European Union finance ministers have addressed Bulgarian concerns as they agreed on a plan to force banks to hold more capital to counter their risk-taking.

After Bulgaria voiced concerns that banks may be forced to hold more capitalagainst the country’s sovereign debt, the EU ministers decided that banks in the country will not be obliged to report as risky the assets they hold in euros and will not be required to have more capital in relation to them.

The government in Sofia has pressed for the concession as the country operates in a currency board regime, in which the lev is pegged to the euro and all Bulgarian currency in circulation is backed by foreign exchange reserves.

European Union finance ministers broke an impasse Tuesday and agreed on a plan to force banks to hold more capital as a buffer against the unexpected, but bowed to pressure to give national regulators some leeway to impose higher standards on their banks.

The agreement was required for Europe to implement new global rules on banking standards known as Basel III, which were endorsed by the Group of 20 largest economies in 2010 and are meant to force banks to sock away more cash for bad times.

The so-called Basel III deal would force lenders to increase their highest-qualitycapital gradually from 2 percent of the risky assets they hold to 7 percent by 2019. An additional 2.5 percent would have to be built up during good times.

Under the accord agreed on by the finance ministers, member states can independently require their banks to set aside another buffer equal to 3 percent of risk weighted assets, provided the increase is applied across the entire region.

The draft approved by ministers means negotiations can begin on a final text with the European Parliament, where a committee passed its own version late Monday.

The EU hopes that the new international agreement on capital defenses for bankswill prevent a repeat of the 2008 financial crisis.

Erste Group Bank AG, one of the four biggest lenders in the former communist part of Europe, keeps Bulgaria in its plans, but in the longer term, its chief executive has said.

“If we look into the long term, the market we have to move into urgently – and urgently means for me sometime in the next 25 years – is Poland,” Chief Executive Andreas Treichl said in response to a question after a meeting of the shareholders on Tuesday.

“Afterwards we will probably relatively soon get into Bulgaria. At the moment we have no expansion plans in this direction.”

In his words Ukraine remains a “very interesting market” for the long term.

Andreas Treichl praised Ukraine‘s commodity wealth and geography, but voiced concerns over the lack of political stability in the country.

UniCredit SpA, Erste Group Bank AG, Raiffeisen Bank International AG andSociete Generale SA are the four biggest lenders in the former communist part of Europe.

The Bulgarian banking system is concentrated, with most of the assets owned by large financial institutions from the eurozone.

The five biggest banks in Bulgaria are UniCredit Bulbank; DSK Bank, a unit of OTP Bank Nyrt., Hungary’s largest bank; United Bulgarian Bank, owned by the National Bank of Greece SA; Raiffeisenbank Bulgaria and Eurobank EFG Bulgaria.

Greek banks control about 28% of banks‘ total assets in Bulgaria.

Bulgaria‘s growth continues to slow, mostly reflecting external headwinds, but there is room for optimism due to the expected euro area recovery in the second half of the year, IMF mission chief for Bulgaria has said.

“Real GDP growth is projected to reach 0.8% in 2012, which is lower than our previous forecast. Growth is expected to rise moderately to 1.5% in 2013, which shows we have taken into account the forecast for the euro area,” IMF mission headCatriona Purfield said in an interview for Capital daily after the end of the mission visit to Sofia.

The projected growth also reflects the expected euro area growth recovering in the second half of the year, which will allow exports to regain their position as the major driving force behind Bulgaria‘s economy, she pointed out.

Mrs Purfield singled out stronger EU funds absorption by Bulgaria and prudent policy as the key incentives for attracting more foreign direct investments and boosting growth.

Asked about the consistent rise in deposits in Bulgarian banks, Mrs Purfield said people are uncertain about their future, mostly because of external headwinds, and are seeking to safeguard their savings.

“The banking system remains well capitalized, liquid, profitable, and well supervised, which is why I think that it is doing very well amid the ongoing crisis,” she pointed out.

The IMF mission chief for Bulgaria stressed tapping international markets to secure funds to cover both future rollover needs and bolster the reserve would be a good option.

