The Bulgarian government will use the fiscal reserve as a buffer against possible banking trouble from the global credit crunch, and step up public spending to offset shrinking foreign direct investments, under measures weighted by the ruling coalition council.

This is the first time the finance ministry has spoken out on using the fiscal reserve as a tool to prop up the banking system in case it should falter.

Under the proposed mechanism, the government via the central bank will buy back securities from commercial banks to help them build up liquidity as the currency board mechanism pegging the local currency to the euro does not allow the Bulgarian National Bank intervene directly.

Government deposits with commercial banks may be secured by reserves or cash in banks’ other accounts with the central bank.

The draft budget sees FDI slumping to 12.4% from this year’s forecast of EUR 6.136 billion. The slump will be countered by a further EUR 437 million public investments compared to 2008.

No measures have been proposed to boost the disposable income of the population.

The government stuck to the tax burden it agreed in the spring of raising the total social security contribution but cutting the employer’s share by some 2%.

Dividend tax will also stay intact at 5% in spite of proposals for a 2.5% decrease or scrapping it altogether to woo foreign investors.

All direct and indirect taxes but municipal taxes will be left unchanged.

Despite its poor record, the government plans to utilise EUR 2 billion of EU funds, of which BGN 1.023 billion under the pre-accession funds, BGN 1.696 billion under the common agricultural policy and BGN 1.202 billion under the structural and Cohesion funds.

The big question mark over the EU projects is whether Bulgaria’s structures will obtain conformity certificates from Brussels after it emerged last week that the EC’s auditors have turned down the assessments under Human Resources and Administrative Capacity operational programmes over inefficiency of the finance ministry’s audit office.

The government vowed yesterday it would hire private audit companies and said it has sent revised audit strategies.

After freezing more than EUR 600 million of pre-accession aid, the EC barred two Bulgarian agencies from handling EU funds threatening to block over EUR 1 billion.

(Dnevnik)

The daily audience of dnevnik.bg has increased to 4,000 visitors from May to September making it the third most popular Bulgarian information website, shows data of Nielsen Online, a service of The Nielsen Company, the global information and media company.

Netinfo.bg topped the list of Bulgaria’s most popular news portals followed by dnes.bg.

Dnevnik.bg registered an average of 29,177 unique visitors a day, who browsed for an average of 5.1 minutes.

Netinfo.bg was visited by an average of 69,947 unique browsers spending an average of 4.6 on the page.

Abv.bg, the free e-mail service, attracted 400,546 visitors in September to become Bulgaria’s most popular website. The runner-up was Vbox7, the streaming video site, with 285,155 visitors.

Third on the list was directory site Gbg.bg with 127,763 daily hits.

Dnevnik.bg landed at number 16h in the total ranking of Bulgaria’s most popular web pages.

Thirty-five percent of the local Internet users live in the capital city followed by Varna (8.3 percent) and Plovdiv (7.7 percent).

Nielsen Online said it has revamped for the second time in the year its Market Intelligence platform, which offers complete benchmarking of site performance.

Customers can now get quarterly reports on all levels of analysis including brand, publisher, site and category.

The upgrade is aimed at boosting market transparency by following the development trend of each product.

(Dnevnik)

The Bulgarian biofuel makers threatened to file a lawsuit against the Customs Agency after it said they will be imposed an excise on pure products from October, the National Biofuels Association in Bulgaria said.

Deputy finance minister Kiril Zhelev said in mid-October bioful producers will have to pay excise duties until the European Commission has issued a notification.

Chairman Dimitar Zamfirov told Dnevnik the association would seek court action if it receives an official document on the new tax because it was against the law.

Under local legislation, biofuels bear a zero excise duty but removing the tax incentives brought the collateral to the level of the excise of mineral fuels. Biodiesel will be taxed as gas oil with BGN 600 per 1,000 litres, and the tax rate will be BGN 1,100 for 100 litres of pure bioethanol.

The NBAB said the measure pushed biofuel producers on the brink of bankruptcy pointing out that a EC notification is not obligatory but only recommended.

The same reason stalled the introduction of a lower tax on biofuel blends. Mineral diesel and unleaded petrol with a 4 to 5% bio component are eligible for a 3% tax break, or BGN 0.18 and 0.21 per litre, respectively.

(Dnevnik)

Balkan Trade House, the local architecture and engineering consultancy, will spend EUR 10 million to build a multi-task complex in the southern town of Pazardjik, said Filip Tsanov, who advises the project.

The Fountains complex will be funded by a tailor-made mortgage product by First Investment Bank. It will sprawl on 3.4 hectares and comprise 22 four-storey blocks of flats, a swimming pool, sports facilities, children’s playgrounds, a kindergarten, a restaurant and an administrative centre.

The first batch of 12 blocks is due for completion within a year, and the whole complex should be finished by the spring of 2011.

The investor said apartments will sell from EUR 550 per square metre and have already drawn potential buyers.

The complex will have a floor space of 32,000 sq m with most flats ranging from 82 to 95 sq m.

(Dnevnik)

As loan and deposit interest rates were hitting new highs in the recent months, Bulgarian banks could not leave service fees unchanged.

Some lenders switched to monthly from annual loan service fees digging deeper in borrowers’ pockets.

The 0.3% annual fee on the average mortgage of BGN 50,000 adds BGN 150 to the tab whereas a 0.04% monthly charge generates a combined BGN 240 for the full year.

Experts say the new mechanism offers smoother calculation and is lighter on the borrower’s budget.

Other lenders simply raised their service fee with Raiffeisenbank adding 5 percentage points, under data of financial website moitepari.bg.

Banks have also changed deposit withdrawal and treasury operations fees.

Loan interest rates continued to soar at UBB and Postbank.

(Dnevnik)

The Bulgarian Association of Asset Management Companies said it had pressed for waiving the BGN 500,000 net assets floor for mutual funds to ward off artificial winding-ups that would scare away investors.

The current legislation does not specify any regulatory action in case a fund’s assets drop below the BGN 500,000 benchmark. The schemes are required to accumulate assets of no less than BGN 500,000 and kick off buybacks within a year of getting clearance.

The association said in a letter to the financial regulator that the EU directives contain no bottom capital requirement for open mutual funds and called for urgent amendments to the domestic legislation.

Under the latest data of the association, seven of the market’s 70 schemes have assets of less than BGN 50,000 and eight are teetering on the brink. The stock market meltdown and the massive withdrawals sank the assets of more funds below the limit.

Market sources said some funds keep above the threshold via related entities without elaborating further.

BenchMark Fund Management executive director Petko Valkov commented the asset requirement may press funds to sell out and pile up further pressure on the rickety market.

(Dnevnik)