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The European Union presidency called on Bulgaria on Tuesday to take further steps on judicial reform and tackling crime but voiced the expectation that it could accede to the bloc as planned in 2007.

Sofia is scrambling to remedy a list of faults?including corruption and organised crime?before May, when Brussels will decide whether to recommend that it can join next year or to delay its entry until 2008.

"We hope and expect that Bulgaria by then will have fulfilled all the criteria," Austrian State Secretary for Foreign Affairs Hans Winkler, whose country holds the rotating EU presidency, told reporters after meeting Bulgarian officials.

If the EU report due in May on Bulgaria's progress gives Sofia the thumbs-up, EU leaders are expected to confirm in June that its accession can go ahead at the start of 2007.

"The shortcomings are well-known and Bulgaria needs to use all its energy to address them," EU Enlargement Commissioner Olli Rehn told the same news conference with Winkler and Bulgarian Foreign Minister Ivailo Kalfin.

Bulgaria this month elected a new chief prosecutor to replace Nikola Filchev, a man diplomats say had blocked progress in its judicial system. Brussels hopes the appointment will lead to new charges in high-profile corruption cases before May.

Kalfin also noted that scheduled changes to Bulgaria's constitution would narrow the scope of immunity currently available to parliamentarians to cover only prosecutions linked to their activity as deputies.

The initial bids for the picking of a contractor for the design, construction and putting into operation of units 1 and 2 of Bulgaria's second nuclear power plant Belene will take place on Tuesday.

The negotiations with the two companies will begin after an evaluation of the bids.

Two companies - a Czech and a Russian consortiums - successfully passed the first stage of the tender for the construction of the Belene nuclear power plant.

The two consortiums - one led by the Czech Skoda and another by Russia's Atomstroyexport - have met the demands of the first stage and were invited to join the second one.

The bidding prerequisites for the construction of Bulgaria's second nuclear plant include an annual turnover of at least USD 5 B and previous experience in the construction and commissioning of water-pressurized nuclear units.

Skoda formed a consortium with two banks and Atomexportstroy - with the French Framatome and German Siemens.

Latvia has ratified Bulgaria and Romania's European Union (EU) Accession Treaty.

The accession treaty was ratified at a January 26 session of the Latvian Parliament. Of all 85 MPs a total of 79 MPs supported the ratification, five sustained and no one opposed the ratification.

Latvia's president is expected to sign the final ratification document in two weeks, Bulgaria's Foreign Ministry announced.

Bulgaria and Romania's EU Accession Treaty has been ratified by Greece, Estonia, Italy, Spain, Cyprus, Slovakia, Slovenia, Hungary, the Czech Republic and Malta.

The two Balkan countries are to join the bloc January 1, 2007.

The credit growth rate for 2005 is close to the limits set by Bulgarian National Bank. The limit was 30 per cent. The credit growth rate was 32.9 per cent, meaning 17.7 billion leva.
The International Monetary Fund (IMF) and the Cabinet agreed on a growth rate of 17.5 per cent. At the end of 2005, Bulgarians owed 2.03 billion leva on property loans. Bulgarian credit institutions concluded the previous year with a total profit of 584.2 million leva. This is 34.6 per cent higher than in 2004, Sega newspaper reported.
Banks hold assets totaling 32.85 billion leva, a 31.8 per cent increase over a one-year period. The growth resulted from a higher number of deposits, experts said. Financial institutions attracted 25.4 billion leva investment for 2005 from individuals, companies and other financial institutions. Compared to 2004, the increase was 30.1 per cent. Nearly half of all bank deposits are in leva, and a third are in euro.

The US Trade and Development Agency (USTDA) awarded a USD 36,000 grant to assist the municipality of Karlovo in Bulgaria in obtaining a credit rating for its pilot wind farm project.

The ultimate goal is to introduce the first commercial wind farm in Bulgaria and demonstrate that wind power is an economically viable source of energy that can be replicated elsewhere.

The grant agreement was signed by U.S. Ambassador to Bulgaria John Beyrle and Karlovo Mayor Emil Kabaivanov on Friday.

This is an additional subsidy to an original grant from the agency worth USD 384,531, which co-funds a feasibility study on a municipal pilot wind farm project. The issuance of the credit rating will allow the Karlovo municipality to secure funding from financial institutions for the project implementation.

The project will assist the municipality in expanding energy production and introducing renewable sources of energy in Bulgaria.

British Airways will launch regular flights from Bulgaria's Black Sea center of Varna to London March 29.

The pre-launch price of the return ticket is set at EUR 150. After the company starts to service the flights, the price will increase to EUR 200.

Initially the flights will be carried out twice a week - on Wednesdays and Saturdays. As of June 6, the company will fly planes four times a week.

The Bulgarian National Bank (BNB) will require that the eligibility of mortgage borrowers be limited to applicants that can finance at least 50% of their new home themselves.

The measure, demanded by the IMF, is aimed at dampening mortgage lending and is coupled with a recommendation that the banks avoid borrowers whose income per family member drops below 100 levs after the monthly mortgage payment.

At the moment, many Bulgarian banks offer mortgages that cover 100% of the home purchase. Lenders that loan-finance more than 50% of the new home's value will be obliged to tie up more cash in reserves.

