INFORMATION ON CURRENT DEVELOPMENT OF THE ECONOMY OF BULGARIA

FINANCAL AND MACROECONOMIC STABILITY

The stabilization strategy of the Bulgaria Government is based on the introduction of a Currency Board in mid 1997, which combined with the support of the IMF made possible for the economy to recover from the heavy crises of the end of 1996 and the beginning of 1997.

As a result today Bulgaria is politically and economically stable, forthcoming membership in the European Union in 2007 with competitive labor force in terms of both - reasonable cost and high qualifications.

Bulgaria lies at the center of South-eastern Europe and has access to a market available to 560 million consumers. You can find in Bulgaria guarantees protection of investors. ?ur country has concluded more than 100 agreements on mutual protection of investments and avoiding double taxation.

As a result the macroeconomic indicators of Bulgaria in the last 3 years are:

	GDP /growth rate/:	4,8 % /2002/; 4,3% /2003/ and 5,0% /2004 forecast/ in comparison with the European Union - 1,9 % /2002/; 0,8% /2003/ and 1,9% /2004f./.
	Inflation:	5,8 % /2002/; 2,3% /2003/ and 1,9% /2004 September/.
	Unemployment:	17,71% /2002/; 14, 25% /2003/ and 11,74% /2004 f/.
	Foreign Direct Investments:	USD 904,7 mln. /2002/; USD 1419 mln. /2003/ and USD 2000 mln. /2004 f./
	Bulgarian Export /FOB/:	USD 5693 mln. /2002/; USD 7445 mln. /2003/ and USD 6217 mln. /August 2004/
	Bulgarian Import /CIF/:	USD 7903 mln. /2002/; USD 10757 mln. /2003/ and USD 8869 mln. /August 2004/.

Investment incentives in Bulgaria

	15% corporate income tax in 2005.
	0% corporate tax in areas with above average unemployment.
	Depreciation rates - 2 years for computers and related equipment and 3 1/3 years for manufacturing equipment.
	2-year VAT exemption for imports of equipment, consumables and components related to investment projects valued over € 5 million.
	0% capital gains tax.
	The highest bracket for personal income tax is only 29% for monthly income over € 300.
	The Employment Agency's Programmes and measures for employment of young people.

Investment Categories

Third category - universal measures (Euro 5 - 25 mln.)
	Submission of information, prepared and processed in advance;
	Certificate, specifying the investment category and the type of administrative services, provided by the central and local executive authorities;
	Minimum deadlines.

Second investment category (Euro 25 - 50 mln.)
	Individual administrative services;
	Individual information services;
	Institutional support.

First investment category (above Euro 50 mln.)
	Universal measures;
	Institutional support;
	State aid for developing the necessary elements of technical infrastructure.

Priority Economic Sectors
	Hi-tech - Uses best resource of Bulgaria
	Energy - Uses low cost & position
	Tourism - Uses excellent conditions

Bulgaria is the New IT Industry Destination

cost effectiveness and skill
	Outstanding HUMAN CAPITAL
	Most competitive COST OF LABOR in Southeastern Europe
	Lowest corporate and personal INCOME TAX LEVELS
	IT is TOP ECONOMIC PRIORITY of the Bulgarian government
	STRATEGY for competitiveness of IT to be adopted soon
	No VAT for software exports

Energy Sector Overview
	Positioning of Bulgaria as a reliable base for the transit of oil, natural gas and electric power and as a regional dispatching center
	Biggest exporter of electricity on the Balkans - 6,790 GWh
	Available electricity generation capacity-10,234?W
	Trend towards greater energy independence through development of local energy resources

Tourism in Bulgaria
	Well-positioned international tourist destination.
	Rare combination of natural environment and climatic conditions for year-round tourism.
	Wide range of products: Beach/Recreation, Winter Sports, Spa/Health, Culture/Museum/Monasteries, Nature/Activity, Touring, Conference.
	One of the few European destinations with strong 2003 growth.

ACTUAL MACROECONOMIC INDICATORS *
EXPORT AND IMPORT OF GOODS

The indicators characterizing exports and imports of the Republic of Bulgaria are based on summarized data from SAD (Single Administrative Document). Foreign trade transactions for which SAD is not required, but which are subject of recording by foreign trade statistics (e.g. state foreign trade, bunkering, natural gas and electricity), are also included. For these activities statistical survey has been organized.
Since January 1, 1999 foreign trade statistics apply Special System of Trade in reporting trade flows.
The criteria to refer the foreign trade transactions to a given year is the date of issuing of a SAD.
The data on foreign trade statistics cover exports of goods for consumption into the country of destination; imports of goods for domestic consumption into the country; temporary imports and exports of goods before and after processing.
Exports and imports do not include: exported and imported goods, sold on consignation basis; transit of goods; household goods and means of transportation of emigrants/immigrants, personal effects and belongings of travellers according to the Customs rules; luggage and goods (personal and business) designated for the Bulgarian and foreign embassies, legations and consulates; gifts.
Re-exports refer to all foreign goods that our country has bought from one country and sold to another.
Reporting of trade commodity flows is organized according to the National Customs Tariff based on Harmonized System of Commodity Description and Combined Nomenclature. This allows mirror comparisons between countries.

EXPORTS AND IMPORTS FOR THE PERIOD
JANUARY - DECEMBER 2003*

Exports and Imports by Groups of Countries and Main
Trade Partners for the Period January - December 2002 and 2003*