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Tuesday, February 17, 2004

This weblog has moved to Our New Blog


Wednesday, October 08, 2003

Mostly Pensioners


Looks like people are beginning to notice our population situation:

1 M Bulgarians Emigrated

Unemployment and poverty drove away the young people. In 2 decades Bulgarian population will be of pensioners mostly

Over 1,000,000 people emigrated from this country in the wake of 1989, the Bulgarian National Radio released, quoting data of the Generalia 21 Youth Organization. Of them, 840,000 were aged under 29. According to the statistics, young people living in Bulgaria are only 1,150,000. Their number is expected to fall down to 1 million in a decade, and in two decades it is expected to be reduced to 670,000. Young people are emigrating en masse for unemployment, dramatically low living standards and social instability. Soon the population of Bulgaria will be constituted of pensioners mostly, commented experts at the discussion on youth policy-making held in Borovets. The other reasons for the fall in population are the low birth rates and high death ones. Annually, Bulgaria's population is decreasing by 45,000 to 50,000 people in average.
Source: StandartNews
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Monday, September 08, 2003

Bulgaria's Difficult Road Into Europe

Despite the fact that most Bulgarians look with hope and a sometimes difficult to sustain optimism towards the 2007 horizon, the road is littered with problems. Interesting article from the EU observer today. Just one small quibble, I'm not sure it's still true to say that Bulgaria's population is 8.9 million.

Bulgaria's long bumpy road to EU membership

In the optimistically named Mladost ("Youth") area of Sophia, ugly high-rises and broken-down Ladas balefully remind of the small Eastern Balkan country’s time behind the Iron Curtain. It is here that the ‘Fatherland’ or ‘Rodina’ can be found - one of Bulgaria’s remaining state-owned companies where 15 of its newspapers are printed. In the sweltering heat on the factory floor, Lubteho Kotev (49), who has been working at Rodina for over 16 years, worries that he will be one of the victims of the wave privatisation that is coming to Bulgaria. "We don’t expect very positive changes" says Kotev, who oversees the smooth running of the printing plant. "It's an open secret that the private companies in Bulgaria pay minimum salaries."

He tells of another well-known state-owned company in Bulgaria that was recently bought by an outsider. Most of the workers and machines were replaced. "We are afraid the same things will happen here," says Kotev shaking his head – his cross-shaped earring representing his favourite soccer player, former Bulgarian international Nasko Sirakov, jangles in sympathy. Upstairs, away from the printing machines, the deputy-editor of the Standard newspaper confirms the view on the factory floor. "Jobs will go", she admits but it reluctant to guess how many. Factory workers are not the only ones who will be affected - the country side just outside Sophia is startlingly green and mountainous. Its fields are tended by small families - old women cut the grass with scythes, old men take hay by cart and donkey to the farm. Children also help. It is desperately poor and, of course, not particularly efficient.

But for Bulgaria’s small new class of entrepreneurs, free market economy and the prospect of EU membership in 2007 can only be positive. 150 kilometres south of Sophia in the heart of Thracia, Ivan Todoroff, former flautist, former construction worker, and now Wine-maker has made good. In 2001, he bought a wine cellar using money made in the construction business and with the help of loans from an EU rural development fund has built it up into a successful cellar producing high-quality red wine.

His neighbours in the village do not think such projects will work, he says, with an eloquent shrug to the tidy and well-off operation that he has built for himself.

Then he gets to the nub of the matter. They are afraid "of the eventual corruption they will meet." He elaborates, "it happens that the guilty ones win against the one that is right." And, indeed, corruption, the thin line between politics and business and the murky judicial system is one of the things that most worries the European Commission and member states. As usual this is reflected by the pragmatic business community: there is little foreign direct investment in Bulgaria. In a report in November 2002 laying out the roadmap to Bulgaria’s EU membership the Commission notes "the judicial system remains weak and there has been little concrete change in its functioning" it draws particular attention to the question of immunity for politicians as well as the way investigations are carried out. While parliamentarians are keen to point out that a lot of progress is being made in reforming the legislation. Implementation is a lot slower. Part of the route to corruption lies with the fact that wages are so low. MPs, for example, earn around 500 euro gross a month, while judges get about 700 euro into their hands per month.