Local bankers said the lenders, in a bid to retain their current market positions, will opt to stomach the penalty reserves, passing on the implicit costs to the borrower. The restriction will expire after the first 2-3 years of the mortgage when the borrower would have repaid 50% of the home value.

The IMF has argued that the mortgage lending restrictions are needed to stop the practice of using home purchase loans to buy cars and other imported goods that overtax Bulgaria's already worrisome balance of payments.

BNB governor Ivan Iskrov said the disposable income threshold is only a recommendation and likened the measure to the banks' gentlemen's agreement to use a standardised annual percentage rate indicator.

IMF estimates indicate that the tougher lending rules implemented by the BNB will slow overall credit growth to 17.5% in 2006.

Corporate borrowers too will face further credit restrictions. Some banks have found ways to by-pass Ordinance 21 on the minimum required reserves maintained with the BNB by the banks but these loopholes will be closed, said Iskrov. Under the scheme used by the banks, they advise potential corporate clients to issue bonds instead of taking out a loan and the bank undertakes to buy the placement. In this way, the company raises the necessary capital while the respective bank keeps clear of BNB's credit growth caps. Ordinance 21 will be amended to qualify these bonds as credits, said Iskrov.

In a related development, it was announced that the IMF and the finance ministry have agreed to allow land border duty-free shops to remain in business while tightening the control over their operation.

The IMF urged Bulgaria to shut down the inland duty-free shops and those at the land borders as a countermeasure against the contraband trade and the grey economy as a whole. The fund estimates that the shops defraud the state budget of millions of euro annually.

One of the envisaged control measures is authorising the mobile customs patrols operated here by British consultancy Crown Agents to make random checks of the duty-free shops. The customs authorities will also install surveillance cameras in the outlets.

Bulgaria's economic indexes are getting closer to those of the new members of the European Union (EU), according to the UN annual economic report.

Despite that statement, however, Bulgaria's economy has been defined as "economy in transition", the National radio reported. The real growth of Bulgaria's GDP in 2005 is 5,6%. The UN forecasted that in 2006 it would go down to 4%.

Bulgaria has a long way to go to cope with the unemployment problem. As compared to the EU countries Bulgaria is lagging behind with 3% in that area.

The annual growth forecast was more conservative than those offered by other private and public institutions, and its plea for a synchronized effort by world policy makers was likely to go ignored, economists said.

World economic growth slowed noticeably in 2005 from the strong expansion in 2004. The world economy is expected to continue to grow at this more moderate pace of about 3% during 2006.

The United States economy remains the main engine of global economic growth, but the dynamic growth of China, India and a few other large developing economies is becoming increasingly important.

Economic growth slowed down in most of the developed economies during 2005, with no recovery expected in 2006. Growth will moderate further to 3.1% in the United States of America, while lacklustre performance will still prevail in Europe,
with growth reaching a meager 2.1% in 2006. The recovery in Japan is expected to continue, albeit at a very modest pace of arond 2%.

Generally, economic growth in most parts of the developing world and the economies in transition is well above the world average. On average, developing economies are expected to expand at a rate of 5.6% and the economies in transition at 5.9%, despite the fact that these economies may face larger challenges during 2006.

THE Culture Ministry?s interpretation of 2005 tourism figures for Bulgaria is that the industry is doing well in spite of problems such as ?construction tourism? and damage caused by last year?s floods.


According to figures released in the past week, international tourism contributed a million euro to the country?s current account. This is an encouraging note in the light of the concerns about Bulgaria?s widening current account gap (see story elsewhere on this page).


In the first 11 months of 2005, the number of foreign tourists visiting Bulgaria increased by 5.09 per cent. A total of 4 585 875 foreigners visited Bulgaria between January and November 2005.


The Culture Ministry said that most tourists visiting Bulgaria came from elsewhere in Europe.


Bulgaria had considerably increased its share of the market in the UK, Russia, the Scandinavian countries, Turkey, Central Europe and the US, the ministry said.


The number of tourists from long-standing EU member countries increased by 5.94 per cent and those from new EU members by 7.23 per cent. Overall, there was an 6.15 per cent increase in visitors from EU countries, according to the ministry.


With these encouraging figures in mind, seven Bulgarian tourist companies and representatives of the municipality of Smolyan are taking part in the Vakantiebeurs tourism fair in Utrecht in the Netherlands. The fair is a major event on the international tourism industry calendar, and in 2005 attracted 176 000 visitors. Expectations are that this year?s fair would draw more than 250 000 visitors, including 30 000 representatives of the tourism industry.


According to a State Tourism Agency media statement about the Bulgarians? participation in Vakantiebeurs, hopes were to attract Dutch tour operators to include Bulgaria in their catalogues, as well as to achieve sales among the general public.


Meanwhile, the State Tourism Agency had some troubles of its own, going by an agency statement on January 13.


The agency lacked a chairperson in charge of signing categorisation orders for Bulgaria?s hotels and restaurants.


This was delaying the process, and could cause problems for hotels and restaurants. Some, however, were operating without the categorisation certificates required by law, and hotels were going ahead with signing contracts with international tour operators.


According to the agency, more than 330 Bulgarian hotels and restaurants had submitted documents applying for categorisation and were awaiting finality. About 130 of these had not yet been inspected, while the remaining 200 were awaiting a decision on their category.