In 2004 and 2005, Bulgaria was unexpectedly hit by torrential rain that caused extensive flooding. To deal with the destruction, the government awarded nearly €67m to 257 flood-stricken municipalities (see map below). For many of Bulgaria’s impoverished municipalities, the funds were a substantial financial injection, and mayors and local councils were the ultimate authority on how the money was spent. Not surprisingly in a country ranked as the second-most corrupt in the EU, the media uncovered multiple instances of local politicians pocketing the money. According to estimates by opposition parties, €59m disappeared into the coffers of firms related to the ruling political coalition.
Distribution of flood funds, per capita (in lev)
After a difficult two years that saw five governments, ongoing street protests and a banking crisis, Bulgaria’s politics and economy may be getting back to something approaching normality in 2015.
Blessed with greater stability – but with a significant fiscal deficit and loans to repay – the county plans to raise 6.9bn lev (€3.5bn) from bond issues this year. But investors may still be wary of the risks of a slow-growing country with a recent history of instability. Read more
Boyko Borisov: he's back
It is a minority administration involving a coalition within a coalition, backed by another coalition and a splinter party. But at least Bulgaria has a government, and a government with an agenda for reform. It has a hefty in-tray including energy sector restructuring, mopping up after a banking crisis, and getting a beleaguered economy moving again. Read more
Bulgaria will have to conjure its fifth government in less than two years from its most fragmented parliament since the fall of Communism, after the country’s snap election on October 5.
Over the past 20 months, the EU’s poorest member state has experienced street protests against successive governments, a banking crisis, severe flooding and the loss of Brussels funding through maladministration. It has also been caught in a squeeze between its EU responsibilities and the baleful influence of long-time ally Russia, on which it has heavy energy dependence. The new government will have its hands full – once it is pieced together from the fractious groupings that made it into parliament. Read more
Bulgaria must bolster defence spending in response to the Russian invasion of Ukraine and war in the Middle East, the country’s defence minister has told beyondbrics in exclusive comments. Velizar Shalamanov (pictured), a member of the caretaker government that will step down after elections next month, reiterated Bulgaria’s commitment to Nato at a time when some of the alliance’s members have been accused of backing away from their obligations.
However, a long-term shift towards higher defence spending and a break with Russia will be hard to implement. Read more
And it's goodbye from him
Bulgaria’s battered and unloved government formally resigned on July 24, its reputation shaken by its policies and alleged murky business links – and, more recently, a banking crisis. With snap elections looming in October, a caretaker government will now seek to steady the ship and repair relations with the European Union. The election is expected to usher in the nominally rightist opposition with the hope it will take a more reform-minded and western-looking approach. Read more
Bulgaria’s under-fire central bank has turned to the European Central Bank to oversee the country’s financial system days after it announced that it would allow the country’s fourth-biggest lender to collapse.
Bulgaria’s banking system as a whole remains well-capitalised. But the Bulgarian National Bank’s decision to enter talks with the ECB about joining the joining the European Single Supervisory Mechanism (SSM), even though Bulgaria is not in the eurozone, is an admission of draining confidence in the country’s financial and political authorities. Read more
Bulgaria’s central bank issued a dramatically-worded statement on Friday warning of “an attempt to destabilise the state through an organised attack against Bulgarian banks” after the country saw its second bank run in a week.
While the banking sector as a whole is well-capitalised, the manner in which two major financial institutions have been hit raises serious concerns about the country and poses risks to its economy. Read more
Controversial Bulgarian tycoon Tzvetan Vassilev blamed Sofia’s state prosecution service and media attacks for sparking a run on his Corporate Commercial Bank (KTB) as shareholders declined to rescue the country’s fourth largest lender, raising the prospect of nationalisation.
Speaking to beyondbrics, Vassilev said the run on KTB last week was “triggered by absurd speculations of certain factions of the Bulgarian prosecution service, which were blown out of proportion by Bulgarian media”. The run came after a controversial MP, Delyan Peevski, accused Vassilev of ordering his assassination, following which the state prosecutor detained three of Vassilev’s associates. Read more
Bulgaria’s central bank on Friday froze the operations of the Corporate Commercial Bank (KTB), suspended its directors and put the country’s fourth largest lender under special supervision following a bank run that had raised risks of insolvency.
Tsvetan Vassilev, KTB’s largest shareholder and one of Bulgaria’s wealthiest and most influential figures, said in a statement to the FT late on Friday that “the events that have been taking place since last week are the visible part of a carefully prepared and planned scenario aimed at destabilizing Corporate Commercial Bank”.
