site.btaMedia Review: December 17

HEADLINES

Not a single topic dominates Bulgarian print and online media on Tuesday. The morning programmes of the Bulgarian National Television, bTV, and Nova TV host discussions on the political situation on the country. The front pages of print media highlight topics in the field politics and economy and the upcoming holiday season.

POLITICS

A front page headline in Trud reads that President Rumen Radev will give the first government formation mandate in 2025 after the winter holidays.

Following the end of government formation consultations of President Rumen Radev with parliamentary groups, BNT hosted a discussion on the future of Bulgaria’s political sphere and the potential exit from the political crisis in the country. Guests were Nidal Algafari, Miroslav Sevlievski and Iskren Mitev.

Telegraph writes that according to Movement for Rights and Freedom Leader Delyan Peevski the scenario for new snap elections is ready and that even if a government is formed it will only delay the inevitable. Peevski also stressed that his party will be in opposition, if the talks to form a new government succeed.

Telegraph also writes that acting Prosecutor General Borislav Sarafov requested to strip the Alliance for Rights and Freedom MP Dzheyhan Ibryamov of his immunity. Ibryamov did not voluntarily give up his parliamentary protection, which is why this matter will be decided by a vote in parliament.

PR expert Maxim Behar said on Nova TV's morning show that forming a government would be an extremely difficult task to do, requiring huge compromises, which is why he believes the likelihood of this happening is no more than 20%. He said: "We are talking about people who cannot stand each other. How would they coexist in the same government? There is a deep-rooted Balkan intolerance. They use insulting rhetoric on each other. This is unacceptable! The world is constantly changing, and it is inconceivable to have such relations in Bulgaria, not only between politicians. I see no prospect of a coalition of the BSP with GERB and DB."

In the same interview, communications expert Aleksander Hristov said that changes on the political scene in the US made it clear that changes must occur in Bulgaria as well. He specified: "Ideology is no longer key among politicians in our country. It provides a horizon, a hard-core constituency, and predictability. Public sabre-rattling leads to negatives, provoking people's reluctance to participate in the political process as voters. Systemic parties must offer a solution, lest a Georgescu emerge," seemingly referring to the independent far-right candidate for President of Romania, Calin Georgescu.

FOREIGN AFFAIRS

Former Bulgarian foreign minister Nickolay Mladenov warned on bTV that the conflict in Syria could be rekindled. "The risk is very big," he noted. He described the situation as "extremely dangerous" and said that the conflict may continue in a different form. "A process is missing which could bring all Syrian factors together, so it is hard to predict the future of the state of Syria," Mladenov said. He holds that the Syrians themselves should determine their own fate. He believes that the nation needs an entirely new constitution in the wake of the fall of Bashar al-Assad's dictatorship.

ECONOMY

Economist Yulian Voynov told Nova TV that Bulgaria is close to covering the inflation criterion for euro area membership. With monthly inflation at 0.6% and annual at 2.1%, according to November data from the National Statistical Institute, there is a slight acceleration of inflation on an annual basis, but on a monthly basis the index is rising more slowly compared to its October growth. Voynov said: "We are above it [the inflation criterion for eurozone membership] by 0.4 points, if the three countries with the lowest inflation are taken into account. If we compare ourselves with Ireland, which sees 0.5%, we have been covering the criterion since November. The inflation rate in Bulgaria is low enough. It will probably continue to fall. In the medium term, inflation is expected to be around 2%. Prices of dairy products in our country are 15% higher than the European average. The budget deficit may cause a problem with meeting the criteria, not product prices. Bulgaria is actually converging towards the European average. Incomes in Bulgaria are rising ahead of inflation. Purchasing power is increasing."

Another economist, Garabed Minasyan, said that inflation developments are to be expected. He said: "Our general price level is too low compared to the European average. It cannot remain so over time, especially if the goal is to join the euro area. With a fixed exchange rate, this can only happen with higher inflation. However, this is an inevitable process. At global level, there are four groups of goods: food and non-food items, public catering and services. In three of them there is a significantly high inflation rate at around 4%. The highest price jump was in catering with an annual basis of about 7%, in food and services with 4%. The only drop in price was seen in non-food products. Joining the euro area in the near future is not a good step, we are far from it. This is mainly due to the low degree of real convergence towards the EU and euro area member states. We are forcefully trying to meet the monetary criteria, but meanwhile, there are real ones on which we are lagging significantly behind."

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Telegraph writes that the heating and hot water bills in Sofia for November 2024 are between 12% to 52% higher than for the same month in 2023, despite the lower cost of heat energy. The reason for the price increase is the colder weather, as the average monthly temperature in Sofia was 4.4C, while in 2023 it was 6.8C.

