The three coalition partners in the Bulgarian government have decided to allocate money from the budget surplus to rescue projects that were awaiting financing under EU aid programs.

Last week, Brussels stripped Bulgaria of its share of funding under the Phare, ISPA and SAPARD programs over the failure of the government to stamp out the irregularities in the spending of the provided EU cash.

Sources that attended this weekend's get-together of party leaders in Bansko told Dnevnik that the finance ministry estimates as much as 1.4 bln levs could be available for the new initiative as soon as the fall.

The budget surplus topped 3.869 bln levs by mid-2008, sharply up from 2.161 bln a year ago.

According to prime minister Sergei Stanishev, the budget surplus will be spent in two priority areas: infrastructure projects and pension increases.

In 2007, the biggest chunk of cash from the budget surplus was administered through the national road fund. Earlier this year, the fund became the first local institution to be barred from EU cash over suspicions for conflicts of interest and mismanagement that were later documented in audits carried out by the National Audit Office and KPMG.

The decision how much of the budget surplus should be spent and on what will be decided by a working group headed by the finance minister. It will require an amendment to the 2008 budget bill.

The Bansko mini-summit also confirmed that the social security burden will be reduced by 2.4% in 2008 with the employers benefiting the most.

The finance ministry also provided some figures for the 2009 budget and revised targets for 2008.

This year's GDP is forecast at 64.9 bln levs, up from the 61 bln stated earlier. The 2009 GDP is projected at 72.23 bln levs.

The 2008 year-end inflation is seen at 6.7% with the annualised rate at 9.5%. The respective targets for 2009 are 4.2% and 5.1%.

The c/a deficit will reach 21.1% in 2008 and should be flattish at 21% next year.

The government will target a 3% budget surplus and will redistribute 40% of GDP through the central budget in both 2008 and 2009.(Dnevnik)

The Bulgarian Stock Exchange (BSE) has scheduled for September 23 a general meeting of shareholders to sort out the mandate of its current board of directors.

The terms of two directors on the four-member board - Bistra Ilkova and Viktor Papazov, expired in early 2007 while those of the other half of the board - Lyudmila Elkova and Todor Breshkov, expired in early 2008.

The general meeting is called a week after a Dnevnik story revealed irregularities in the board's mandate entry in the commercial register.

It came to light that the board was registered for a new five-year mandate through 2012 without the mandatory prior sanction from shareholders.

The bourse management blamed the controversy on the online form provided by the Registry Agency which they claimed lacked clarity.

It was announced last week that the financial regulator is also investigating the registration snafu.

In late June this year, the association of investment intermediaries demanded the sacking of the bourse management. The subsequent general meeting of shareholders rejected the proposal but failed to do anything about the mandate of the board which had already expired back then.

Board members with expired terms are allowed to stay on until officially removed by the general meeting of shareholders.

The vote on the fate of the board at the upcoming meeting could go either way.

The finance ministry, a 44% shareholder in BSE, declined to comment on Friday.

At the last meeting of shareholders, the finance ministry backed the incumbent management of the bourse.(Dnevnik)

Seven of the 20 mall-type schemes currently under development across the country are located in cities with less than 200,000 residents, shows Q2 market data of real estate consultants Forton.

Four of the mall developments in progress are in Ruse with one each in Kazanlak, Gabrovo and Pleven, said Forton.

No less than six mixed-use shopping and entertainment schemes have been announced over the last quarter with locations in Sliven, Kazanlak, Stara Zagora, Haskovo, Burgas ad Blagoevgrad.

Shopping mall projects are also taking shape in bigger cities like Sofia, Plovdiv, Varna and Stara Zagora.

The profusion of mall projects in the major metropolitan areas has sent developers scurrying for opportunities in understored cities with 30,000 to 60,000 residents.

The spate of new mall developments has done little to quell demand for retail space with vacancy rates at just about zero.

The yield on retail space properties in Bulgaria has halved since 2002 and now stands at around 6%.

The retail space rent costs in Sofia peaked at 1,440 euro/sq m per year in 2005. They have since come down to 1,200 euro/sq m per year.

Neither is the office space market showing any signs of a slowdown, said Forton.

Some 850,000 sq m of office properties are under construction at the moment with another 800,000 sq m on the drawing boards.

The undersupply of Class A office space is keeping vacancy levels at around 3%.(Dnevnik)

The period for the regulatory assessment of proposed acquirers of assets in the financial sector is shortened to a maximum of 60 working days under the latest changes to the Credit Institutions Act that transpose relevant community law.

The new rules will streamline the process when the acquirer is a bank. The assessment procedure in that case will be less stringent than if the acquirer is a non-bank.

If the competent authorities do not oppose the proposed acquisition within the assessment period in writing, it shall be deemed to be approved.

At the moment, the Bulgarian central bank notifies the proposed acquirer in either case..

If the competent authorities, upon completion of the assessment, decide to oppose the proposed acquisition, they shall, within two working days, and not exceeding the assessment period, inform the proposed acquirer in writing and provide the reasons for that decision.

The competent authorities will appraise the suitability of the proposed acquirer against criteria that include reputation of the company, the reputation and experience of any person who will direct the business as a result of the proposed acquisition and the financial soundness of the proposed acquirer.

The competent authorities may, during the assessment period, request in writing further information that is necessary to complete the assessment. For the period between the date of request for information and the receipt of a response thereto by the proposed acquirer, the assessment period shall be interrupted.(Dnevnik)

Engel East Europe N.V. has decided not to proceed with the Gorna Banya project to develop 430 residential units in Sofia, Bulgaria, reports news agency Dow Jones.

The company's share in the estimated sales value was 17 mln euro and construction was scheduled to start in the second half of 2008.

Engel holds a 40% interest in the project through a joint venture with an affiliate of the Heitman Group which holds the other 60%, it said.

The joint venture had entered into an agreement with the land owner, whereby the land owner retained an interest in the land but ownership of the construction rights and buildings erected on the land would be transferred to the joint venture.

The decision not to proceed with the project follows the failure of the land owner, despite being granted an extension, to fulfill certain contractual obligations to the joint venture, Engel was quoted as saying in a filing with the London Stock Exchange.

The company's share of the costs incurred by the project to date is 0.25 mln euro which will be written off.

(Dnevnik)

The supply of industrial/logistics space along Bulgaria's Black Sea coast is insufficient, said Dobromir Ganev, manager of Foros Real Estate.

Most of the properties in this category are inland. The only industrial facility of this type on the coast is Logistic Park Varna.

There are several industrial/logistics properties in development across the country.

Auto distributor Kamor Auto is building a logistics park for departmental needs between Kazichene and Krivina, near Sofia.

Another scheme has been announced for the vicinity of the Sofia International Airport. It was first pitched as a logistics property but the concept has since been expanded to include n addition to the 22,000 sq m of storage space a 250-room hotel and 100,000 sq m of office space.

A property under construction near Novi Han will deliver 98,000 sq m of warehouses.

Food company Bella Bulgaria is building a logistics facility in Plovdiv that will be owner-occupied.

There are two more such developments in that city. Trade and Industrial Park Plovdiv will offer 47,751 sq m of retail and storage space. The second one is the 80,000 sq m Industrial Park Plovdiv project financed by Immo Industry Group.(Dnevnik)