The elections are finally here, World Bank and the US criticize Bulgaria, tourism is down 70%

Yet, make no mistake: the stakes are high and the pressure is creeping up. GERB, in power for the last 12 years, is still the party to beat and it is not going to be easy to form a government without it. Even if that happens, removing its influence from all the government levers will not be fast or smooth.

This political insecurity will coincide with lots of deadlines for decisions about the huge pile of money coming from the EU.

So buckle up and be ready for a rough couple of months. Yet, don't be too worried: a new poll of managers in Bulgaria has proven that political stability is not that great of an asset, when this stability doesn't bring prosperity or rule of law.

A little shake-up from time to time might do wonders. Especially if you haven't had one in 12 years.

POLITICS

DC calling...

Well, this time it's kinda hard to denounce the new slap, as it's coming from the State Department. In its 2020 Country Report on Human Rights Practices in Bulgaria the American foreign ministry files its biggest criticism yet.

There are many brickbats: arbitrary arrests, police violence, refugees push-back, child abuse and hate crimes. And yes, it is a problem that you can depict some American cities in the same light too, because it undermines the bigger point here: Bulgaria has many defects and it is useful to have a foreign finger pointing them out, since the domestic ones are tamed.

Two things, visible from across the ocean: impunity and oligarchs

While the media mogul and power broker Delyan Peevski is a prominent figure in the US reports, this time Kiril Domuschiev has made his debut - the businessman heading the largest employers association in Bulgaria, who is directly called "an oligarch".

The thing the government picked up from the report? North Macedonia

This time there was no commentary whatsoever from the ruling coalition. Silence was chosen as the best defense, except for the small nationalistic party VMRO and its obsession with North Macedonia.

There was a claim in the US report about Bulgaria's failure to recognize a Macedonian minority: a thorny issue as Sofia sees it as a threat for its own Pirin Macedonia province. "The CIA is working with old, Soviet-era information on the topic," said Defence Minister and VMRO leader Krassimir Karakachanov on Thursday.

This is not surprising: basically the only two issues that can get VMRO above the 4% threshold for the next parliament are "family values" (meaning no gender issues or same-sex marriages) and Macedonia. In an obvious provocation the European Parliament member and deputy head of VMRO Angel Dzhambazki repeated several times that "Macedonia is Bulgarian" - the oldest motto of his party. While it was not a very clever strategy, it got VMRO in the news: Skopje complained about the statements in the video and the Bulgarian Foreign Ministry had to distance itself from Mr Dzhambazki.

No kidding: the lockdown is ending

"Everything will be fine in a couple of weeks; we are walking on the steepest part of the plateau and we hope that we stay like this over the next couple of weeks." This is no April fools joke, but an actual statement of Health Minister Kostadin Angelov made on 1 April, the day Bulgaria overtook Czech Republic in terms of the second highest number of fatalities in 14 days attributed to Covid-19.

On the same day most of the few remaining anti-pandemic restrictions were also dropped only eight days after their introduction. Cafes and restaurants open partially, as well as gyms, theaters and big stores. Children are allowed back to kindergartens and at some point - schools.

"We are like a rubber band," Prime Minister Borissov said a few days earlier, saying that he doesn't keep restrictions up for too long because he also cares about the psychological welfare of the people. With hospitals overwhelmed once more and over 13 000 deaths, the rubber band will soon stretch in the other direction.

ECONOMY

The World Bank: you are not doing well, Bulgaria

The World Bank decreased its estimates for economic growth in Bulgaria in 2021 to 2.6%, which is 0.7 percentage points below the number set in the institution's January forecast. The growth rate in 2022 has also been lowered by 0.4 percentage points to a GDP increase of 3.3%.

This is among the few revisions down in the region the country falls in (Eastern Europe, the Balkans and Central Asia) compared to the bank's January accounts.

And while the numbers are not good, the explanations are even worse. The revision is due to the severe course of the third wave of the coronavirus in Bulgaria and the low rate of vaccination, explains the Bank. It claims the pandemic showed deficiencies in healthcare, education, social security and administration. "The growth potential is undermined by weakness in governance and institutions, visible in the low public trust," concludes the Bank.

Investors: it's actually ok but the state sucks

Overall, foreign investors are happy with the business climate, but not with state support, according to a survey conducted by ManpowerGroup Bulgaria in the last two months among 51 top executives of companies who have made significant investments and created new jobs over the past four years.

About 52% of respondents say that the business climate in Bulgaria is good, and for 30% - it's excellent. The primary advantages: the quality of the labor force (especially in IT, outsourcing, automotive and electronics), low labor costs and easy access to other markets because of EU membership.

However, three-quarters of respondents say that the government offers practically no support to businesses. Most CEOs' recommendations concern improvements to the education system.