Vassilev did not say who he believed was behind the alleged attempt to destabilise KTB, but he did say that “more than 20 per cent of the financial institution’s assets were withdrawn in less than a week”. This, he added, would “have made any bank collapse within two or three days” but KTB had been able to withstand it, proving its “outstanding management”. Read more
Bulgaria will hold an early election in the autumn, with the beleaguered government set to step down after barely a year in power characterised by street protests, accusations of links to nefarious business interests and strong criticism from the European Union.
President Rosen Plevneliev said on Tuesday that the country’s leading political parties had agreed to an election between September 28 and October 12. It comes after a junior coalition partner withdrew from the government led by the Bulgarian Socialist Party (BSP), which suffered a damaging defeat in the European elections. Read more
European advocates of shale gas – and they do exist – have been hoping that the Ukraine crisis might galvanise governments into dropping objections to controversial fracking. But despite a growing and belated recognition that Europe must do more to diversify its energy sources, in Bulgaria at least the unpopular shale movement is going backwards.
Last month, US energy giant Chevron quietly closed its Sofia office, three years after it was awarded a licence for shale exploration that was scrapped months later. The company did not publicise its withdrawal and it has gone largely unreported. But the move is indicative both of the political challenges that frackers still face and of Bulgaria’s frustratingly inconsistent treatment of energy investors. Read more
When is a pipeline not a pipeline? When it’s a highly-controversial Russian energy project that would cut Ukraine out of the European gas supply equation – at least according to Bulgaria’s parliament.
The EU member state is at loggerheads with the European Commission, the EU’s executive body, over the South Stream gas pipeline that would carry Russian gas from Bulgaria through Serbia to central Europe and Italy. Read more
Hollywood, Bollywood, Nigeria’s Nollywood; France’s arthouse cinema scene, British romcoms, Italian and Russian film from the likes of Fellini and Tarkovsky; the Korean Wave. The cinema culture of south eastern Europe may be rather less celebrated outside the region than those of its more famous peers, but there is growing recognition both of a resurgent home-grown movie scene and the competitive advantages of SEE as a location for shoots. Read more
The government besieged, protesters and police packing the streets, an ongoing air of uncertainty over the country’s future – name the country. Not Turkey, or Egypt, but Bulgaria. But while demonstrators rage against the newly-appointed prime minister, the Balkan country has received a remarkably upbeat report from the International Monetary Fund, which praised the country’s economic stability and policies.
At the end of a regular staff visit on July 3, Michele Shannon, IMF Mission Chief for Bulgaria issued a statement that may give a fledgling, fragile and beleaguered government some succour. Read more
Bulgaria’s Danubeside city of Vidin has a somewhat forlorn air. The great grey river slinks slowly by a long waterfront of panel blocks gazing across the water to the forests of Romania. Among the cracked pavements, despoiled Communist monuments and boarded-up shops, there are, however, a few glimmers of a noble past: an old quarter with some charm, and the stout fortress of Baba Vida, which stands on ancient foundations. The fortress and the elegant gateway to the old city – the Stambul Kapiya, or Istanbul gate – remind the visitor that this was once an important centre in a European network of empire and trade. Read more
Five hundred years of Ottoman rule, 45 years of Communism and the past two decades of democracy tainted by corruption and economic failure have given Bulgarians a substantial dose of disrespect for their rulers. The latest government, which tiptoed over the line into office in a parliamentary vote on Wednesday, presides over a country that is as sceptical – even cynical – as ever. It also faces a sluggish, if stable, economy with the EU’s lowest incomes. Read more
Bad GDP figures from the eurozone on Wednesday but there’s a pleasant surprise from an unexpected quarter: Hungary’s economy contracted by only 0.9 percent in annual terms in the first three months.
Doesn’t sound like good news. But investors had been expecting a drop of as much as 1.4 per cent. With hopes of further improvement in the rest of 2013 buoying the Budapest market, the forint gained 1 per cent against the euro. Read more
In an election marred by allegations of poll-rigging and vote-buying, Bulgaria’s former ruling GERB party came out on top. But it is far from clear who will form the government once the dust settles. Two possible scenarios are a coalition between GERB and ultranationalists that would cause disquiet in Europe, or a return to power of two opposition parties still regarded with suspicion by many Bulgarians. Read more