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BNT had a report from Ruse, on the Danube, saying that because of the rise in the price of many fruits and vegetables in recent months, people are preserving food for the winter less and less often. Bulgarian cabbage is 10% more expensive than last year.

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Former Energy Minister Rumen Radev told the morning programme of bTV that electricity prices will go up in the coming 2025. The electricity distribution companies want an increase of about 9% for electricity from January 1. The biggest increase is planned in North-Eastern Bulgaria. There, Energo-pro proposes an increase of more than 9%.

In Central and Southeastern Bulgaria, the proposed increase by EVN is just under 9%. A similar increase is expected to be paid in Western Bulgaria, as proposed by Elektrohold.

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In a Bulgarian National Radio interview, former finance minister Milen Velchev commented that, in general, the philosophy behind the draft 2025 State Budget Act is to distribute a certain amount of money that has been already promised to be distributed. One cannot blame the finance minister.

"Large amounts of money have been promised [to be distributed] on the hush-hush, and now the finance minister feels obliged to fulfil these promises, but at the same time not to break the 3% deficit criterion", Velchev said, adding that there is no solution to this task.

"You can't spend BGN 20 billion more and keep the [budget] deficit the same, there's no way," he stressed.

"Nothing stood in the way of the Finance Minister and the government to address these unreasonable promises by proposing a budget without these promised expenditures or proposing two options. One [to include] the spending but also [to include] a 25% increase in VAT and other basic taxes, which is also unreasonable. But the MPs should realize and be publicly accountable for their unreasonable decisions so far," Velchev explained.

According to him, pensions should not be increased by some 8 to 9% but should grow in parallel with the rate of inflation of 3%. In his words, betting on a 9% rise in pensions is а suicidal move, and this against the backdrop of the extraordinary rise in pensions during the coronavirus pandemic.

Velchev recommended that wage increases with arbitrary percentages in the public sector are stopped and postponed them until the public finances are brought back on a sustainable path.

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Capital writes that some of the conclusions of the traditional online survey of the Bulgarian Industrial Association (BIA) among 738 companies, conducted between November 5 and December 6 point to a predominantly negative assessment of the business climate and the state of their own companies, uncertainty and lack of predictability about the future.  

"Only 15% of the respondents see an improvement in the business climate, while 24% of the participants report an improvement in the state of companies. There is minimal optimism among managers. The survey period is before the caretaker government submits the draft budget for 2025. If the survey had been done after the budget submission, optimism would have been even lower", said Dobri Mitrev, BIA Management Board Chair.

Lack of manpower, bureaucracy and regulatory burden, frequently changing regulations and corruption are the biggest obstacles for business according to the survey participants. Political instability is also becoming a serious problem.

The next most important problems are the inefficient judiciary, the low quality of administrative services and the insufficient number of administrative electronic services, according to the BIA survey.

A third of respondents highlight as a problem the poor state of infrastructure and the inculcation of negativism towards business, a fifth see the gray economy as a problem, and 17% of the companies find probemlatic the deteriorated market conditions and the shortage of markets, shows the survey.

Plans to increase the minimum wage mostly reflect on inflationary processes - 33% of respondents said they would calculate this additional cost to the prices of goods and services.  

And 16% say they will be forced to increase all wages, while 11% say they will only be able to afford a wage increase for minimum wage employees and maintain the level of other wages. Only 8% of the respondents declared that an increase in the minimum wage would not create a problem for them, while for 31% of the respondents a forced increase in wages is unaffordable and may lead to staff layoffs, abandonment of planned investments or even relocation of the business out of the country.

In terms of institutions, the leaders in terms of approval are the presidential institution (40%), municipal administrations (37%) and the tax administration (36%). The Glavchev government enjoys the approval of 21% of respondents, the judiciary garners only 1% approval and the National Assembly enjoys 0% trust, the BIA survey shows.

The institutions with the highest percentage of disapproval are the National Assembly (90%), the government (79%) and the judiciary (73%).

Forty-one percent of respondents expect an economic downturn in 2025, and another 21% expect no change. Businesses' biggest fears are related to expectations of dramatic increases in energy and commodity prices, as well as inflation.

Expectations of rising labor costs are causing most employers to include wage growth in their plans for 2025. Over half of respondents plan to increase their production volume as well as the range of products/services offered. And 45% of respondents will seek new markets, the survey shows.

The percentage of those planning to invest in new facilities and/or new technologies is up on last year. Priorities include investment in staff development/training, and 37% intend to open new jobs.

DEMOGRAPHICS

An article of Capital says that the demographic crisis in the European Union (EU) is deepening after the birth rate hit a record low of 3.6 million live births last year - the lowest since comparable data began to be collected in 1961, according to Eurostat, the EU's statistics office.

