Foreign direct investment (FDI) in Bulgaria increased by 11.5 per cent year-on-year in the first nine months of the 2005 amid fears for the country’s current account deficit.
This was announced on November 11 by the InvestBulgaria Agency, which was quoting Bulgarian National Bank (BNB) data. The nominal value of FDI for the January-September period was more than 1.3 billion euro.
InvestBulgaria executive director Pavel Ezekiev said that the amount of such investments reported by BNB did not include the funds in the investment projects certified as first-class investments. These projects receive special treatment under the Investment Promotion Act and the state provides funds for building their accompanying infrastructure.
Ezekiev said that two more such projects would be unveiled by the year-end in addition to the 10 that the agency had certified since the beginning of 2005.
The implementation of the 10 certified projects is expected to provide nearly 10 500 jobs. According to the agency, by the end of 2005 total investment in Bulgaria will reach about six billion euro, with FDI accounting for about 2.5 billion euro of the total volume.
BNB preliminary data on FDI in Bulgaria in the January-September period put the amount at 1.323 billion euro.
The central bank statistics also show that the biggest country-investor in Bulgaria in January-September is Austria with 32.5 per cent of the total amount of the FDI, followed by Switzerland with 14.2 per cent, and the UK with 13.5 per cent.
The incoming FDI is expected to at least partially offset the negative effect of the rising current account deficit of Bulgaria. The January-September 2005 current account gap stood at 1.837 billion euro, or 8.7 per cent of GDP, against a deficit of 696.6 million euro (3.6 per cent of GDP) for the same period in 2004, BNB said.
In September 2005 alone, the current account deficit amounted to 227.1 million euro, compared to a positive balance amounting to 23.8 million euro for the same month in 2004.
Not a single privatisation deal had been closed this year and the capital inflow was entirely due to the expansion of foreign investors who had already set up in Bulgaria, InvestBulgaria also said.
The biggest growth was registered in credits supplied by foreign parent companies, which surged from 468 million euro last year to 642 million euro in 2005. At the same time, foreign equity in Bulgarian companies increased from 499 million euro in 2004 to 505.4 million euro by the end of September.