The week: The day of the Second Payment has arrived

The week: The day of the Second Payment has arrived

One EU instrument which actually works, Wars bring the Balkans closer, The 6 centers of Bulgaria

© Julia Lazarova

You remember the feeling when you've submitted your project, or homework, or paper, or anything you'd worked on for an eternity? A long and profound sigh of relief.

That's how the Ministry of Finance must have felt when they finally submitted the documents for the second payment from the Recovery and Resilience Facility this week. Or rather, The Second Payment, because it was so significant politically in the last year that it deserves a certain respectful capitalisation.

Almost everything the political class did was related to the mythical Second Payment and the goal of not letting 1.4 billion levs, or 700 million euro slip away. The caretaker government spoke about it, and the new government spoke about it when they assumed power. Parliament has basically worked ⅔ of the time over the past several months, passing new laws and amending old ones, to fulfill all of the 66 criteria, set as a prerequisite by the European Commission to allow the money. This included everything from procurement regulations, to street lights, telecom frequencies, energy reform, healthcare, state-owned enterprises, etc.

So how is it that a mere 700 million euro can spur the whole political spectrum - from Delyan Peevski and Boyko Borissov, to Kiril Petkov and Assen Vasilev, to actually get work done?

Well, there are two answers to this question. First of all, remember the thing we've discussed about investments? Well, the RRP money is still the only considerable amount of foreign investment flowing into the Bulgarian economy for the time being. They are pure investment capital and there are a lot of potential interests that can be served by them.

But second, and I must admit this has come as a surprise to me: they are indeed bound by very strict rules. While the EC has for ages claimed that eurofunding comes with strings attached, this was always a bit of a fantasy. Regarding the usual EU programs, the country could have manipulated the results, the indicators, twisted them, renegotiated and so on. And it did.

While now there is a very clear timetable, with a very precise list of KPI's that need to be attained. There is really very little room for maneuvering. So you either get your things done, or you miss a payment. And once you've missed it, it's very hard to claim the others, since the whole thing ends in 2026 and you might as well need to return what you've invested.

Don't get me wrong. I'm not saying all is perfect and we live in a fairyland now. A lot of what has been changed has been done half-heartedly, and incompetently. A lot of lobbying has been going on (private hospitals, for example, lobbied hard to get excluded from the procurement regulations). But all in all, things are getting done. This is somewhat of a revolution.

So look forward to the Third Payment. It involves another 44 measures and we've already missed the deadlines for them.

Oh, boy, it's going to be a long year.

This newsletter is helped by

Martin Dimitrov and Monika Varbanova

1. Politics this week:

Vote of no confidence: GERB will keep WCC-DB afloat

By the time you read this newsletter, the Parliament would have voted on the motion of no confidence against the Denkov-Gabriеl government that was filed by Vazrazhdane, TISP and BSP parliamentary groups last Friday. Almost certainly, the vote will have failed - in fact, it could have passed only if GERB, which is part of the ruling coalition, had withdrawn its support.

It is almost certain that this will happen sooner or later - Boyko Borissov never tires of bashing his partners, claiming they are bankrupting the country and not building anything and is certainly waiting for the right moment to ask for the redistribution of power.

But it is unlikely that he uses such a crude instrument as the no-confidence vote to attain his goal - he would likely wait for the results of the local elections for his coup de grace. Or even more.

Why did Bulgaria, Greece and Romania meet?

Shortly before being called to Parliament for the no-confidence vote, Denkov dropped into Varna, or rather - the palace of Euxinograd. There he met his counterparts from Greece, Kyriakos Mitsotakis, and from Romania, Marcel Ciolacu, to speak infrastructure.

The result of this meeting was more promises and new maps. On them one can see a new bridge across the Danube near Ruse, oil pipeline project between Bulgaria and Greece, as well as a finished south-north corridor and rail connections between the Aegean, the Black Sea and the Danube. We've seen more than enough of those promises and maps to tell you it will only matter if there is money and political will for that.

