Pearl Property News & Blog

The Bourgas regional committee on life guarding is to propose the formation of a register that would control the jet skis rented out by beach concessionaires. The measure is to be taken because of frequent accidents at the seaside. More than 20 tourists have been injured since the beginning of the summer season. At present, there are no jet ski regulations or demands for any qualifications or permits by the sea administration. There are special corridors in the water away from swimming areas for which most concessionaires know the conditions, and so they may hire out the water facilities. The large number of accidents shows that requirements are not kept to and sanctions are not envisaged by the law.

Bourgas-based national cable television Skat TV opened its first private television centre in the country in Primorsko, south-eastern Bulgaria, on July 29. Its main focus will be on tourism development mainly on the Black Sea coast. Skat TV’s television centre has its own studio complex from where it will broadcast programmes for Primorsko and Tsarevo, south-eastern Bulgaria. The station’s short-term plans include extending the programmes to Malko Tournovo, also in south-eastern Bulgaria. The number of TV viewers on Bulgaria’s southern coastline, tourists included, currently exceeds 170 000 people. Skat TV broadcast its pilot news programme on July 29. For the time being, the programme will be broadcast once a week.

The executive board of the International Monetary Fund (IMF) has completed the third review of the Bulgarian Government’s performance under the economic and financial reforms programme under the precautionary stand-by arrangement with the IMF, the Finance Ministry said on August 3.

The agreement, which was extended by six months, is Bulgaria’s last and will play the role of a bridge to EU accession.

On the whole, the Government’s economic programme, based on a prudent fiscal policy, credit growth restrictions and structural reforms boosting competitiveness, aims to ensure a stable economic and political framework and to prepare Bulgaria to a large extent for EU accession from January 2007.

By making this positive decision, the board highly commended the Government’s policy leading to macroeconomic stability through a prudent fiscal policy and continued structural reforms.

Statements made at the board meeting noted that despite increased external challenges and risks, Bulgaria had made further progress in strengthening the principles of a market-oriented economy and had carried out considerable financial and economic reforms clearly directed to European integration.

The executive board expressed confidence that the progress made under the programme sent positive signals to the international economic elite and guaranteed that Bulgaria would further maintain its macroeconomic stability.

The IMF is preparing to withdraw from the active monitoring of Bulgaria’s macroeconomic stability. This process however, will occur over the next eight months due to an agreement reached between the IMF and the Cabinet that will lead to a six-month extension of Bulgaria’s accord with the fund, starting from October 2006.

The current stand-by agreement ends in September, leaving a three-month gap till Bulgaria’s expected entry to the EU in January 2007, providing possibilities for macroeconomic insecurity and unclear fiscal policy.

Since 1997, Bulgaria has operated under an IMF-advised currency board system, a strict straitjacket that deprives the central bank from its monetary policy functions and pegs the exchange rate of the Bulgarian lev to the euro, sheltering the currency from foreign exchange volatilities.

Effective implementation of the six-month extended arrangement will continue in the first three months of the extension period, until the end of 2006, and the next three months will be a time for drawing conclusions and for the IMF executive board to compile a report on the implementation of the programme for Bulgaria. The country is not receiving any financing from the IMF under the current arrangement.

Bulgaria’s economic growth is expected to exceed 5.3 percent in 2006, according to forecasts released on August 3 by the independent Centre for Economic Development (CED).

The Government earlier made a forecast that Bulgaria’s gross domestic product (GDP) will grow by a real 5.3 per cent in 2006. In the first three months of 2006, the Bulgarian economy registered real growth of 5.6 per cent.

“The dynamics of the short-term indicators give us grounds to project that 2006 annual economic growth will be higher than the projected value of 5.3 per cent,” CED said in its report.

Services are again the main driver of growth, while industry and construction register a slowdown. No change is observed in the development of agriculture and stagnation in this sector continues.

Unemployment registers a stable downward trend and investments in equity are up for a third quarter in a row, while growth in final consumption is more moderate. These indicators give grounds for optimism.

On the other hand, the current account deficit on the balance of payments is steadily up, accounting for 7.3 per cent of GDP in the period January-May 2006, or up 73 per cent on the deficit for the same period of last year.

Foreign direct investments cover only half of the trade deficit. Exports, however, show a trend of higher increase against imports, which is expected to persist. If foreign investments preserve their sustained growth, as anticipated, the negative economic effects of the increasing current account deficit on the balance of payments would not be registered.

From the beginning of 2006 until June, consumer prices were up 2.9 per cent and were not expected to increase their levels in the summer months, owing to a seasonal decline in food prices that account for a significant relative share of the consumer basket.

Overall, the financial sector registers growth and remains relatively stable.

At the same time, some negative trends are observed. The first concerns the growing credit expansion of commercial banks, which has a negative effect on economic stability and is also a factor for the current account deficit. On the other hand, credit expansion contributes to a jump in the short-term foreign indebtedness of banks and, respectively, of the whole economy. According to CED, the capital market registered record-breaking turnover values and sustainable growth in indexes. It is, however, still dominated by incidental block transactions, and not by sustainable trade on the regulated market, the centre’s experts found.

Development of public finance is characterised by persistence of major trends established in previous periods. Among these are: the increase in the actual quota of reallocation through the budget and the strengthened role of the state in the Bulgarian economy.

Draft changes of tax legislation contain some good elements but fail again to be structured into an economically sound system.

