Twelve billion leva is a lot of money. This is 6 billion euros - 12 annual budgets of Sofia, for example. Or a quarter of all the FDIs in Bulgaria in the last 20 years.
This is the amount Bulgaria is getting from the EU as part of its Recovery and Resilience facility. As you can imagine, in a capital-hungry economy this is a source of a lot of interest and speculation. This week, the (almost) final version of the spending plan was presented to the public. It contains quite a few surprises - sufficient to say that if you own a house in Bulgaria, you will be able to equip it with solar panels paid in part by the government.
But before we delve into the details of this juicy new business plan, let me remind you of something else you will find very useful: the new Kapital Quarterly (or as it is known - KQ) is out!
You can download it in a neat and rather beautiful version on our website. It will give you probably the best summary of the last 3 months: from new factories and the overview of the stock exchange for 2020 to political insights about the coming elections and even a guide on which Bulgarian movies you can find on streaming platforms.
The next KQ will be online in April, which promises to be quite a frenetic month. Read on.
POLITICS THIS WEEK
Something that is not going to be online in April: counting of the votes
Despite the unprecedented levels of distrust in the political system and lots of calls from the ruling coalition to "respect the election results", the Central Electoral Committee decided not to allow video streaming from the vote count. This will violate the rights of the members of local electoral commissions, said CEC. Also, there might be provocateurs and how can they possibly control the process in 12 thousand sections across the country? The obvious answer to that is: well, they can't. But that's rather the point, isn't it?
Also, (no) voting in a pandemic, maybe?
If people were hoping the pandemic would disappear by April, they are badly mistaken. This week the health minister suggested the country is entering its third wave of infections. No new lockdown is on the horizon, however, and it would take a lot of political gumption to close the country down right before elections.
Two things to keep in mind here. First, the figure you need to follow is beds in ER - there are 38% taken at present. And second: there is absolutely no option in Bulgarian elections for voting remotely.
Something was voted before the elections, though
The favorite tool of the government - the supposedly independent Competition regulator, got 2 additional years in its mandate. This means whoever comes next will have to deal with the same bunch of commissioners, who proved time and again they are loyal not to the market, but to their behind-the-scenes rulers. Case in point: the deal for Nova TV passed through the regulator only after a businessman close to the government decided to buy it.
The new plan for Bulgaria: direct subsidies, vouchers, and a subway
So, back to the 6 bln euro plan. The ink is still drying upon it, and the documents have missing numbers in them, but the main things are clear. Some things are cut to make space for several new big programs. There is a 500 mln euro program for business grants under the taglines "Technical modernization", "Green transition" and "Digitalization". There is also a 120 mln. euro program for vouchers for acquiring digital skills and other necessities for the current economy. And there are 150 mln. euro for that darling of the Sofia mayor - the subway. How Bulgaria will defend in the European Commission the inclusion in an economy-revival package of a subway line in its most developed city, remains to be seen.
Out with the coal, in with the hydrogen
The other big thing Sofia is betting on: hydrogen. This shy competitor in the race for decarbonization has found its way into the plan with 180 mln. euro for pipelines and new producing capabilities. This surprise is explained in part by the fact, that some of that money will go to the gasification of the existing coal infrastructure in the country. Bear in mind that until just last month, Bulgaria kept explaining how coal is not going away and all tens of thousands of people busy in the mines and the power plants will keep their jobs for decades to come.
Solar panels for everyone
In a nod to the renewable future, the government has decided to support households in their energy transition. 15 mln. euro are devoted to financing up to half of the individual investments in solar panels for electricity or water heating. Yes, this means that if you have a house you want to power up by yourself, you will be able to apply to wherever this money will be distributed and recoup half of your investment. Expect this to be a big hit on the market.
Remember, it is still just a draft
This whole thing needs to be filed in Brussels by the end of... you guessed it - April. This means technically it might be a different government filing the plan. So some changes might happen.
Also, the EC might as well just throw out half the plan. One reason it might do so: main areas to lose funding were directed at poorer segments of the population - building renovation, people with disabilities, train services and schools. In a Union concerned more than ever with equal opportunities, this will prove tricky.