It takes time for society to change its habits from top to bottom – a point noted by my young city tour guide. "The old communists still have a lot of power, " he claims. Other civil servants also admit that the apparatchik is still in place making it hard for young change-minded Bulgarians to really get a foothold. It is this difficulty to confront change or make change happen that is one of the of biggest challenges facing the spirited women who run Animus – the first NGO dealing with trafficking in women, domestic violence and child protection to be set up in Bulgaria. They are having to force a huge attitude change in the country. Until December last year there was no legal definition of trafficking of women. "Our society has a rigid attitude towards violence" says psychotherapist Maria Tchomarova, "it victimises the victim". The women say they run into "active opposition" from some parliamentarians. "They are postponing, postponing, postponing [new legislation]" continues Tchomarova. Bulgaria is a good destination for trafficked girls "to be broken" says Animus because police and society "are not organised".


Part of this disorganisation comes from the fact that there is still a strong feeling among the country’s 8.9 million inhabitants that the state can and should look after unwanted children in state-run homes – a legacy of communist times. Unwanted children proved to be a loose and open category. In the past, such homes led to horrific media reports on the conditions inside – they are often tucked away from society’s eye and little or no contact with the outside world. Officials in the justice ministry admit that there are still homes where government inspectors have had little access. But as with the rest of Bulgaria – change is coming, albeit slowly, here too. In another high-rise part of the city, the Soviet title Nadezhda ("Hope") is not altogether misplaced. Assen Zlatarov, a home to some 100 children from 7-18 years is an open and friendly place using modern psychology methods. It is quite obviously a ‘showcase’ home – but the pragmatic woman who runs the place feels that societal changes in Bulgaria will lead to this being the norm throughout the country. Certainly the children are no different from anywhere else – their biggest dreams are to have a house, own a car, be rich. They ask us about our countries, Europe. This slowly-but-surely attitude is reflected by Bulgaria’s prime minister Simeon Saxe-Coburg. "Society cannot change overnight", he adds that to have joined the EU in 2004 with the other ten mainly central and eastern European countries "would have been very wrong".
Source: EU Observer
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Friday, July 25, 2003

Who sais Bulgaria is in deep economy crisis? Who sais Bulgarians become the poorest people in Europe?
Recent media news:
BULGARIANS AT BUSINESS TRIPS
National statistics have shown 1 504 744 trips abroad for first 6 months of 2003. The tourists - 400 630, visitors to friends or relatives abroad - 86 084, business - 894 659.
Dimentions top 5: Turkey, Former Yugoslavia, Monte Negro, Greece, Germany. Sorry Edward, Spain is not in statistics. But keep in mind - we are about 7 000 000. Count what this statistic sais :)

Tuesday, July 15, 2003

"No one goes on in this household
We are a dying Breed"


These days I often listen to this song from Lonesome Bob - a famous country singer in the USA. Probably because the Bulgarian media keep telling us:

In 2002 in Bulgaria there were 67,038 children born. As a comparison, in 1990, there were 105,180 new born kids. Infant mortality in 2002 was 887 (13.3 per 1 000). Death rates for 2002 - 112,617 (14.3 per 1000). In the year 2002 we have lost 43 000 people because of emigration (official figures, the reality is certainly a lot more). The id coeficient of natural population growth is therfore minus 5.8. Life expectance is 71.87. 2002 is the worse year in our modern history they say. You can find the official data here , in Bulgarian of course!

So, I just keep listening to Lonesome Bob.

Friday, June 20, 2003

Bulgaria Presses for a Road Map


It's strange, but our readers seem to get into everything. John from Canada recently sent this revealing mail:

I've just returned from an extended holiday in the UK with my family. In the middle of it I spent a week visiting my company's software development partners in Hungary and Bulgaria. Both groups of course mentioned the depreciation of their currencies against the dollar. I agree with your comments about the wisdom of Hungary's approach, but was most interested by your comments about Bulgaria. I spent three days there earlier this month and did find it significantly more expensive than last year, while still of course quite cheap compared to the West.



I wrote back explaining that he was pleased to see the observation about Hungary, but that he had misunderstood the situation in Bulgaria. The Bulgarian leva is pegged to the euro, and is inevtably rising. Hence the 'expensive' comment. What is even more preoccupying is the fact that this peg is being sponsored by the IMF and encouraged by the EU. All this sounds awfully reminiscent of Argentina to me. Why cannot they learn the simple message that it is not appropriate for a relatively small economy to have a fixed peg with a much larger neighbour (and this of course also applies to Spain Greece and Portugal who are inside the euro), especially when that neigbours currency may be subject to relatively violent fluctuations which will reflect no underlying fundamentals in the small neighbour. Now back to John's second mail:

I did not know that the leva/euro peg was an IMF requirement; that certainly explains some things. Bulgaria itself seems to be improving marginally, but the whole place smells, as before, of corruption.



