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 /fixed rate: 2 lv.= 1 euro/, full membership in the European Union /the Treaty with the EU was signed on April 25th, 2005 - full member of EU since 01st January 2007/ with competitive labor force in terms of both - reasonable cost and high qualifications. NATO member since 2004.

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.

Basic Country Data

Area: 110,910 sq. km. / 42,822 square miles
Population (end 2006): 7 679 290 ( 3 720 932 - males / 3 958 358 - females)
Economy (GVA, 9 months 2007): 59.9% services, 33.2% industry and 6.9% agriculture
University degrees: 15% of population
Native language: Bulgarian
Foreign languages: English, German, French, Spanish, Russian
Religion: 83% Eastern Orthodox
Government: Parliamentary democracy
Currency: BGN pegged to EUR at 1.95583:1
Affiliations: EU, NATO, WTO

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

Real GDP growth: 6% /2008/, GDP - EUR 30 bln.; 6,2% (2007); 6,1% /2006/; 6,2 % /2005/; 6,6% /2004/;
Inflation: 5,8 % /2002/; 2,3% /2003/ and 1,9% /2004 September/.
Budget surplus/ GDP: 3,8% /2007/; 3,6% /2006/; 3,1% /2005/; 1,7% /2004/;
Unemployment: 6,3%/December 2008/; 7,5% /2007/; 8,5% /2006/;
Foreign Direct Investments: Euro 5500 mln /2008exp/; Euro 6500 mln /2007/; Euro 6000 mln /2006/;
Bulgarian Export /FOB/: Euro 15200 /2008./ USD 21500 mln /2007/; USD 14920 mln /2006/; USD 11821 mln /2005/; USD 9888 mln. /2004/,
Bulgarian Import /CIF/: Euro 21000 mln/2008 exp./; USD 24500 mln. /2007/; USD 22897 mln /2006/; USD 18331 mln /2005/ USD 14379 mln. /2004/.
In 2008 Budget surplus amounts to 3% of GDP;
In 2008 Current – Account Deficit is 24% of GDP
Tourism: more than 5 mln. foreign tourists in 2007 - growth rate about 14% per year.

Investment incentives in Bulgaria

10% corporate income tax – the lowest in Europe.
The personal income tax is only 10% - the lowest in Europe.
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.
10 days VAT refund for major investor companies.
0% capital gains tax.
Investor law guarantees all investors the same rights and protection.
Free trade opportunities with market access to 560 million consumers, located in EU, EFTA, CEFTA countries, Macedonia, Turkey, Israel, Serbia and Montenegro, Albania
Adoptation of International accounting standarts.
The Employment Agency’s Programmes and measures for employment of young people.

Investment Categories

First investment category (over Euro 70  mln.)
Universal measures;
Institutional support;
State aid for developing the necessary elements of technical infrastructure.

Second investment category (Euro 40 -70 mln.)
Individual administrative services;
Individual information services;
Institutional support.

Third category – universal measures (Euro 10 -40 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.

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 centеr;
Biggest exporter of electricity on the Balkans;
Available electricity generation capacity–10,234МW
Trend towards greater energy independence through development of local energy resources

Tourism in Bulgaria – more than 5,5 mln. tourists have visited Bulgaria in 2008.
Well-positioned international tourist destination – between the 10 most popular tourist destination all over the world in 2006.
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 tourist destinations with strong growth in the last few years.