site.btaMedia Review: December 8

STRYKER COMBAT VEHICLES – PRICE 
 
Earlier in the week, former defence minister Krassimir Karakachanov said that the US is selling Bulgaria the Stryker combat vehicles at a price which is three times higher, which is an exaggeration according to the publication Capital.bg.
  
The ex-minister's statement came days before the government urgently (and not very transparently) voted on Wednesday on the first financial tranche of the combat vehicles project, which is supposed to amount to around BGN 480 million. The total cost of the modernization programme is around BGM 2.5 billion, to be paid in five instalments between 2023 and 2027. More importantly in this case, the combat vehicles should be delivered quite quickly against the backdrop of the currently overstretched global defence industry - the first units are scheduled to start arriving in the third quarter of 2025, in a little over a year and a half. 
 
This decision of the government is important because under US law, the implementation of the agreement does not start with its ratification by both countries, but with the receipt of the first payment. It will also use up funds for new combat vehicles already earmarked in this year's state budget. Moreover, the US offer for the combat vehicles expires on December 15 and on paper there could be a procedural problem if President Rumen Radev decides at the last minute to veto the law ratifying the treaty and send it back to parliament for reconsideration. However, this makes no sense at least because the draft was largely developed and pushed through by the presidential defence secretary Dimitar Stoyanov while he was caretaker defence minister. 
 
It is true, however, that there is a serious discrepancy between the initial estimated cost of the project for the modernization of the Bulgarian land forces, described in the initial correspondence with the US at the end of January this year, and the actual offer, published by the US Defense Security Cooperation Agency (DSCA) in early September. 
The reason for all this, however, is that the Bulgarian Defence Ministry has requested changes in the parameters of the deal and the acquisition of additional combat capabilities, which raise the cost of the project by nearly USD 300 million. A further USD 166 million is to be spent on artillery and small arms and Javelin anti-tank missiles, and this expenditure will be formalized in two subsequent contracts with the US.  
  
Otherwise, the indicative offer was worth about USD 970 million, or about BGN 1.75 billion. 

CULTURE 

Sega.bg writes that the Culture Ministry is finally taking steps to protect thousands of buildings designated as cultural monuments. All cultural monuments that do not have a protection regime will be temporarily granted one on an interim basis until they are properly surveyed and protected with a permanent status. In parallel, investors in sites that are monuments of culture will be seriously eased in the procedures for examining the relevant documents. The capacity of the National Institute for Immovable Cultural Heritage will be strengthened. 
 
These are part of the amendments to the Cultural Heritage Act, which try to solve problems accumulated for years in the field of preservation of immovable cultural heritage. The draft changes have been published on the Strategy.bg public consultation website. 

Currently Bulgaria is at an impasse with the protection of its cultural heritage. There are a total of 39, 600 cultural monuments Bulgaria, but only a small part of them are under a  protection regime. The vast majority of monuments are without protection because the assessment procedure has not yet been passed. 
 
Monuments go through a two-stage procedure - first they are declared, then they are designated, and the law requires that they have a temporary protection regime after the first declaration.  
  
However, most of the monuments were declared before the adoption of this legal requirement and are unprotected. Some time ago, NINKS provided data that the number of declared buildings without any protection is 14,780, and many of them are subject to investors' interests. Most officially declared monuments are also unprotected. In order to solve the problem of lack of temporary protection, all listed sites will be granted such protection with changes in the transitional provisions of the law. The Culture Ministry proposes a specific protection regime for each type of monument depending on whether it is of global, national or regional and local importance. Temporary regimes will apply until permanent ones are determined.

ECONOMY

Capital.bg writes that since the beginning of 2021, labour productivity has nominally outpaced wage growth, but the trend has recently reversed. Although economic activity in Bulgaria and Europe is slowing more markedly, workers' wages continue to grow at double-digit rates this year, led by still high inflation and staff shortages. Thus, by the third quarter, average wages were up 14.7% from a year earlier, while GDP per employee lagged behind with a 6.5% rise in current prices, statistical data show. 

At least since 2009, wages have outpaced productivity for most of the time. This is probably due to the process of gradual catching-up of income levels in more advanced European economies, as well as to low unemployment and staff shortages in many sectors. However, the now outpacing wage growth comes against a backdrop of still high inflation. And rising labour costs are often cited as one of the main drivers of price rises. This is especially true if wages are rising disproportionately to the pace at which the economy is growing. On the other hand, it is possible that wages are still catching up some of the productivity lag of the past two years. 
  
In real terms, if inflation is subtracted, productivity per employee in the economy in the months from July to September increased by 2.1% year-on-year, the statistics show. While this is the strongest rate in 2023, the result is relatively weak compared with growth rates of 6-7% in the previous two years, when the economy was coming out of the crash. Real labour productivity has been rising over time as capital such as machinery and equipment that make employees' jobs easier accumulates, as technology advances, and as workers' skills and qualifications improve.

FARMERS’ PROTESTS 
 
In a televised interview on Thursday Agriculture Minister Kiril Vatev commented on the recent protests of farmers with demands for greater subsidies. Vatev said that he is strongly against subsidies. 
The agriculture minister said there every protest is political. "Even if it arises spontaneously, it is politically motivated. The first protest was justified," Vatev said.  
 
However, he said, protests in recent weeks "are inflated with more political charge." "With such protests nothing is achieved. They call for European regulations to be broken. If we do that and pay above the ceiling [for state aid], as the protest demands, they will have to return the money and Bulgaria will have to return the money paid in triple to the EU," said Vatev. 