And now let's go south a little, to Thessalonika where the EU is having a big meeting to decide on it's constitution, and Bulgaria is looking for an accession timetable, but things don't seem to be too promising. Incidentally, note the growing Spanish connection at the end, as I am trying to suggest, this may be more than mere coincidence. Solomon Passi is Bulgaria's foreign minister.

The three-day summit, where the accession of Balkan countries to the EU is a key item, ends on June 22. Bulgaria and Romania were not invited to join the EU in May 2004 along with 10 other eastern and southern European nations because of their slow economic progress, but hope to join in 2007.

Passi said that it would not be easy for the EU to recognise 2004 as the year to end negotiations, but this would create a positive precedent if it happened, Bulgarian National Radio said. "The other countries which joined the EU did not have any dates fixed in advance. I cannot promise at this time that we would be able to achieve this goal, but if we are not successful now, we will have to try again at the summit meeting in Rome at the end of the year", he told BNR in an interview.

Passi was speaking just a day after he returned from Brussels where he paid a working visit to EU headquarters. Statements by senior officials there were not very encouraging. The EU's Employment and Social Affairs Commissioner, Anna Diamantopoulou, told Passi that it was doubtful that Bulgaria would be given a fixed accession date in Thessaloniki. EU enlargement commissioner Guenther Verheugen was even more straightforward: "Bulgaria cannot expect to receive a set date for finalisation of the accession talks at thesummit in Thessaloniki," he said after meeting Passi in Brussels.

The regular report of the European Commission, which will make an objective assessment of Bulgaria's progress in negotiations and in meeting the criteria, is traditionally announced in October, Verheu-gen said. However, Verheugen assessed Bulgaria's political programme for finalising the talks in 2004 as realistic and attainable. Talks were proceeding smoothly, he said. Passi also met EU Foreign Policy and Common Security Commissioner Javier Solana, who noted Bulgaria's hard work towards joining the European institutions.

"The EU wants to maintain with Bulgaria the most intensive possible political dialogue," Solana told reporters on June 12. However, Bulgaria got a sign of support for its effort to determine 2004 as the year to end negotiations with EU. Spanish foreign minister Ana Palacio, who accompanied King Juan Carlos on a state visit to Bulgaria at the beginning of June, said that Madrid would back Sofia's efforts to conclude its negotiations on joining the EU next year. "We hope that at the Thessaloniki summit we can confirm Bulgaria's timetable for negotiations so that these can be concluded in 2004," Palacio said.
Source: Sofia Echo
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Monday, June 02, 2003

Agriculture in Bulgaria

This OECD booklet is full of interesting details. Especially the fact that the proportion of the population working in agriculture is rising Again OECD don't like cut and paste. I'll put something later.
LINK
Refugees in Bulgaria


Paper on the condition of refugess and displaced persons in Bulgaria:


The general contribution of the private sector in the gross value added is 64% as of 1998 which is a proof of the growing importance of the private initiative in the economy. In terms of the economic integration, the structural reform and the development of the private business, have created the same preconditions for refugees as for every Bulgarian citizen to develop their own private initiative. However the social cost of the transition has proved to be very high. The Bulgarian state is still unable to fulfil its social obligations and to guarantee the right to employment, education and health care, to provide equal access to job opportunities and a decent standard of living. The human development balance sheet of the transition is rather pessimistic. According to the 1999 UNDP Human Development Report for Central and Eastern Europe and the CIS, Bulgarian government expenditures on health care as of GDP fell from 4% in 1990 to 3,2% in 1996; infant mortality increased from 13,4 in 1988 to 15,6 in 1996, long term unemployment remains high -14,8%; the share of income spent on food increased from 46% in 1993 to 66% in 1997. According to the Bulgarian Centre for Economic Development, Bulgaria is rated 45-50th in the world regarding the level of socio-economic development in 1998. Due to the economic difficulties asylum seekers and recognised refugees in Bulgaria (although the latter legally are on equal terms with Bulgarian citizens) have limited access to employment and social security. It is important to point out that the labour bureaus only serve recognised refugees. Asylum seekers have no legal grounds to interact with the Labour Office and apply for jobs. That means that while the asylum seekers are undergoing the determination procedure the labour bureaus do not incur any costs serving them, nor finding jobs for them or enrolling them in training courses.
LINK


IMF Orginal Stand-by Approval

This one goes back to Feb 2002. You know I try to defend the IMF, I don't respect Stiglitz at all, Rogoff seems to be doing his best, but this beats me. I mean, where the hell do they drag this one up from: "this program offers good prospects for rapid sustained growth, sound external balances, and lower unemployment and poverty". Where the inspectors too busy out clubbing it to think? When will they ever learn.

