase, which is intended to stabilize the second biggest Bulgarian electricity producer, was postponed several times. BEH had been in contact with the European Commission for almost a year to establish whether such financial injection could be regarded as unlawful state-aid. In February, the Bulgarian parliament adopted a decision authorizing the government to increase the capital of the power producer "irrespectively of the opinion of the European Commission". Maritsa Iztok 2 has accumulated 900 million in losses in the last three years, mainly due to the price increase of the CO2 emission allowances in the EU Emissions Trading System. The power plant needs to buy 1.3 allowances, now valued at 22 euro each, for every MWh of produced electricity.


The Supreme Administrative Prosecutor's Office announced on February 13 that it has tasked the minister of the environment with carrying out an immediate investigation of four thermal power plants. All four plants are connected to Hristo Kovachki, a Bulgarian businessman with dubious fame, and are suspected of illegally burning waste products. This is the second time such an investigation has been ordered by the prosecutor's office, but no results of the previous ones have been released. Most of those power plants had to be stopped years ago on environmental grounds but the Bulgarian authorities still can't rein in Mr Kovachki's business practices.


State-owned gas supplier Bulgargaz opened a tender to select a credit institution to issue a $ 109.3 million unsecured bank guarantee in favour of Azerbaijan Gas Supply Company (SOCAR). The guarantee will cover some of Bulgargaz's financial obligations under the company's 25-year natural gas supply contract with SOCAR. The planned annual deliveries of one billion cubic meters will be enough to cover 40% of Bulgaria's consumption. Bulgargaz has also announced that it will hold negotiations with SOCAR on a new price formula connecting the price of the gas to quotations of the liquid gas hubs in Europe.

No confidence

On 4 February President Rumen Radev announced he is officially withdrawing his confidence in the government. Besides the institutional crises that led to water shortages in the town of Pernik, he indirectly criticised the use of the prosecution as a political instrument. He was also critical of what he perceived as the government "quietly pushing" for reform of the Currency Board, while poverty and inequality deepening.

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