The tourism season that was not

Bulgarian ski and spa resorts finish winter with a revenue decrease of between 30-70%, judging by statistics from the Ministry of Tourism's ESTI system on overnight stays in the period from the beginning of December to March 28, provided to Capital. Although the data is still preliminary, the numbers confirm initial industry expectations that the results will hover around the sad record of summer tourism.

Worst hit is the best-known ski resort of Bansko, where there was a 70% drop in nights stayed. The other two ski resorts - Pamporovo and Borovetz - register a drop of between 50 and 60%. Spa resorts meanwhile, suffer a lot less - around 30%.

The trustees of the bankrupted Corporate Commercial Bank (CCB, or KTB as it's known in Bulgaria) have begun the payout of 125 million euro to the bank's creditors.

The sum comes from the payment made by the BTC telecom in May last year. CCB paid 125 million euro for acquiring a majority stake in the telecom in 2012. According to information in the country's Trade Registry, the funds will be distributed among over 7,000 former CCB depositors who are still owed money. So far, the trustees have recovered about 20% of depositors' money at the time of closure.

BUSINESS

Logistics

DHL's cargo division is building a new base in Sofia worth 9 million levs close to the airport. The project should be completed by November 2021 and will cover 12.3 thousand sq.m. DHL Logistics Bulgaria's revenue in 2019 amounted to a little over 60 million levs, with 530,000 levs in profits, and a little over 100 employees.

Software

Bulgarian IT company Alterco has received an offer of 2.1 million euro for its Asian business, which includes stakes in three telecoms. The proposal comes from Singapore's Skylight Venture Capital and is negotiable following a thorough due diligence, the company said. Alterco sold its European companies in the telecommunications sector two years ago and is focusing on IoT-based products.

Advertising

Vienna-based web and social media agency Datenwerk, part of communications group The Skills, is coming to Bulgaria in partnership with All Channels Communication Group. Datenwerk will offer digital communications solutions based on data. Boyan Petrov, former digital strategist at All Channels (and former Capital journalist), will head the Bulgarian office.

ENERGY

Can you buy something that doesn't have a price?

Turns out, yes, as the companies operating on the Bulgarian market started buying gas from the state-owned Bulgargaz without it stating a price.

The reason? The government didn't allow the company to file a new monthly price in the State regulator for energy and water, because it would have meant a spike just before the elections.

Therefore the market doesn't have a new price for the month, as required by the law and neither Bulgargaz, nor the gas-exchange "Balkan", can operate. This cheap political trick is supposed to end after the elections but it makes it harder for companies to operate as they will be billed for the gas in the near future.

A state gift for a friendly oligarch

In March, the state-owned Bulgartransgaz signed two contracts with companies related to energy mogul Hristo Kovachki - with Atomenergoremont for the construction of the transmission pipeline in Srednogorie for over BGN 27 million, and with OZK-Zastrahovane for insurance of the newly built gas pipeline TurkStream. In addition to the pipe itself, the insurance also covers buildings, structures, machines, facilities, equipment, as well as one of the compressor stations - "Rasovo".

Why is everyone suddenly talking about hydrogen? Well, it's one possible successor to the carbon economy, but we're not there yet. Ivaylo Stanchev explains.

WATCH OUT FOR

People

Ilia Iliev

A well-connected businessman and ex-deputy from the Turkish MRF party, whose family companies keep on winning millions in state contracts, despite him having left the country. Most likely being used as a figurehead for other political figures.

Ladislav Bartoníček

The new head of PPF conglomerate, which owns bTV and Telenor Bulgaria. He took over the company after its founder Petr Kelner - the richest man in CEE, died in a heli-skiing accident in Alaska last week.

Nicolas Gautheron

The new CEO of Metro Bulgaria is probably going to be a bit underwhelmed by the volumes of the local market given that he comes from Metro China.

04.04

Election day

WORDS OF THE WEEK

Shkembe - belly.

The thing currently preoccupying the Prime Minister. On 30 March Mr Borissov, who has been on an incessant roll of "inspections" around the country, opened a new school sports hall ("I constructed it on this empty field") and then moved on to criticize the tummies of the opposition. "When I look at the bellies of our political opponents Ha!," he exclaimed on a Facebook Live video.

On the next day (and in another Facebook Live video - remember, he has not dared enter a TV studio or meet any journalists for a year now), the Prime Minister seemed to backtrack on his words and said that it was not his political opponents who got fat but his allies. Especially one of them - the aforementioned Defence Minister.

Speaking from an agricultural field, he complained that he can't even make a joke any more. "Yesterday I was mocking [Defense Minister] Krassi [Karakachanov] and [Deputy Regional Minister Nikolay] Nankov that they've grown chunky, and others got offended," he said.