Another reason? Possibilities of misuse, of which in Bulgaria there is plenty.
100 mln. euro in losses per week
In the meantime, the current government is promising to start spending the money already: possibly by the middle of the year. Of course, it is pre-election tactics, but one that might as well work in a country where the pandemic costs 100 mln. euro per week..
Or at least these are the calculations of the trade credit insurer Euler Hermes. According to their analysis, EU governments will deal with the economic effects of the pandemic through huge fiscal expansions - meaning direct payments and other state expenditures.
...and a lot of new unemployed
This week the National Statistical Institute revealed the results of a flash poll amongst more than 3500 companies, showing an uptick in all types of labor freeze: more people in unpaid leave, more lay-offs and fewer new hires than the previous lockdown last spring.
The official data shows 160 thousand more unemployed in the period from February last year to this one.
NN and KBC
The Netherlands-based NN Group is retreating from the Bulgarian market. The group is selling its pension fund together with its life insurance business for 77.7 mln. euro to the Belgian KBC group. The fund has 900 mln. euro in assets and the insurance business has a 14 mln. euro profit in 2019.
The Bulgarian business of the Austrian group surpassed 1 bln. leva (500 mln. euro) in revenue in 2020, which happened for the last time in 2011. Everything is up, but the main growth is in the fixed services. This is a 5.7% growth and EBITDA is also 7.3% higher than 2019.
The Hungarian low-cost carrier will open a summer base in the Black Sea city of Burgas and operate 14 destinations from there. 7 of those are new - Dortmund, Liverpool, Tel Aviv, Poznan, Eindhoven, Kyiv and Turku. The airline will base one of its airplanes in Burgas from 10 June until 12 September in what promises to be a better season than the last for Black Sea resorts.
North Macedonia breaks free
Of Bulgaria and Russia, that is. By tying itself to Greece. Energy politics, you see, is a lot like history, only more pragmatic and less bloody. Last week, it transpired that the neighboring country is planning to finally find an alternative to the Bulgarian gas network. It will build a 68km-long pipeline to Greece and connect itself to the Transadriatic gas corridor TAP, as well as the two LNG terminals.
This will allow North Macedonia to stop relying on Russia for its gas deliveries - right now the only entry point is through Bulgaria and Gazprom controls it. Which leaves Bulgaria the only fully-controlled Russian gas puppet in the region.
WATCH OUT FOR
Valentin Nikolov The probablе new head of the state-owned Bulgarian energy holding is going to control billions in contracts and the question is whether he will stay loyal to the people who put him there - GERB and the Turkish MRF.
Valery Simeonov & Vesselin Mareshki
The leader of the National Front for Salvation party has entered in coalition with the Volya party of businessman Vesselin Mareshki, hoping to enter parliament and again be in government as a partner of Boyko Borissov.
Bulgaria issues new debt - 150 mln.euro in 10.5-year bonds.
A small Bulgarian start-up that wants to build a 5000 hp supercar in the Rhodope mountain (more here)
WORDS OF THE WEEK
If anything can expedite vaccinations in Bulgaria, it will be Greece's decision to oblige tourists to have vaccination proof. Not a done deal yet, but on the horizon.
The nickname prime minister Borissov gave the anonymous woman who leaked photos of gold and euro from his bedroom. This week one of the prime suspects - the wife of a prosecuted businessman by the name of Hristina Bobokova, denied she is Mata Hari. "I'm not the right person to ask about that', she answered when questioned by "Dnevnik".
A slang word meaning house-party, mainly used by teenagers. This week it transpired that the son of President Rumen Radev has been involved in a small koupon in a Sofia hostel. The gathering, which was under the legally allowed 15 people mark, was dispersed by police after a neighbor complained about the noise.
A yellow-media hysteria ensued, trying to frame the minor for indecent or even criminal activity during a pandemic. It is not currently clear if any wrongdoing has been registered (except for the fact that the police uncovered the identity of a minor).