Банкеръ Weekly



A year ago an old neighbour of mine enjoyed telling me about the rich Arabic friends of Bulgaria's former monarch, whose investments would change the country. Today, this is just one of the topics he doesn't want to discuss...Even before the new rulers completed one year in office, foreign investors gave one of the most eloquent evaluations of the Government's performance - and it was absolutely negative. After direct foreign investments went slowly down in the second half of last year, they remained quite modest - USD125MN, in the first four months of 2002, down from USD310MN in the same period of 2001. Private unsecured credits decreased drastically from January to April of the current year. On a net basis, the growth is just above USD1MN, while it was USD74MN for the same period of 2001.It's true that the general investment environment is not very favourable in the aftermath of the terrorist attacks against the USA on September 11, 2001. But it is also true that in the past five years we've seen all possible negative shocks from outside - there were crises in Asia, Russia, Turkey and Kosovo. That's why it does not sound convincing that foreign factors are the reason for the reserved behaviour of the foreign investors.Another bothering circumstance is the fact that Bulgaria failed to attract any strategic investor in the whole year that passed. There are no such figures in the course of the privatisation of two major companies such as the Bulgarian Telecomunications (BTC) and Bulgartabac, either. In the case of BTC, the list of applicants is dominated by financial institutions able to do lots of things for BTC but not able to guarantee the company's functional restructuring and stable long-term growth. The second case deserves special attention. The privatisation procedure for Bulgartabac attracted amateurs in the branch, companies that does not have sufficient authority, and financial investors. Today, there is the same favourite applicant that was unofficially commented one year ago - the quickly established consortium between an unknown company and a financial institution with investment profile. It is more curious, though, that the management of this consortium includes people close to some of Bulgaria's current rulers.The world experience has proven that financial investors appear most often when the price of the company is below the net value of its assets or when, for different reasons, the actual buyer does not want to appear in public. Both reasons do not sound calming, however. Just the opposite, there are enough reasons to conclude that in this case the two hypotheses are combined in an extremely suitable manner. If combined, they give an interesting conclusion - we don't know who the buyers are (in fact, some people do know them), still we know that they will buy as cheap as possible...Moreover, listen how serious it sounds: Deutsche Bank to acquire Bulgartabac... It sounds even funny...Obviously, the economic and investment framework created by the Government lacks confidence. The low direct foreign investments and the practically frozen foreign crediting to the real sector are a sufficient alarm about the confusion in the economic policy from the middle of last year and the grown political and economic risk in the country. The absence of strategic foreign investors is a factor that will delay even more the slow pace of the economic recovery of the country. At the same time, it is a negative sign for the general investment climate and the investment initiatives of the domestic business.

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