Mrs Purfield reiterated that at this juncture Bulgaria should increase the fiscal reserve, and to avoid steps that would reduce it.

“Strong fiscal buffers will ensure Bulgaria‘s resilience and safeguard this resilience going forward,” she said.

An International Monetary Fund (IMF) mission visited Sofia during May 2–9, 2012, to discuss economic developments and government policies with the Bulgarian authorities.

While the IMF projected gross domestic product growth of 0.8% in 2012 and 1.5% in 2013, the European Commission revised sharply downwards its forecast forBulgaria‘s economy, estimating it is to grow just 0.5% this year.

According to Brussels the European Union economy is in a “mild recession,” with a recovery “forecast to set in slowly from the second half of the year on”.

The European Union executive previously estimated that the economy of the Balkan country will grow 1.4% this year due to worsening growth prospects in key trading partners across Europe and stagnant domestic demand.

Last month Bulgarian analysts and institutions unanimously cut their growth forecast for 2012 to just below 1.5% instead of the previously forecast 2-3%, citing slumping exports and stagnant domestic demand.

The central bank BNB estimated Bulgaria‘s economic growth to slow-down to 0.7% in 2012, citing the sovereign-debt crisis in the euro area.

Bulgaria‘s economy expanded by 1.7% in 2011.

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Bulgaria‘s government has gotten Georgia‘s authorities to agree to almost double the number of permits for Bulgarian freighters and transport companies, the Bulgarian Transport Ministry announced.

After negotiations, Bulgaria and Georgia have agreed to increase the number of universal freighter permits (which are valid for both bilateral and transit services) from 800 to 1 500. The number of permits for/to a third party has been also been increased from 150 to 200.

Georgia agreed to increase the quota for Bulgarian freight transport companiesduring a sitting of the Joint Bulgarian-Georgian Commission on International Auto Transport that was held in Sofia on May 9-10, 2012, the Bulgarian Transport Ministry announced Monday.

The sitting was chaired by the CEO of Bulgaria‘s Automobile Administration Executive Agency Valentin Bozhkov and the Director of the Georgian Automobile Administration Mikheil Khmaladze.

During the meetings, Georgia has explained the recent increase of the no-permit fine for foreign freighters entering its territory from GEL 500 to GEL 5 000 in order to crack down on freighters that choose to pay the fine instead of procuring a permit.

At the same time, Bulgaria has committed to distribute the permits only totransport companies that are indeed going to carry out freight and passenger services.

The government said the general agreement to boost the number of Georgiantransport permits for Bulgarian companies was reached during Bulgarian PM Boyko Borisov’s visit in Georgia in April 2012.

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Bulgaria‘s male national volleyballteam defeated Serbia in straight sets on Wednesday, booking its spot in the semifinals of the EuropeanOlympic qualifier in Sofia.

The Bulgarian team delighted a massive crowd by beating traditional rival Serbia 3:0 3:0 (25-22, 25-16, 25-23) in the capital’s Arena Armeets sports hall. On Tuesday, the home boys downed Slovenia, also in straight sets.

“I am very glad that we managed to win against the reigning European champion. We played excellent from the beginning until the very end of the game and did not give up in the tough moments. We found the strength to fight for every point,” Bulgarian captain Vladimir Nikolov commented after the game, as cited by Boxcore News.

Bulgaria‘s next game is against Spain on Friday.

Germany also secured a spot in Saturday’s semifinals of the 2012 Olympic Games European Qualification, as the team defeated Finland 3:1.

The official start of the summer tourist season will be given by the end of May, according to the Deputy Economy Minister in charge of the Tourist Industry, Ivo Marinov.

The date is most likely going to be scheduled around the Day of Slavic Script and Culture, May 24, when Bulgarians get four days off, according to Marinov, who spoke in a TV interview Tuesday.

The Deputy Minister informed that the country expects an increase of anywhere between 5% and 8% of foreign tourists this summer, based on the number of early reservations. The expected increase of Russian tourists is 20%. There are ongoing negotiations with Russian aviation authorities to up the number of charter flights to Bulgaria not only in the summer, but in the winter as well.

