Банкеръ Weekly



EUR200MN MIGHT ENTER LOCAL HOSPITALSEUR200MN may be invested in local hospitals which are in dire straights through a loan from Austria. The BANKER weekly has learned that the candidates for financing are already being considered. This is the newest and biggest investment credit for the Bulgarian health care system. Behind the announced readiness on the part of Austrian companies to take part in the modernization of Bulgarian hospitals is the money of Prince Emanuel, a relative of PM Simeon Saxe-Coburg-Gotha, informed sources claim.Because of the currency board arrangement in the country Bulgaria was not in a position to guarantee such a big amount of money. Therefore, the loan will be guarnteed by Austrian insurance agencies. One of the conditions, however, is that 70% of the construction and repair work should be done by Austrian entrepreneurs. Thus, part of the monet will go back to Vienna.The first visit in Sofia of representatives of the interested business circles was in the beginning of March. The team of the Minister of Health Care Bozhidar Finkov showed three hospitals that urgently need funds for new buildings - the Hospital for Infectious Diseases, the University Hospital of Paediatrics, and the Alexandrovska Hospital. At the site of the former Academy of Medicine the guests feasted their eyes on the super-modern building of Prof. Alexander Chirkov's Saint Ekatherina Hospital.The Ministry of Health Care has sent to the Austrians its first proposal: they will have to choose between the Hospital for Infectious Diseases, and the University Hospital of Paediatrics. Now their financial analysis is expected in order to see in which of the two candidates they are more interested.Negotiations on the loan for health care from Korea are in a more advanced stage. The Restructuring of the Hospital Sector project is financed by the Fund for Cooperation in Economic Development of the Republic of Korea, especially set up for assisting economies with problems. It projects investments of USD30MN in Bulgarian hospitals. The Ministry of Health Care expects the documents for the loan to be conclusively signed by mid-2002 and the project's implementation to start at the year-end or the beginning of 2003.The term within which the investment programme, financed by the health loan from the World Bank, should had been launched has been extended by three months, Deputy Minister of Health Care Slavcho Bogoev told the BANKER weekly. Thus, it has been postponed from end-March 2002 to the beginning of July. New terms for the programme's implementation are being set now, because it has been delayed, on one hand, has not been timed well, on the other hand, Mr. Bogoev explained. EUR20MN - double the initially projected investments - will be set aside for the hospitals, after the Bulgarian Government insisted that the parameters of the financial agreement should be renegotiated.According to expert evaluation, the buildings, land, and heavy medical equipment in the state-owned medical establishments (which are subordinated to the Ministry of Health Care) presently cost BGN400MN. However, this evaluation was made prior the Bulgarian lev's denomination. The long-term assets were not reevaluated even in the year 2000 when the hospitals were transformed into joint-stock companies.A great part of the health care stock is already entirely worn-out, the medical equipment is beyond the wear and tear limits, investments are lagging behind. About BGN60MN per year should be invested in capital expenses in order to compensate the delay. BGN55,003,000 from the 2002 State budget (some 11% of the Health Care Ministry's total expenses) were projected for that item. BGN30,696,099 of this amount should come from external resourecs, and the purely State subsidy is just BGN24,306,901.Experts claim that these are the most advantageous credits which Bulgaria could receive. According to preliminary information, the money will be extended at 2-2.5% interest and will be rapayable in 20 years, including a 5-year grace period. It is said there's even a possibility to renegotiate the terms later on and cancel part of Bulgaria's dues. The Health Care Ministry, however, declined to specify the parameters, agruing that negotiations on the loans were still going on.One of the mandatory conditions for getting the credit from Korea is to ensure a State guarantee for it, because it is under an intergovernmental agreement. No such decision has been made yet. The loan from Korea is intended for renewal of the buildings where 6-10 hospitals are located, but it has not been specified yet which they would be. The credit from Austria is still at quite an early stage in order to specify the medical establishments it will go to.The investment strategy for utilization of the money from the loans is being worked out by a team of consultants from First Investment Bank.

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