The minister said that processes that have been going on backwards for decades cannot be fixed in a few months, but will take at least two or three years.  "I am strongly against “subsidy” farmers because these are people who stay in agriculture for their sake," Vatev pointed out. According to him, they rob working farmers. "Subsidy farmers are also very loud. The most hard-working, industrious, golden Bulgarian producers should get everything, but unfortunately the others have had political protection for years," the Agriculture Minister said. 
 
Vatev promised massive checks through the food safety agency and the Agriculture Fund. "It struck me that for five years in a row the same people have had their acreage fail due to frost and they want compensation for lost benefits. We will fight fraud to the maximum," the minister explained.

RUSSIAN OIL DEROGATION
 
Dnevnik.bg reports that the Lukoil refinery in Burgas will be able to export fuels from Russian oil until January 1, and import Russian crude oil until March 1. This was the final decision announced to journalists at the National Assembly on Thursday by Boyko Borissov and Delyan Dobrev of GERB, and Radoslav Ribarsky of Continue the Change - Democratic Bulgaria. 
  
Earlier in the day, representatives of the two formations and the Movement for Rights and Freedoms announced that they had reached an agreement which will be signed into law. "The refinery should be given time to export what has been produced until December 31, because otherwise it will not be able to store the fuels," Borissov said. Ribarski pointed out that both coalitions had concerns that the European sanctions were being bypassed and that was why the penalties are increased if violations are found. Ribarski confirmed that with the agreement there are no more concerns about oil supplies to Bulgaria after the end of the exception from the ban on imports of Russian oil. 
  
"We were concerned that mid-winter deliveries would stop, now we are given until March. And at the moment the refinery is reducing quantities," Ribarski said.  
   
Parliamentary budget committee chair Yordan Tsonev said that an audit will establish what quantities are already processed and what the refinery's stocks are.

PIROGOV CONTROVERSY  
 
24 Chasa quotes MP Vasil Pandov of Continue the Change-Democratic Bulgaria who commented in a televised interview the decision of the parliamentary healthcare committee, of which he is a member, to reverse the dismissal of the Pirogov emergency hospital director Valentin Dimitrov.  "This decision is more in the nature of a message than any legal nature. At this stage, the court has stopped the entry of the new management. This is the competent authority. If the court allows, the Registry Agency is obliged to register the new director," Pandov said. He added that the reasoning was to ensure the peaceful operation of the medical institution. "We talk about staff, about patient access. That was more the motive, not so much to obstruct the Health Minister," Pandov explained.

 Asked if the health minister should resign in order to reduce tensions in the ruling majority, he replied: "I can't say whether Minister Hinkov should be sacrificed. Last week, the governor and the deputy governor of the National Health Insurance Fund were sacrificed for the sake of national priorities - the adoption of the budget and changes to the Constitution. Whether Hinkov wins or loses, the budget is a national priority." 

TAX AMENDMENTS 
 
Dnevnink.bg writes that MPs left the threshold for cash payments at BGN 10,000 and rejected a proposal for bonuses for tipoffs on tax concealment by voting at the second reading amendments to the Tax and Social Insurance Procedure Code on Thursday. 
  
The MPs did not support the proposal of the Finance Ministry to reduce the threshold for cash payments to BGN 5,000. Also rejected were proposals by MPs to raise the threshold to BGN 20 000 or BGN 15 000. 
  
The amendments to the Tax and Social Insurance Procedure Code introduce a requirement for restaurateurs offering services in two-, three-, four- or five- star dining or entertainment establishments to have a mandatory POS terminal. However, the requirement to pay wages to employees by bank transfer has been removed.

For non-compliance with the obligation to install a POS terminal, a fine of BGN 100 to BGN 500 is envisaged for natural persons who are not traders, or a pecuniary sanction of BGN 500 to BGN 2,000 for legal persons and sole traders. In case of a repeated violation, the fine is from BGN 200 to BGN 1,000 and the pecuniary sanction from BGN 1,000 to BGN 4,000.   
  
Information about the option to pay via POS terminal must be placed in a place visible to customers in the establishments. The amendments will take effect on January 1 2024 and the requirement for POS terminals in restaurants - on March 1. MPs decided not to introduce excise duty on home-brewed beer. They introduced an alternative tax on income from wild mushroom and fruit picking. 

ELECTION CODE PROVISIONS 
 
The Bulgarian National Radio reports that under a unanimous decision of the Constitutional Court all parties contesting the elections should have access to the source code and the documentation of the machine-voting electronic system, whereas previously access was limited only to parties and coalitions which gained more than 4% of the valid votes at the last parliamentary elections. The constitutional case has been instituted on a petition filed by MPs of the 48th National Assembly on January 27, 2023.   
  
Also the Court pronounced unconstitutional an Election Code provision ruling out machine voting abroad in the absence of a person who has been assigned to perform and maintenance work for the voting machines 
The Court dismissed a plea to declare unconstitutional the denial to citizens in sections with fewer than 300 voters of the option to vote either by paper ballot or by machine-voting ballot and the provision obliging section election commissions to tally the machine voting results by counting the machine-voting ballots. 
  
ROAD WORKERS’ PROTESTS 

The Bulgarian National Radio reports that from Monday, December 11, the Roads trade union with the Confederation of Independent Trade Unions In Bulgaria will begin preparations for effective strike action. 
  
On December 14 employees of the Road Infrastructure Agency (RIA) will block traffic on Danube bridge. The decision was taken after Thursday’s protest on the Hemus motorway. They demand a 20% increase of salaries in 2024. On Thursday protesting RIA employees blocked briefly traffic on the Hemus motorway at the Topli Dol tunnel. They were invited for talks by the RIA chief Yassen Yordanov. However, the meeting did not end in agreement in connection with the demands for higher pay.