Location and Demography 

Bulgaria is located in south-eastern Europe, on the eastern part of the Balkan Peninsula. To the north it borders Romania, to the west the Former Yugoslav Republic of Macedonia and the Republic of Serbia, the Black Sea to the east, Greece to the south and Turkey’s European part to the southeast. The country’s population is 7.45 million and has a territory of 110,099.6 sq. km. Bulgaria is situated in the centre of a region, which is undergoing dynamic transition. Within 500 km of its capital Sofia a population of over 60 million is concentrated throughout 10 countries most of which have only recently embarked on their way to a market economy. All these regions are several hours’ drive from any point in Bulgaria. A network of international motorways crosses the country, making vital connections to Western Europe, Russia, and Minor Asia, to the Adriatic, the Aegean and the Black sea. Both sea and river transports (the Black Sea and the Danube River) offer good communications and transportation to and from the region.

Politics

Bulgaria’s political system is a parliamentary republic. After the fall of communism in 1989 the country has started on the road to democratic reforms and has achieved significant progress in recent years. It has a sustained GDP growth of 4.8%, a stable political system and highly trained workforce. As of March 2004 the country is member of NATO and is invited to join the European Union in 2007.

Currency Board Guarantees Stability 

A Currency Board was introduced effectively as of July 1st 1997. The Currency Board was proposed by the IMF and World Bank as an active attempt to curb down inflation, devaluation of the BGL and the run on the banking system.

The Goal - Accession to the European Union

While still far from the achievements of the Visegrad 4, Bulgaria is clearly on the way to recovery. GDP growth of 3.5% for 1998, virtually no inflation, Government budget surplus, improving foreign debt indicators and high liquidity of the banking system are some of the unquestionable successes in the last 2 years. The current economic policy measures and reforms are designed to help Bulgaria make substantial progress towards meeting the conditions for accession to the European Union. The goal of accession to the European Union should create momentum for structural reforms, which are essential for the development of the Bulgarian economy.

Bulgaria as an Emerging Market

- The Currency Board and the IMF commitment to Bulgaria provide a strong guarantee of the macroeconomic and currency stability of Bulgaria.

- The Bulgarian government is promoting Bulgaria as an isolated island of economic and political stability in a world of falling capital markets and recessing economies.

The Capital Market Development

An important part of the recent changes was the capital market development. Equity trade in Bulgaria started at the beginning of the 1990s. Traded companies comprised of mainly newly established private corporations and a small number of state banks while most industrial companies were still in state hands.

The real opening of the capital market took place in 1997. The voucher privatization created some of the prerequisites for a the market development – substantial stakes of 1050 state enterprises went into the hands of individuals and privatization funds, creating a wide shareholders’ base. All the necessary factors for the start of trade existed – Securities Law /adopted 1995/, Securities and Stock Exchange Commission was formed, the Bulgarian Stock Exchange /BSE/ got license in October 1997.

Forecasts for the development of the Bulgarian economy include: 

- There are new big companies coming through the cash privatization to the BSE, like Bulbank and the Bulgarian Telecommunications Company;

- Some of the remaining packages of the companies already with a majority shareholder will be floated;

- There are several big companies that will be partly privatized through the stock exchange.

- Bulgaria is expected to be invited to negotiate for full accession in the European Union in December 1999. This fact will immediately reflect into better perception of Bulgaria among foreign investors.

Macroeconomic Policy

The objectives of the government’s economic policy during the period 1999-2001 are to achieve strong economic growth on a sustainable basis, and to improve the living standards of its citizens while substantially advancing the transformation of Bulgaria into a competitive and well functioning market economy. Bulgaria uses the Maastricht criteria on the key macroeconomic variables as medium-term points of reference for its economic policy targets. The priorities of economic policy over the next three years are:

- To maintain the currency board arrangement and enhance banking
supervision;

- Maintaining a broadly balanced budget and reducing the government debt;

- To complete the privatisation of all earmarked fixed assets

- To restructure state-owned enterprises and natural monopolies as well as to reform the financial system;

- To develop a modern system of health insurance and social protection, and to reform the pension system;

- To enhance the development of financial markets;

- To modernize the infrastructure (transport systems, energy systems and communication systems).

Macroeconomic stability

- Political and economic stability 
- Sustained GDP growth of 4.7-4.9 % per year 
- NATO membership achieved in 2004
- EU membership set for 1 January 2007 
- Very competitive tax regime - 15% corporate profit tax as of 1 January 2005
- Strategic geographic location.

Booming real estate sector

- 25% price growth in the last 12 months
- Still lowest real estate prices in Europe
- Strong year round corporate letting market in Sofia
- Dramatic increase in demand for quality accommodation at Bulgarian resorts
- Strong drive for property purchase from Bulgarians living abroad
- Bulgaria on the agenda of top European real estate investment funds.