06 November 2007 Newsletter

Bulgaria aiming for 6.4% GDP growth

The Bulgarian government presented a draft 2008 state budget on Wednesday, projecting a record surplus of 3% of gross domestic product and economic growth of 6.4% of GDP.

In 2007, growth is expected to reach 5.8% of GDP; and the budget surplus is expected to be 0.8%.

Finance Minister Plamen Oresharski said the budget surplus target "is a measure to guarantee the sustainability of the lev backing and the stability of the exchange rate."

Bulgaria's currency, the lev, is successfully pegged at a fixed rate to the euro under a currency board arrangement introduced in 1997. The board imposed strict financial rules aimed at restoring fiscal discipline, preventing deficit spending and controlling inflation.

Bulgaria, which joined the EU on Jan. 1, has said it wants to start using the Euro by 2010.

The 2008 draft budget allocates 4.2% of GDP to education and health care, 2.1% to defence and 2.4% to public works.

Public sector salaries will rise 10% in the beginning of next July, while pensions will go up 9.5 %. In an effort to crack down on tax evasion, the government plans to introduce a 10% flat tax on personal income in 2008. Currently, the tax rate ranges from 20 to 24%.

Last year, Bulgaria lowered its corporate tax by five points to 10%. Lawmakers will begin debating the budget next week and are set to vote on it in mid December.

The Associated Press
31 October, 2007

Over 2000km of road infrastructure to be rehabilitated in 2008

About 2000 km of the national roads will be rehabilitated with loans granted by the World Bank and the European Investment Bank. The total sum of the credit is EUR 500 million, and that of the national co-financing - EUR 350 million, i.e. the rehabilitation of 1 km will cost EUR 410 000. Yesterday the loans were approved by the government and now are to be ratified by Parliament.

One of the projects is aimed at rehabilitating 450 km of the country's road infrastructure. It will be financed by the World Bank with a EUR 90 million loan, together with EUR 24 million share from the national budget.

Another 1535 km of first-class roads will be rehabilitated under the EU Transit Routes V project.

Dnevnik Daily
26 October 2007

What's wrong with Bulgarians and Romanians?

What's wrong is that they joined the EU after half a million Polish migrants rocked up to these shores. Tough luck.

On Tuesday, the government confirmed that Bulgarians and Romanians will be barred from working in the UK for at least another year. Why? Because, the argument goes, the effects of the two countries' recent EU Membership is yet to be fully evaluated. But the real reason is that the government is fearful of losing its grip on immigration.

The economic truth, as a cynical fellow Bulgarian pointed out during January's Some what subdued EU accession celebrations in Sofia, is that those who really wanted to leave have already gone. They have had nearly 20 years to do it. Bulgaria's population has shrunk dramatically as a result. The highly skilled and the resourceful have remade their lives in the US, Europe and the Antipodes. Others have fallen through the cracks of their adoptive countries' black economies.

With Bulgarian unemployment at 6.7%, lower than the EU average, there is a trend for some workers to return home.

This may be why the Bulgarian media didn't get too excited over the latest bad news from Britain. For some, it confirmed that we are still, in the eyes of "Europe", second-class citizens.

And some suggested angrily that Bulgarian migrants contribute infinitely more to the British economy than British ex-pat pensioners and property investors do to Bulgaria.

Excerpt from The Guardian
1 November, 2007

Lufthansa Technik to set up maintenance operation in Sofia

Lufthansa Technik, the leading provider for maintenance, repair and overhaul (MRO) of airplanes, components and engines, is setting up a new overhaul operation in Bulgaria with the aim of opening up the growing air transport market in the region, the company said in an official press release on its corporate website.

The new facility is to be built at the Sofia International Airport.

Lufthansa Technik will be the first international MRO provider to have a base in Bulgaria. Its partner in the new joint venture company, Lufthansa Technik Sofia, will be Bulgarian Aviation Group.

According to the press release, Lufthansa Technik Sofia will offer base maintenance services (D-checks) for the Airbus A320 family and for Boeing 737 aircraft, including the 737 Classic and the 737 NG (Next Generation). Operations are planned to commence in October 2008.

The MRO Company will serve customers from Europe, the Middle East and North Africa in two docks.

Lufthansa Technik together with its partner Bulgarian Aviation Group is to invest more than EUR 20 mln in the refurbishment of the hangar, the dock facilities, tooling and working materials as well as in the training of the employees.

The hangar will have 6,000 m² of floor space allowing work to proceed on two Narrow- body aircraft at a time. It will also be possible for aircraft to be painted on the spot in either position using state-of-the-art technology.

'With our new site in Bulgaria we are creating another European supporting pillar to serve our customers in Europe, the Middle East and North Africa. The demand for base maintenance services will increase strongly over the next few years.

The new operation will supplement our existing European MRO capacity in Germany, Ireland, Hungary and Malta,' said Thomas Stüger, chief executive product and services at Lufthansa Technik AG.

Lufthansa Technik Sofia expects to employ about 380 highly skilled mechanics and engineers, thus becoming an important employer in Sofia. Training will be carried out by the local Civil Aviation Training Centre in consultation with Lufthansa Technik.

Dnevnik Daily
31 October, 2007

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