This week: Bulgaria finally sets foot on three seas, Elections are here (again) and how to lose 550 million on gambling

This week: Bulgaria finally sets foot on three seas, Elections are here (again) and how to lose 550 million on gambling

An e-car maker might land in Lovetch, you can fly to Varna

Bulgaria on three seas! This is a longstanding Bulgarian patriotic slogan that you can see on t-shirts, flags and Facebook profile pictures.

It is a yearning for a bygone period in Bulgarian medieval history, when the kingdom embraced the shores of the Black Sea, Aegean and the Adriatic. There is a curious twist to this dream though: no one knows what we would do if we were to have so many seas again. We are not a seafaring nation, and we already have a hard time keeping the only coast we have clean, let alone three!

Yet real life sometimes gives you more than any twisted dream: this week Bulgaria ended up touching far-flung shores. The 3 seas initiative, composed of EU nations between the Adriatic, the Baltic and the Black Sea, came to Sofia. The initiative, started 5 years ago as a humble exercise of multinational coordination, grew into an opportunity for infrastructural investment outside EU funding and, potentially, into a vehicle for closer business (and political?) cooperation.

It would be quite an overstatement to call this a "Marshall plan". As a percentage of GDP, the region gets immensely more money from the EU budget. Neither is it exactly game-changing: the needs of the countries in terms of infrastructure far exceed what the new fund can offer.

Yet the initiative is a step outside Brussels' (supposedly) strict oversight. It is not China-related (which is why the US welcomes it) and it is not Russia-targeted (which is why Moscow hasn't attacked it yet). This makes it one of the very few forums to allow Central and Eastern Europe (what was once known in the words of the late Donald Rumsfeld as "the new Europe") to talk amongst themselves and find common projects and interests. The legacy of communism and focus on Western Europe left the region very weakly interconnected. As the post-COVID economic recovery begins, such an initiative might prove more enduring than expected.

For all the problems and faults of this region, this is a whole new sea to swim in.

1. Politics this week

Caretaker government and President Radev welcome guests

For them this conference comes just in time: 2 days before the election in which GERB and Boyko Borissov will claim to be the sole defenders of Bulgarian interests abroad. This is the largest and most distinguished event in Sofia since the EU presidency - a high point for Borissov. The German president in person, the US president via recording, and the presence of the IMF president (a blow to Borissov who once proclaimed Ms. Georgieva to be a close ally) will be a media spectacle GERB will find hard to match.

One forbidden word: PPP's

Bulgaria has always had a problem with big infrastructure projects: we offered tens of those to the Chinese and none was taken because of insufficient planning or just plain ineffectiveness. Yet Three Seas calls for something we are even more unprepared for: Public-private partnerships. Suffice to say, the law in Bulgaria currently does not allow for an easy PPP. Unlocking that would be a major prize for all the municipalities here, so that is a good goal for the next government.

Slavi gets ready to steal the show

In domestic political news, today marks the official end of the most enervating electoral campaign in Bulgaria's modern history. If you missed our analysis, catch up here (and see what pollsters have to say about the parties' support just days before the vote).

The biggest unknown remains Slavi Trifonov. His party could emerge as the winner and try harder to form a government this time, but that's just about all we know of its plans so far. Mr Trifonov gave a rare interview - for Le Monde, where he said he wants to dismiss the Prosecutor General because he's "too small for his chair". He also backed Bulgaria's NATO and EU membership, as well as the adoption of the Euro (meaning there will be continuity with GERB on these topics). He also openly attacks Hungary, demanding greater federalization of the EU in order to tackle challenges such as those posed by Viktor Orban.

But when it comes to plans for his own country and its near future, everything is as murky as before. Mr Trifonov even refused to name who his party plans to nominate for Prime Minister. Significantly, the interview finishes with the French correspondent being urged to leave when he pressures Trifonov to answer if it is strange for the Bulgarians to vote for someone who doesn't say who will run the country.

Finally, a Covid response plan

In other news, after 18 months of pandemic, Bulgaria finally got its Coronavirus response plan. Health Minister Stoycho Katsarov presented it on Thursday, showcasing what restrictions would be placed on various forms of public gatherings in the event of rising numbers of patients hospitalized with Covid-19.

There are four "zones," each based on a certain number of people needing medical help, with the highest - dark red zone - meaning over 9,000 people are sick and in need of a hospital bed. Then, almost everything closes (at a regional level), with some concessions planned for vaccinated people.

2. Economy

The outlook for Bulgarian economy gets even brighter

This week, UniCredit Bulbank raised its outlook for Bulgarian GDP growth in 2021 to 4.4%, followed by 4.1% in 2022. The projection for this year is 1.8 percentage points higher than the bank previously estimated. The European Commission also improved its macroeconomic outlook for Bulgaria and the region. In its summer forecast, Brussels is betting on local GDP growth to accelerate to 4.6% in 2021, which is 1.1 percentage points higher than the rate it set in the spring economic forecast published in May. Both improvements are driven primarily by a better-than-expected recovery in the first quarter of this year.