War is knocking on the Balkan's door

But this time, it seems there just might be. The reason of course, as we've mentioned before, is the war in Ukraine, but in a week when another war reignited, it's going to be even more urgent.

NATO and the US seem very willing to deal with the gordian knot that is the infrastructure connectivity here. Which means there soon might be an intra-government agreement on those corridors and some big construction names on the ground.

Which explains why the other guest in the palace was the EU transport commissioner Adina-Joana Valian, who pledged EU support.

Speaking of military cooperation, Turkey steps in

Turkey, Romania and Bulgaria are discussing the creation of a joint force to clear mines from Russia's war against Ukraine that drift into the water of Black Sea. The three NATO members are working out the details but may set up the unit as early as next month.

Greece finally steps up to speak Schengen

Aside from the main topics of discussion at the meeting in the Black Sea resort, the summit was notable for one more reason - Kyriakos Mitsotakis expressed for the first time his country's firm support for the urgent resolution of the issue with the Dutch and Austrian blockade of Bulgaria and Romania's Schengen accession. Mitsotakis says this affects both the trade between Sofia and Athens and has an important role for tourism in his country. As an "island" Schengen member, Greece has been suspiciously silent up to now.

Netherlands and Austria - not impressed

His comments arrived just as Wolfgang Sobotka, President of the Austrian National Council visited the Bulgarian-Turkish border, commending the efforts of the Bulgarian border guard to protect EU's outer frontier, yet practically confessing that his country is holding Bulgaria and Romania hostage over its general disapproval of the way the Schengen space is governed.

For its part, the Netherlands insisted on more information from the European Commission, as well as on a mission to find out how the rule of law is applied in Bulgaria, Dutch migration minister Erik van der Burg told BNR.

2. Economy:

Source: IME

The six speeds of Bulgaria

There are six main economic centers in the country. And they are not cities, but interconnected regions with a core and a periphery. The largest one, of course, is around Sofia, with Pernik and Botevgard as secondary cores, followed by Plovdiv, Varna, Stara Zagora, Ruse and Burgas where 70% of the national economic production is concentrated.

This is the conclusion of an analysis of the Institute for Market Economics (IME) published this week (the map is on top). A few things to note here. First, someone finally studied commuting patterns, albeit on the rudimentary level the Bulgarian statistics allowed, and found out which counties were connected via human capital and natural economic links, rather than administrative borders.

Ah, Gabrovo, we have something to tell you

And second, there are 10 smaller similar economic engines that stand out on the economic map, which act as a magnet for workers from nearby settlements. Such smaller centers are Sliven-Yambol, Shumen and Kozloduy and others.

But the region that can benefit from much more interconnectedness is Gabrovo-Sevlievo. The dual-system fails to connect to the nearby Veliko Tarnovo cluster, therefore missing out on a potential candidate to enter the top 5. Food for thought.

You can find the analysis here (in Bulgarian).


933 BGN

The increased minimum wage that will come to force on 1 January 2024. Additionally, it is expected that the authorities will approve higher maximum insurable income for 2024. At the moment it is 3,400 levs, and according to Capital's sources, it will go up by at least 300 levs.


The expected annual inflation for 2023 according to the upwardly revised prognosis of the IMF, published this week. The international body expects price increases to go down to 3% in 2024.

3. Business:


The German supermarket chain invested BGN 37 million in a new hypermarket in the capital's Lyulin 3 district. This is the 14th outlet of the retail chain in Sofia, which opens 70 jobs, the company's CEO Ivan Chernev said.


Ideal Standard-Vidima

The Sevlievo plant announced a 1 million euro investment in a mold manufacturing plant. The factory will produce its own polymer molds for high-pressure ceramic molding

4. Brussels:

#Demography - Brussels sounds alarm about the EU's rapidly aging population. According to the report, the EU's population will lose 57.4 million from the working-age people by 2100. More worryingly, the ratio of the number of elderly people compared to the number of people of working age - will surge from 33% today to 60% by the end of the century. The Commission recommends legal migration to fill vacancies, without being too concrete on the details.