There is also a noted increase from the German and UK markets.

Marinov cited data of the National Statistics Institute, NSI, showing a growth of 4.9% of foreign tourists during the first quarter of 2012, compared to the same period of 2011.

On the subject of the planned relocation of his institution from the capital Sofia to the second largest city of Plovdiv, he explained that the building has already been secured. The Deputy Minister stressed that the headquarters of the Economy Ministry will remain in Sofia and only operations will be moved with the goal to improve interactions between the State and the business.

All Bulgarian citizens are strongly advised to leave Syria as soon as possible, the spokesperson of Bulgaria‘s foreign affairs ministry has said.

The Bulgarian Ministry of Foreign Affairs issued the same warning on March 17 and April 7, but on Thursday Vesela Cherneva repeated the calls.

“We strongly advise all Bulgarian citizens to leave Syria as quickly as possible, while this is still possible. Following Thursday’s blasts and the escalation of violence, Bulgarian citizens, who decide to stay there, will bear the whole responsibility for their life and safety,” Cherneva pointed out.

The statement came in reaction to the twin suicide car-bomb attacks, which killed at least 55 people and wounded 372 in Damascus.

The Bulgarian embassy in the Syrian capital is operating, but the staff has been reduced to a minimum.

Bulgaria‘s Foreign Ministry has developed an emergency evacuation plan, which however would be much more complicated than a similar plan it developed for Libya.

Many of the Bulgarians living in Syria have families there, with family members not always having a Bulgarian citizenship. Also, Bulgarians live across the country, not only in Damascus and other large cities.

The contact information of the Bulgarian embassy in Syria is as follows:

Damascus, Salhia, 8 Pakistan Street, P.O. Box 2732

Tel.: 0096311 4454039; 0096311 4413128

Fax: 0096311 4419854

e-mail: Embassy.Damascus@mfa.bg

Bulgaria should prudently increase the fiscal reserve and steer clear of reducing it,IMF mission has concluded at the end of its visit here.

“Fiscal buffers need to be raised to safeguard resilience. At this juncture, it would be prudent to increase the fiscal reserve, and to avoid steps that would reduce it,” IMFmission chief Catriona Purfield said in a statement.

The Bulgarian government wants to allow its Silver Fund, set up to anchor the public pension system, to also invest in bonds issued by national and local administrations. At the moment, only foreign securities with an adequate credit rating may be purchased.

Last month the European Central Bank strongly advised Bulgaria against investing the assets of the state fund for guaranteeing the stability of the state pension system in domestic assets.

According to the ECB, the fact that Bulgarian securities would not require a rating could place the Bulgarian government in “a privileged position compared to other issuers.”

Another concern is that provisions allowing the Silver Fund to channel up to 70% of its portfolio on Bulgarian bonds by 2016 could lead to skewed yields not driven purely by the markets.

Bulgaria‘s central bank BNB has also vehemently criticized the draft law, saying it puts at risk the already accumulated funds, as well as the country’s financial stability, but the finance minister has made it clear he will stick to his proposal.

The IMF meanwhile approved of the government’s plans to float a eurobond issue this year.

“Tapping international markets to secure funds to cover both future rollover needs and bolster the reserve would be a good option,” Purfield said Thursday.

Bulgaria plans to tap international markets at the end of May or in June to raise funds to repay about EUR 835 M (USD 1.07 B) in 11-year eurobonds maturing on January 15, 2013.

The bonds offered on international markets will be worth up to BGN 2 B.

According to unconfirmed information Finance Minister Simeon Djankov has decided to go for a five-year maturity partly because of the low indicative prices that the three financial institutions offered – less than a 4% yield – on bonds with that maturity.

The IMF also confirmed its spring World Economic Outlook, which reduced the 2012 economic growth projection for Bulgaria by almost half. The country’s gross domestic product growth is expected to reach 0.8% in 2012 and 1.5% in 2013.