The budget lost 557 million levs from gambling (tax, that is)

Four gambling companies should have paid an additional 557 million levs to the national budget but paid lower fees than due by law. The companies - "New Games", "Eurofootball", "National Lottery" and "Eurobet", are affiliated to Vasil Bozhkov - a candidate facing numerous accusations from the prosecutor's office and sanctioned under the Magnitsky law. His companies paid less than the statutory fee of 15% due for revenue from betting activities as a result of decisions made by the State Gambling Commission, according to a new report by the State Financial Inspection Agency.

Revenues of all companies in Bulgaria increase despite crisis in 2020

The total sum of revenues of all 357,000 companies in Bulgaria increased by 4% to nearly 400 billion levs despite the pandemic in 2020, according to the results of the NRA's annual tax campaign. While some companies have had a pretty good year, others have felt the impact of the crisis. Costs are also on the rise and are increasing a bit faster than revenues - by 5%, thus profits increased by just 2% to a total of 27 billion levs compared to pre-crisis 2019. Data is from the National Revenue Agency for last year and follows processing of the tax returns of the companies provided at the request of "Capital".

Employers planning wage increases

About half of all employers plan to increase wages in their company in the second half of this year, according to a survey among 513 firms conducted by ManpowerGroup Bulgaria. The decision stems from a lack of candidates for open positions. According to the HR company, in the second half of 2021, wages are expected to increase in most sectors of the economy, with the most popular being in tourism and hospitality, healthcare and pharmacy, and the automotive industry.

3. Business

Automotive industry

Next.e.GO Mobile

The German electric car startup Next.e.GO Mobile is planning to produce electric cars in Bulgaria. Details on the possible investment are thin, but if the project is fully implemented, the total investment could reach 140 million euro. The company is looking at an ambitious annual output of tens of thousands of cars per year. Next.e.GO Mobile has looked at various possible production locations in Bulgaria and has set its sights on the site of a former Balkan machine-building plant in Lovech, according to one of Capital's sources.

Capital funds

ImPulse I

Investment fund ImPulse I successfully raised nearly 6 million levs in its IPO on the BEAM stock market. Investor interest was significant, as the emission was oversubscribed 1.5 times. A special time slot at the beginning of the session allowed many small investors to join. The large orders were six in total - for just under 2 million levs (37% of the offered shares).



This week, Ryanair announced the beginning of flight schedules between Sofia and Varna. They will run from August 1 to the end of October, five times a week, and will be part of the extended summer schedule of the low-cost company. Currently, only BulgariaAir flies this route. WizzAir has twice attempted to run flights but gave up on both occasions.


IAB Bulgaria

The market for internet advertising in Bulgaria hit a record 142.7 million levs in revenues in 2020, which is an increase of 15.3% compared to 2019, according to industry organization "IAB Bulgaria". Unsurprisingly, the big winners from the rapid growth of online communication in Bulgaria are Facebook and Google. According to the data of "IAB Bulgaria", investments in Internet advertising on the local market, excluding the technology giants, amount to 34.4 million levs, or 4.5% less compared to 2019.

4. Energy

Overgas swaps Russian for American share

The biggest private Bulgarian gas company bought 50% of its shares from "Gazprom" earlier this year for 100 million euro and now is selling them to the American Linden energy. This was announced at the Three Seas summit. Linden already owns 10% of the capacity of the interconnector between Bulgaria and Greece. The plans are to deliver gas to private buyers in the Balkans.

Prices heat up in energy

Electricity, gas, and heating are becoming significantly more expensive. Electricity for households increased by an average of 4.4%. The Energy and Water Regulatory Commission also set a new price for natural gas, which is twice as high as expected - 49.94 levs per mWh whereas earlier in the week expectations were for the price to increase to 46.88 levs per mWh. This is just the latest increase in gas prices in the last few months. Compared to March, prices have risen by close to 75%. As a result, heating and hot water have become significantly more expensive.

5. Watch out for

People: Boyko Borissov

The ex-Prime Minister and GERB leader hinted on several occasions that his party expects voting manipulation and threatened that it might not recognize the result of the election. So follow his reaction to a potential loss on Sunday with caution

Date: 11 Jul, the new elections.

6. Words of the week: "Kiro Harvarda" (Kiril from Harvard)

A drama unfolded regarding the diploma of Economy Minister Kiril Petkov - some of his political opponents did not trust that he really graduated Harvard Business School. After a smear campaign by pro-GERB websites, predominantly by, he produced his certificate which clearly stated he had graduated with distinction from the elite MBA program of the school. This did not stop his opponents - or just people who dislike anyone smarter than them - from continuing to mock him as "Kiro Harvarda," as if graduating from one of the best universities in the world (and in the top 10 percent of your class) can ever be worthy of derision.

The Three Seas Initiative saw leaders from 12 countries, as well as the head of the IMF Kristalina Georgieva and representatives of the EU Commission and the US Congress attend one of the most important international meetings in Sofia in recent years
Photographer: Presidency of Bulgaria

Bulgaria on three seas! This is a longstanding Bulgarian patriotic slogan that you can see on t-shirts, flags and Facebook profile pictures.

It is a yearning for a bygone period in Bulgarian medieval history, when the kingdom embraced the shores of the Black Sea, Aegean and the Adriatic. There is a curious twist to this dream though: no one knows what we would do if we were to have so many seas again. We are not a seafaring nation, and we already have a hard time keeping the only coast we have clean, let alone three!

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