#Е-cars from China EU formally opens subsidies probe into electrical vehicles made in China. Under the new rules, which apply in full from this week, the bloc has powers to vet subsidies that can distort European markets, and could issue fines, order the suspension of tenders or block state takeovers.

5. Energy:

Kozloduy NPP sold energy for nearly 170 million levs in November and December

In two deals on 12 October, the Kozloduy nuclear power plant sold a large part of its energy for November and December. Such a thing is happening for the first time in years, after electricity was mainly sold on the day-ahead segment rather than long-term since 2020. The state will seize 30 million levs of the amount because of the revenue cap, and the deals themselves could be the reason for higher exchange prices in the coming months.

Bulgartransgaz profit drops to 30 million euro as gas prices skyrocket

The Bulgarian gas transmission company's equity has risen to 5.3 billion levs compared to 3.6 billion a year earlier and gas transmission revenues (277.9 million) are the largest contributor to Bulgartransgaz's earnings, but the overall profit for the first half of 2023 almost halved to 30 million euro compared to the same period last year when it was almost 60 million. The volumes produced at the Chiren storage facility have decreased by 60.6% and the natural gas lifted was also lower, the company's interim report also claims.

6. Watch out for:

People: Vladimir Tishchuk

The new Protopriest that will head the Russian church in Sofia after the expulsion of Archimandrite Vassian Zmeyev over spying allegations two weeks ago. Interestingly, the new Primate comes from the Vienna dioceses of the Russian Church - also known as a spying capital of Europe.

Andrey Gurov

The new deputy-governor of BNB came under crossfire these days for still being part of the political council of WCC. He is by law required to leave all political parties when working for the institution and he claims he has done so, but it was not reflected in the party structures.



The site of the unfinished Nuclear power station is now certainly remaining nuclear-free, as the Denkov-Gabriel government finally shut down the project completely, after almost 30 years of kicking the can down the pavement from successive governments.


UN Human Rights Council

Bulgaria kept its seat on the Geneva-based UN body after it received almost twice as much support from UN members than Russia - 160 vs 83 votes - to receive one of the two seats dedicated to the Eastern European region.

Words of the week: Много баби - хилаво бебе

A famous Bulgarian phrase has it that "too many grandmas make the baby meek," meaning that if too many people try to do one job, the final result suffers. This week's strange and unfathomable competition, undertaken by the presidential institution and parliament, over who should be first to discuss the country's national security against the backdrop of war in Israel proves this homily right.

In an attempt to exploit his constitutionally given power to convene a Consultative Council on National Security in such situations, and to bypass party leaders, President Rumen Radev on Wednesday invited only the heads of security agencies, ministries and parliament to discuss potential risks from the escalation of conflict in the Middle East.

Likely affected by the head of state's dismissive attitude towards the leaders of the parliamentary parties, the National Assembly Speaker Rossen Zhelyazkov convened a council at his office, consisting of the chairmen of the parliamentary groups, and the representatives of the same institutions - the prime minister, the deputy prime minister, the interior minister, the interior ministry secretary general, the military minister and the heads of the services. Neither meeting had a dramatic result. There isn't much to worry about, or at least much we can do about it seemed to be the message at the end, but it showed yet again the immaturity of the top political brass, even at a time of serious crisis.

You remember the feeling when you've submitted your project, or homework, or paper, or anything you'd worked on for an eternity? A long and profound sigh of relief.

That's how the Ministry of Finance must have felt when they finally submitted the documents for the second payment from the Recovery and Resilience Facility this week. Or rather, The Second Payment, because it was so significant politically in the last year that it deserves a certain respectful capitalisation.

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