The European Union‘s executive will suspend in the short term the excessivebudget deficit procedure against Bulgaria as the country has taken adequate steps to correct it, a deputy finance minister believes.

Bulgaria‘s budget deficit dipped below the European Union limit of 3% of gross domestic product last year because of the government’s prudent fiscal management, Deputy Finance Minister Boryana Pencheva told MPs from the European affairs parliamentary committee.

“Eurostat, the EU’s statistical agency, already confirmed that Bulgaria‘s budgetdeficit was a notch above 2% of GDP in 2011,” she added.

According to the deputy minister the European Commission usually suspends the proceedings for excessive budget deficit once the country meets the EU target and shows stable fiscal indices.

“The good news is that Bulgaria has one of the lowest budget deficit in EU and the second-lowest debt in the EU – at the end of 2011, the lowest ratios of government debt to GDP were recorded in Estonia 6.0% and Bulgaria 16.3%,” said Pencheva.

The European Commission launched in July 2010 an excessive budget deficitprocedure against Bulgaria and 24 other EU member-states to ensure that the countries reduce swiftly their state spending, and keep their budget deficit below 3% of the GDP.

The measure came shortly after Prime Minister Boyko Borisov and Finance Minister Simeon Djankov said the previous Socialist-led government had kept them in the dark over BGN 2.16 B contracts, which pushed the 2009 deficit up from a projected 1.9% to 3.7% of GDP

In the first of its twice-yearly reviews of government finances in the 27-member bloc, Eurostat said the Bulgarian government’s budget deficit was 3.9% of gross domestic product in 2010.

Prime Minister Boyko Borisov placed the blame squarely on the shoulders of the country’s former Socialist-led administration, saying the government has lied to the EU colleagues about the country’s readiness for the euro zone, being unaware of this trap.

The EU’s stability and growth pact requires governments to maintain public deficits below 3% of gross domestic product.

Bulgaria‘s government and the European Commission recently revised downwards their forecast for the economy of the Balkan country, estimating it is to grow 1.4% in 2012 due to worsening growth prospects in key trading partners across Europe and stagnant domestic demand.

Experts however have warned of looming recession. They have criticized the government for refusing to present updated forecasts for the economy’s growth this year and adapt the state budget to a more realistic scenario, not ruling out technical recession.

Since the beginning of the year, no money has been transferred to Bulgaria‘s Silver Fund, set up to anchor the public pension system, shows its balance sheet, published online by the finance ministry.

Under local legislation the money in the Silver Fund comes from privatization deals, concessions, and budget surpluses (if any).

The money the Bulgarian state got from the sale of its dominant tobacco companyBulgartabac last year has also gone up in smoke, the check shows.

Bulgaria‘s sale body, the Privatization agency, told Dnevnik daily that the price of EUR 100.1 M has been paid by the buyer and transferred immediately to the account of the state budget in the central bank.

Under local legislation them money should next be transferred to the Silver fund, but this does not feature in its end of April report.

Finance Minister Simeon Djankov has explained that the transfer will be made by the end of May, admitting that by then the money can be invested or stacked up in a deposit account. The returns however will not be channeled into the Silver Fund, he pointed out.

The Silver Fund, a state retirement fund set up in 2008 in order to cover future pension system deficits caused by Bulgaria‘s aging population, is currently worth BGN 1.78 B.

The Bulgarian government wants to allow its Silver Fund to also invest in bonds issued by national and local administrations. At the moment, only foreign securities with an adequate credit rating may be purchased.

The proposal was criticized by the European Central Bank, which says the fact that Bulgarian securities would not require a rating could place the Bulgariangovernment in “a privileged position compared to other issuers.”

Such “indirect discrimination” could lead to “unjustified restrictions on the free movement of capital,” thus violating European Union rules.

Another concern is that provisions allowing the Silver Fund to channel up to 70 per cent of its portfolio on Bulgarian bonds by 2016 could lead to skewed yields not driven purely by the markets.

Finance Minister Simeon Djankov responded in a letter by stressing that any Bulgarian bond issues purchased by the fund would have interest rates based on market benchmarks.