Despite appeals by businesses, foreign institutions such as the International Monetary Fund (IMF) and the opposition to scale back spending to contain the global economic contagion, the Bulgarian government continues to dig deeper as revenue tumbles.

According to budget figures, the state ramped up spending by 22% year-on-year to BGN 8.4 billion in the four months through April as revenue dipped by just over 5% t BGN 9.1 billion.

The budget surplus dwindled to BGN 675 million from BGN 2.7 million in the year-ago period.

The trend has persisted for several months in a row now despite buffers adopted last year to curtail expenses by 10%, and the surplus will be far less than the initial target of 3% of the gross domestic product (GDP).

The data published by the ministry is even more alarming, showing that receipts from the main sources of revenue are flagging hard compared with year-ago levels.

For instance, the budget ended April with a surplus of BGN 161 million following vast deficits in March and February. However, two-thirds of the surplus came from funding by the European Union (EU), and the budget would have been in the red excluding one-off receipts such as the installment of the Bulgarian National Bank (BNB).

Value-added tax (VAT) receipts deteriorated by 18.9% from the prior year and are headed to fall a hefty BGN 3.3 billion short of the full-year target.

The alarm about a budget deficit was sounded by both the International Monetary Fund (IMF) and the European Commission (EC) but still the leftist Cabinet of prime minister Sergei Stanishev is splashing cash around.

Ivo Prokopiev, chairman of the Confederation of Employers and Industrialists in Bulgaria (CEIB), who is a co-publisher of Dnevnik daily and Capital weekly, said recently that a hidden deficit is already emerging in the budget and even an extra spending cut in the autumn would not be enough to ward off deficit at the end of the year.

Simeon Dyankov, chief economist of the vice-president of the World Bank, forecast the Bulgarian economy will run a deficit of BGN 3.5-4 billion and will have to seek an IMF agreement.

In late April in Washington, Bulgarian finance minister Plamen Oresharski said that the government had lowered its deficit target to just 1% of the GDP, a day after he called on other ministers to draft a plan on even deeper spending cuts at their respective ministries. Finally, the budget revision was postponed until August or September, a move that business organisations dismissed as a publicity stunt ahead of June’s parliamentary elections.

(Dnevnik)

The latest round on consolidated financial reports did not cheer up investors on the Bulgarian Stock Exchange (BSE) but brought no negative news and bad surprise either.

Agricultural conglomerate Zarneni Hrani Bulgaria was the only one of the companies that published their reports on Monday to report a slump in sales and even this was unexpectedly modest for a food industry firm.

The bulk of the market watchers were gloomy. “There are definitely some companies that outstripped the negative forecasts with drastic falls in their financial results,” said Ivan Ovcharov, chief broker at investment brokerage Elana Trading. He pointed to the hefty number of companies who say their sales shed between 40 and 50% year-on-year.

Mincho Minchev, chief dealer at Investbank, looked on the bright sight, saying: “We can’t say that we are seeing the pessimistic projections come true as none of the BSE-listed companies has filed for bankruptcy. It is also hard to say that most of the companies are having any financial trouble.”

At the end of last year, many market players predicted company failures, and share prices of three months ago revealed investors’ fears that many of the firms would go insolvent.

Analysts have now set sights on the second quarter, most of them making quite cautious projections. “The mere fact that a large proportion of the companies would not give an outlook of the coming months is an indication of the current insecurity,” said Ovcharov.

But yesterday’s first-quarter results showed that companies struggled to maintain their rate of profit rise, some of them even swinging to a loss.

(Dnevnik)

Tobacco group Bulgartabqac, compensatory notes and drug maker Sopharma starred in a listless session on the Bulgarian Stock Exchange (BSE) on Monday.

Friday’s first-quarter report of the tobacco company showed a widening loss but also higher revenue backed by increase in cigarette prices, which helped it trade more than 5,000 stocks at an average if BGN 16.46 apiece, dragging them down by 3.5%.

More than 480,000 compensatory notes changes hands at 30% off their nominal price.