The result for 2023 is lower than the 4 million projected in Eurostat's long-term estimates. It also marks the largest annual decline on record - 5.5 percentage points from 2022. The number of births is roughly twice as low as in the mid-1960s, when it peaked at nearly 7 million.

Demographic experts say record inflation, geopolitical tensions and climate change are among the reasons for the deepening crisis. Low birth rates will increase economic pressure on the working population, and the elderly will be increasingly dependent on the young.  

The declining population trend is most noticeable in the fertility rate (the average number of children a woman would give birth to during her entire childbearing period). For the EU, it is only 1.46 - well below the 2.1 needed to sustain a population. According to Eurostat's projections, the EU's population will fall by around 6%, or approximately 27.3 million people, by the end of this century.

Where Bulgaria stands: Although 2023 saw the lowest population decline in Bulgaria, negative natural growth, emigration and ageing continue to have a significant impact - over the past decade this country's population has declined by 800,000 people, according to the National Statistical Institute (NSI). The fertility rate remains below the replacement level, but has been rising over time from a disastrous 1.2 in 2001 to 1.81 in 2023, with the country reaching the EU's leading fertility position in the last two years.

As of 2016, however, Bulgaria ranks first in EU in terms of mortality - in 2021, the death rate hits its peak with 21.7 ‰, or 116,000 deaths. Apart from the COVID pandemic, the main reasons for the trend are the ageing population, chronic diseases and limited access to healthcare, especially in rural areas where the death rate is about 30% higher than in cities.

Bulgaria is among the countries with the highest levels of emigration in the EU. According to a World Bank report, in 2020 about 1.7 million Bulgarians lived abroad and more than 80% of the emigrants were under 50 years old. Although in 2023, Bulgaria will experience positive mechanical population growth, with the number of immigrants exceeding the number of emigrants by 41,000, the negative impact of emigration on the demographic structure remains significant.

The share of people aged 65 and older reached 23.8% in 2023, placing the country among the EU leaders in population ageing. National statistics projections suggest that if current demographic trends continue, Bulgaria's population could fall below 5 million by 2075, with around a quarter of it aged 65 and older.

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In another signed op-ed, Capital focuses on the fact that 2025 might be the first year since 1985 when this country’s population will actually increase instead of decrease.

"Something interesting has been happening in Northeast Bulgaria in the last three years. If you look at the National Statistics Institute's breakdown of the nationality of people registering as new permanent residents in the region (immigrants), one group is steadily growing - the Germans.

This probably comes as a surprise to you as it was a surprise to me when I was checking the statistics," writes Capital Weekly's editor Ognyan Georgiev.

"This trend was first reported to me by demographer and writer Georgi Bardarov, who had learned it from the Mayor of Dobrich. A check in the NSI shows that it is a fact: in 2020, only 130 Germans in total are registered as newcomers to Bulgaria. In 2021, after the pandemic, this suddenly jumps tenfold and they are over 1,300. In 2022 - 2485, and in 2023 - 2252. The Germans rank fifth in all the statistics for newly registered migrants in Bulgaria, right after the traditional Turkiye and the flows from Russia, Ukraine and Syria.

A large number of them, more than 2,300, are in northeastern Bulgaria and, according to Bardarov, have formed a stable community around Dobrich.

This otherwise unnoticeable trend is indicative of something else that is much more visible - Bulgaria's status is changing from a country that is losing population to one that is gaining it. Not only from third countries, but also from the EU. The numbers are telling - since the pandemic, the number of newcomers has been consistently higher than the number of those who have left, and this gap is constantly growing.

In 2023, over 41,000 more people have come than have left, of which over 70% are foreign nationals and of these almost 20% are EU residents.

This means that two of the three components of the demographic index, births and migration, will point upwards.The total fertility rate (i.e. the average number of children per woman of childbearing age) according to the latest NSI data is 1.8, up from the previous year and meaning that after a slight decline in 2022, the country is back on the rise in fertility - a trend of at least a decade.

If this trend continues, and there is no reason to believe otherwise, 2025 will be the first year since 1985 that Bulgaria's population will grow. It is hard to describe what a watershed this will be in our recent history.

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About 2.3 million people in Bulgaria use the social network TikTok, 24 Chasa says. The daily's estimate is based on advertisement reach data. Five per cent of users are aged 13 to 18 years, which means that 115,000 children in Bulgaria view and publish videos on TikTok. A few days ago, a kid was taken to Sofia's Pirogov Emergency Hospital with a severe head injury after taking a popular challenge dubbed "Superman," the daily says.