Information about Bulgaria and Sofia

Bulgaria

Bulgary joined NATO on 29 March 2004 and the European Union (EU) on 1st January 2007. Bulgary is a country with huge touristic market potentials, due to its exceptional natural environment, with unexploited sea and mountains.

Demography

Bulgary has a population of 7,322.000 inhabitants. The life expectancy is around 72,5 years. The 98.6% of the population is educated.

Government and Politics

The President of Bulgaria is appointed by ballot for a period of 5 years with a right to be reelected. The President has the position of Head of State and Commander in Chief of the Army Forces. The President is the Head of the National Safety and is able to give back a Parliament initiative for a debate. The Parliament has the capacity to dismiss said votation by the simple majority vote.

Spain and Bulgaria keep extraordinary political relationships within the institutional framework, and these have increased and intensified in the last years.

Sofia

Sofia is the capital and the biggest city of the Republic fo Bulgaria, with a population of 1,270.450 inhabitants (what becomes the 14th bigger city of the European Union) and around 1,380.406 in the metropolitan area. It is located in the western region of Bulgaria, at the bottom of the Vitosha mountain massif, and it is the administrative, cultural, economic and educational center of the nation.

Geography

The Republic of Bulgaria is located in the Southeast of Europe, adjacent with Romania, to the South with Greece and Turkey and to the West with the Serbian Republic and the Macedonian Republic. The key geographical position of the country is a linking point of Europe and Asia, and this explains its significant commerce, circulation of goods, development of economic activities and infrastructures and migratory flows. In addition to that, an oil plant is under construction in Russia and it goes across Bulgaria to guarantee the Russina gas provision before the uncertainties created as it goes across Ukraine and Belarus.

Weather

Sofia has a moderate continental weather with high temperature changes. The warmest month is August while January is the coldest. As of 1936 the annual average temperature was +10,0°C (50°F) and since then it has raised in +0,5°C (+1°F). The city receives 600 mm precipitations (25.6 in) on an annual basis, mainly in summer and the lowest, in winter. Sofia is usually less warm in the summer than in other areas of Bulgaria, due to the height of the valley where it is located, even though temperatures can even still reach 40ºC.

Transports and Infrastructures

With its well-developed infrastructure and strategic localization, Sofia is an important center for railway and vehicle routes. All the main transport media (except the water transports), are represented in the city, which is the home of 8 train stations, the Center of the Air Control and the Airport of Sofia (headquarters of the Bulgarian Air airlines).

The public transport in Sofia is well developed, it is effective and important for the city economy. It is comprised by subway trains (Sofia Subway) , buses, trams, trolley buses, and approximately 40 supplementary lines, operated by minibuses (marshrutki), besides more than 15.000 taxis. The subway trains system started operating at the end of the 90's, nevertheless, it had a limited extension.

The tram is the traditional transport in Sofia.

With the increasing growth in private transport in the 90', the number of vehicles registered in Sofia has surpassed the figure of 1,000.000 in the last five years. Therefore, the traffic and air pollution problems have become more serious. This situation is planned to be fought with the expansion of the subway, when all the main routes were finished in 2008.

Sofia has a unique huge power and thermal co-generation plant. Almost all the city (900.000 homes and 5900 companies) have thermal energy, using the residual heat of the electric generation (3000 MW) and thermal furnaces fed with oil and gas, resulting in a total thermal capacity of 4640 MW. The duct network of thermal distribution is 900 Km long and comprises 14.000 substations.

Economy

Sofia is the center of the economic Bulgarian life. The industrial sector of the economy, represented by more than 800 big factories and production centers, includes metallic goods (75% of the total production of the country), textiles, leather and rubber products, printing presses (50% of the total production) and electronic goods. Sofia is also the financial center of the country; it is the headquarters of the National Bank of Sofia, the Stock of Bulgaria, as well as one of the highest business banks of the country (such as the DSK Bank and the United Bulgarian Bank). Building, business and transport industries are other important areas of the domestic economy. Sofia has attracted the attention as an outsourcing point for the multinationals of Western Europe and the USA. Sofia is also the place of important national and international companies operating in Bulgaria and Eastern Europe.

With the fall of the communist regime in Bulgaria in 1989, some important international enterprises not based previously in the Bulgarian market came to the country, the majority to Sofia. The real estate market in Sofia has grown suddenly in recent years, having a growth of 100% in the period comprised between the years 2005 and 2007. The unemployment in the city is relatively low, approximately 2.5% compared with the Bulgarian average of 8.2%, and also within the European levels of approximately 7,3%.

As a member of the European Union from 2007, Bulgaria has made a significant task fighting against corruption and accelerating the privatization process which favours an action program up to 2009, in which the banking has boosted notably, the proper reinvestments of the Bulgarian businessmen and the foreign companies have reached five million Euros in 2006. The World Bank on its annual report included Bulgaria in the top 10 main countries, according to its opinion, implemented the highest amendments in the year 2006.

The most relevant feature of the Bulgarian economy concerning the surrounding countries is its stability and solidity in growth. The economic policy of the country has been aimed at the macroeconomic stabilization following the criteria of the IMF which has become more definite in a fixed conversion rate of the Leva (1 BGN=0’51129 euro), the independency of the central bank, the new systems of bank supervision, a more strict tax policy and a notable reduction of the tax rate of the direct rate which has become one of the most attractive of Europe, and has raised a macroesconomic stability in the last years, with an important fall in the public deficit and the unemployment.

The GDP growth from 2000, the actual GDP has been higher than 4.5%, having expected a growth of 6.5% in 2007. In 2008 and 2009, the forecast is a growth of 6% and 6.2% respectively. The unemployment rate in Bulgaria has been decreasing from 2001 up to 6.6% recorded in the end of 2007, from 2003 a budgetary surplus higher to the annual 3%. The direct foreign investment has changed in 1996 from 137.3 million Euros to 5050 in 2007 according to some sources of the National bank of Bulgaria. The main agreements and economic programs between Bulgaria and Spain are the following:

• Agreement to avoid double taxation.
• Treaty of Friendship and Cooperation
• Agreement for the Improvement and reciprocal Protection of Investments.
• Agreement in Touristic Cooperation
• Covenant treaty about migratory flows

As Bulgaria became a member of the EU and due to the aforementioned bilateral agreements, there is no restriction for the free capital flows concerning investments and the transfer home thereof and the profits for both countries.

Now we highlight the main macroeconomic figures:

Budgetary framework 2008:

TAX POLICY

The budget for 2006 ended with a budgetary surplus of 3.2%.

The tax policy for 2007 and 2008 is targeted to encourage production, investment and purchasing power of users. Thus, the Corporate Income Tax decreased in 2007 from 15% to 10% and the Personal Income Tax to 10% as a fixed rate in 2008. Then it is expected a reduction in the black economy and a reverse bolster in fraud, Bulgaria becoming a suitable country for the investment because of its number one tax attractiveness in Europe.

Concerning the VAT which is at 20%, it is not expected a reduction in the short term, although there is an exemption in the purchase and sale of properties of more than 5 years old, which are the investments we propose in the city center.

The tax policy is expected to keep the surplus, due to the needs to maintain the currency borrad (fixed rate of the leva with respect to the Euro) and the criteria to adopt the Euro as a national currency, which is expected for 2010 - 2012.