Sopharma drove up the blue-chip SOFIX index and Dnevnik 20 of the biggest and most liquid stocks by jumping 3.36% to BGN 2.86 after a quarterly rise in revenue.

SOFIX edged up 0.67% to 382.08 points while Dnevnik hit 57.05 points, up 0.25%.

The broader BG40 emerged as the biggest gainer, adding 1.07% to close trading at 105.3 points.

On the other hand, BGREIT of the property funds was off 1.11% to 40.03 points.

BGTR30 of the stocks with the highest market capitalisation and liquidity slipped a small margin to end the session at 282.38 points.

Road building companies, which already published their consolidated reports, moved in line with their performance. Holding Roads and Moststroy, whose revenue and losses tumbled, dropped to a respective 3.2% and 0.24%.

But Trace Group Hold, which booked a nice revenue, was up more than 3.6% to BGN 50.70.

Still, transactions left turnover at a tiny BGN 1 million or so, most of it generated from over-the-counter dealing.

Brokers commented that the financial reports published so far have only shown the beginning of the end of the global economic crisis.

(Dnevnik)

The credit crunch has triggered off delays in loan repayments, a trend which is set to accelerate but without spiraling out of control, said Matyo Mateev, executive director of First Investment Bank (FIB).

Announcing the lender’s first-quarter financial results, Mateev said all financial institutions are seeing loan delays but this must have been a foreseen development and each bank should rework loan contracts for borrowers who are feeling the pinch.

Bad loans would not undermine the stability of the Bulgarian banking system, according to Mateev.

Ivan Iskrov, chairman of the Bulgarian National Bank (BNB), said last week that delays in loan repayments are an inescapable effect from the economic slowdown. When the banking sector was blossoming, banks stashed away capital, provisions and buffers which can now come in to cover these risks, he said.

Bad and restructured loans in the Bulgarian banking system added up to BGN 1.604 billion at the end of April 2009, speaking for 3.27% of the total volume of corporate and household loans. In November 2008, the volume was BGN 1.062 billion, or 2.19% of the total loan portfolio. Non-performing loans soared by 51% in the six months through April.

(Dnevnik)

Bulgaria dropped from the top of the rankings in terms of highest spikes in housing property prices, with an increase of just 3.3% year-on-year in the first quarter of 2009, according to the latest report of British property advisors Knight Frank.

The country slipped to ninth spot from year-ago’s second, when home prices skyrocketed by 30%.

However, the year-on-year rise from January to March comes with a decline of 1.2% from the previous quarter.

Israel strode atop of the first-quarter table with a 10.9% increase, followed by the Czech Republic, where home prices soared by 9.9%.

Bulgaria was leapfrogged also by Switzerland, India, Indonesia and Russia. Dubai and Singapore trailed at the bottom of the table with falls of 32% and 23%, respectively.

Thirty of the 46 countries in the ranking saw their housing property prices collapse, with Dubai and Singapore again marking the steepest drops of a respective 40% and 16.2%.

The worldwide economic deterioration and the mounting unemployment continue to pinch the global housing market, according to the analysts, who predict that the sector will stay in the doldrums by the end of the year.

(Dnevnik)

Residential property developer Bulgarian Land Development (BLD) breaks ground on the July Morning holiday village, which has sparked vehement protests from green groups, the company said in a filing to the London Stock Exchange (LSE), where it is listed.

Set to sprout on a site near the town of Kavarna, on the northern Black Sea coast, the village has been entered into the list of “destroyers of Bulgarian nature” as the investor plans to “appropriate the coastal line as well,” environmentalists claim.

Despite the strong reaction from conservation groups, the project was awarded all the necessary permits from the local government.

According to the statement to the stock exchange, BLD will erect a 55-flat building from the complex, where it has already sold 41 apartments for about EUR 2.5 million. The building, which will stand on an area of 3,600 square metres, should be completed in June 2010 at a cost of some EUR 2.2 million.

The whole complex will sprawl on 92,000 sq m, accommodating 351 homes, a spa centre, restaurants, mini football fields and mini gold courses as well as five swimming pools. The total investment in the project is estimated at EUR 40 million.

(Dnevnik)