The Executive Board of the International Monetary Fund (IMF) today approved a two-year stand-by credit for SDR 240 million (about US$299 million) in support of Bulgaria's comprehensive economic program. The decision will enable Bulgaria to draw SDR 32 million (about US$40 million) from the IMF immediately.

This arrangement will succeed a three-year, SDR 627.6 million (about US$781 million) credit under the Extended Fund Facility (see Press Release No. 98/44), which expired in September 2001.

Following the Executive Board discussion, Mr. Shigemitsu Sugisaki, Deputy Managing Director and Acting Chairman, stated:

"The Fund supports the Bulgarian authorities' economic program centered on the currency board arrangement, prudent and flexible fiscal policy, a strict incomes policy, and privatization and other structural reforms. This program offers good prospects for rapid sustained growth, sound external balances, and lower unemployment and poverty.

"Prospects for 2002 are generally favorable, with output growth expected to reach 4 percent.
The external current account deficit is projected to remain at around 6 percent of GDP, mostly financed by foreign direct investment. Nevertheless, it should be monitored closely, in light of the uncertainty surrounding the recovery in Western Europe. Inflation increased in January owing to administrative price hikes and other one-time effects, but should remain subdued in the remainder of the year. The banking sector is well supervised, highly capitalized, profitable, and resilient to foreign exchange and interest rate risks.

"The fiscal deficit target of below 1 percent of GDP in 2002 is appropriate, and the authorities' intent to reduce the fiscal deficit further over the medium term is welcome. To this end, expenditure pressures should be curbed through a continuation of fiscal and structural reforms, and revenue collection should be enhanced by improvements in tax and customs administration. These measures would create room to strengthen further the social safety net, and gradually lower direct tax rates.

"The incomes policy should be implemented strictly, and labor market flexibility should be improved to maintain competitiveness and enhance growth. In addition, the last two large public banks should be sold to well-qualified strategic investors, structural impediments to private sector credit growth eliminated, and the privatization of non-infrastructure enterprises finalized. Other priorities are to continue with the reforms in health care and education, restructure the transportation and energy sectors with a view to improving efficiency and reducing risks to the budget, liberalize trade further, and develop a public debt management strategy aimed at lowering the debt-to-GDP ratio and reducing portfolio and roll-over risk," Mr. Sugisaki stated.
LINK



Bulgarian Letter of Intent

No comment:

Dear Mr. Köhler:

The attached Supplementary Memorandum of Economic Policies (SMEP) describes our performance under the program supported by the stand-by arrangement (SBA) with the Fund and discusses the policies that the Government and the Bulgarian National Bank plan to implement in 2003. The core of our policy objectives remains as described in the Memorandum of Economic Policies (MEP) dated February 12, 2002 and the SMEP dated July 5, 2002. We will continue to strengthen macroeconomic stability in support of the currency board arrangement and promote sustainable economic growth.

Performance under our economic program has been strong. The macroeconomic situation has improved considerably in recent months, and we expect growth to remain robust and inflation subdued in 2003. All quantitative performance criteria through end-September were observed, as were most structural benchmarks through end-December. Given the delay in completing the second review, end-December performance criteria are legally controlling for the purchase associated with this review. In this context, we request a waiver of applicability for the end-December performance criteria on the general government fiscal deficit and on the wage bill of the 60 closely-monitored state-owned enterprises, both of which we fully expect to be met.

In support of this program, we request that the second review under the SBA be completed. In addition to analyzing economic policies and conditions in general, the third review will focus on measures to strengthen tax administration and on reforms in the financial sector, while the fourth review will focus on the 2004 budget and related reforms. We will continue to consult with the Fund on a regular basis regarding any additional measures that may become appropriate to ensure that program implementation remains on track. We agree to publish the SMEP after the IMF Board has approved the second review.

Sincerely yours

/s/

--------------------------------------------------------------------------------

Milen Velchev
Minister of Finance
Ministry of Finance /s/

--------------------------------------------------------------------------------

Svetoslav Gavriiski
Governor
Bulgarian National Bank

Attachment: Supplementary Memorandum of Economic Policies of the Government of Bulgaria and the Bulgarian National Bank
LINK


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