As regards the individual sectors, development of construction and real estate services has been most dynamic. Transport, energy sector and agriculture register stagnation or decline. The public administration and the business are mounting efforts in the preparation for European Union membership, in particular in the implementation of environmental standards and the absorption of structural funds, CED said.

Four to bid for Bulgaria AirPrivately owned Greek carrier Aegean Airlines and three other companies are vying to bid in a tender for the sale of flag carrier Bulgaria Air.

The Privatisation Agency announced this (PA) on August 3.

“Four companies have submitted documents in line with the pre-qualification requirements in the tender for the sale of 30 159 shares, or nearly 99.99 per cent of the capital of Bulgaria Air,” the PA said in a statement on its website.

Along with Aegean Airlines, US-based investment fund York Capital Management, Bulgarian-registered company Air One-Bulgaria and Bulgaria’s Balkan Hemus Group, owner of air carrier Hemus Air, have filed documents in the tender, the agency said.

Austrian Airlines, UK asset management and aviation consultancy Trans Atlantic Aviation and Italy’s second-largest airline Air One, which also bought tender documents last month, have withdrawn from the race.

The PA was expected to make a short-list of bidders that would be invited to place non-binding offers by August 17.

Bulgaria launched a tender for the sale of Bulgaria Air in June, looking for a strategic or a financial investor to secure the company’s competitiveness after the country’s European Union entry, scheduled for 2007.

Bulgaria Air’s pre-tax profit dropped last year by 71 per cent to 500 000 leva.

The national air carrier accounts for 30 per cent of the air travel tickets sold in Bulgaria and for about 25 per cent of the revenue from ticket sales.

Bulgaria Air succeeded the country’s flag carrier Balkan Airlines, which was declared bankrupt in 2002, after a nearly two-year struggle to repay debts totalling about $100 million.

Entering and working in Bulgaria is to become easier for foreigners, especially those from European Union countries, following a series of changes to regulations and draft legislation approved by the Cabinet.

From September 1, nationals of a number of countries will be allowed to enter Bulgaria without visas and stay for up to 90 days within six months, the Cabinet decided on August 3.

The countries are the United States, United Kingdom, Australia, Canada, New Zealand, Costa Rica, Guatemala, Honduras, Mexico, Nicaragua, Panama and Salvador. The visa-free entry and stay rules will also apply to nationals of Guatemala, Honduras, Nicaragua and Salvador with valid diplomatic or service passports.

On the same day, the Cabinet approved an agreement with Israel whereby citizens of both countries will be able to enter the other country without a visa and stay for 90 days within a six-month period. However, if a visa will be required if the person intends working. Approving amendments to the visa agreement with Turkey, the Cabinet agreed to a general rule of issuing single or multiple transit visas for stays of 90 days within six months. This is a tripling of the allowable period from a previous 30 days.

At the end of July, the rules for admission of European Union citizens were changed, providing for visa-free admission for EU citizens of up to three months, on condition that a visitor has a valid passport from an EU country or an EU country identity document. The change will take effect when Bulgaria joins the EU.

EU citizens wanting to stay longer will have to apply for permission. Conditions for getting permission include clearance from the Bulgarian police, having sufficient money to support themselves, and where relevant, showing that they are enrolled at a legitimate educational institution.

In May, the Cabinet approved a package of amendments to legislation on the employment of foreigners in Bulgaria.

The new regulations make a distinction between employees from EU member states and employees from “third states”. The new provisions allow for the application of more favourable employment conditions for EU citizens, either those in effect in the country of residence, or those in effect in Bulgaria.

When Bulgaria joins the EU – an event provisionally scheduled for January 1 2007 – all labour restrictions on EU citizens will be dropped.

In June, Labour and Social Policy Minister Emilia Maslarova said that, as a result of foreign investments, there were already 52 000 foreigners employed in Bulgaria. These people had permanent residence status and included senior executives from large foreign companies, as well as trade representatives. By mid-2006, the Employment Agency had issued 1063 work permits to foreigners, a slightly higher figure than for the entire 2005.

Bulgaria’s approach is more open than that of EU member states. According to an August 7 statement by European Integration Minister Meglena Kouneva, Bulgarians will get full labour rights in the 10 states that most recently joined the EU immediately on this country’s accession to the EU. She said that, similarly, full labour rights would be granted immediately on EU accession in about six or seven of the remaining 15 member states. The UK, Ireland and Finland have said that they would open their labour markets to Bulgarians when the country joins the EU, while the rest are yet to decide.

Another indication of the number of foreigners in Bulgaria emerged with the release towards the end of July of a Migration Directorate report, saying that in 2005 a total of 12 318 foreigners were given permission for an extended stay of one year. This included 1152 UK citizens, the third largest group after people from Macedonia and from Turkey, and 473 Germans.

The number of foreigners granted permanent residence in 2005 was 3099. The number of UK citizens applying for permanent residence in 2005 was about 49 per cent higher than the previous year.

Draft legislation approved by the Cabinet at the end of July provides for a tougher line against attempts at illegal immigration, including through stricter visa control and the introduction of biometric passports.

Bulgaria also has been stepping up action against illegal employment of foreigners, especially in sectors where there is a high concentration of such illegal employment. In June, the executive director of the labour inspectorate, Totyu Mladenov, said that cases of illegal employment of foreigners were most often found at construction sites, in the clothing industry, and at restaurants and hotels.