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Information for Investors

S&P confirms Bulgaria’s credit rating at BBB

Moody’s: Bulgaria’s strong fiscal position and resilient economy underpin Baa2 rating – Global Credit Research – 14 Oct 2016


Frankfurt am Main, October 14, 2016 — Bulgaria’s strong fiscal position, resilient economy and broad reform agenda support the country’s Baa2 rating and stable outlook, Moody’s Investors Service said in an annual report published today.
The report, “Government of Bulgaria — Baa2 Stable, Annual Credit Analysis”, is now available on www.moodys.com. Moody’s subscribers can access this report via the link at the end of this press release. The research is an update to the markets and does not constitute a rating action.
“Bulgaria’s rating is underpinned by debt metrics that compare favourably with similarly rated peers, and the stabilization of its external position,” said Marco Zaninelli, a Moody’s Assistant Vice President — Analyst and co-author of the report.
Bulgaria’s fiscal position is strong thanks to the high sustainability of the current level of debt-to-GDP and the authorities’ commitment to the gradual consolidation of fiscal metrics without impairing economic growth.
Fiscal consolidation will continue this year and next. Moody’s expects the fiscal deficit to narrow to 1.3% of GDP in 2016 and to 0.9% in 2017. The debt-to-GDP ratio will marginally rise in 2016 before stabilizing in 2017 and starting to decline from 2018 onwards.
Moody’s sees Bulgaria’s real growth decelerating slightly to 2.8% in both 2016 and 2017, from 3.6% in 2015. An almost stable or mildly benign — but less than previously stated – growth outlook for Bulgaria’s European Union trading partners is likely to help keep its exports growing. The pace of export growth is likely to be slower than imports, however.
“Though the government has stated that it is postponing its plans to join the European Exchange Rate Mechanism (ERM II), the precursor to entry into the European Economic and Monetary Union (euro zone), this is not expected to lead to a change in its commitment to sound economic policy,” the credit rating agency said. “While the country’s banking sector had paid down their external debt (largely owned by parent companies) and had solid capital adequacy ratios, Bulgarian lenders were mainly owned by foreign banks – thus problems affecting their parent banks might have knock-on effects on Bulgarian subsidiaries.“ The stable outlook balances our view of Bulgaria’s macro-financial stability, favorable fiscal position and economic growth prospects against its relatively low levels of wealth, external debtor position, and limited monetary flexibility,” S&P said. “Downward pressure on the ratings could come from weakening fiscal position or external liquidity deterioration, but should external conditions ease further and the economy grows strongly, a hike of the credit rating could be considered”, the agency continued.

The new legislation in Bulgaria effective since May 2009 gives foreign investors in Bulgaria significant benefits both in terms of their business in this country and in personal terms as foreign citizens. On the one hand, the investors’ business is supported by investment promotion measures provided for by the Investment Promotion Act and the Rules on its implementation. On the other hand, foreign investors who have invested in Bulgaria more than BGN 1 million (EUR 511,292) are granted a special status by the government in accordance with the laws currently in force.

Under that programme, foreign investors may obtain a permanent residence permit and, together with their families, enjoy the unique privilege to be exempt from the obligation to settle and physically reside in Bulgaria, as provided for by Article 40, Paragraph 1, Items 5 and 6 of the Foreigners in the Republic of Bulgaria Act (FRBA). That exemption applies only to foreign investors covered by the provisions of Article 25, Paragraph 1, Items 6, 7 or 8 of the FRBA, and the members of their families. A permanent residence permit is issued by the Ministry of Interior based on a certificate by the Ministry of Finance proving the amount and type of the investment made. Foreign investors holding such permits may freely enter and leave Bulgaria for unlimited periods just because they have made a significant investment in the local economy according to the abovementioned article.

                   To apply for a permanent residence permit, a foreign investor shall enter Bulgaria with a visa type D. Strict legal procedures are in place and shall be observed. The first step is the issuance of a certificate by the Ministry of Finance, the second one – the issuance of a visa type D, and finally – the issuance of a permanent residence permit. The procedures are provided for by the Foreigners in the Republic of Bulgaria Act, the Rules on its implementation and the Ordinance on the Terms and Procedure for Visa Issuance and Visa Regime Determination. These legal instruments regulate the entry and residence in, and the leaving of the Republic of Bulgaria by non-EU citizens; it is those citizens that the above residence benefits apply to. The rights of EU citizens are regulated by the European Union Citizens and Members of Their Families Entry and Residence in and Departure from the Republic of Bulgaria Act.

You can find additional information on the requirements, the relevant investments, investment funding and the legal terms and conditions concerning the Investment Programme, residence and citizenship on the website of the InvestBulgaria Agency (IBA).

                   TheIBA’s task is to support potential and existing investors in researching investment opportunities in Bulgaria and implementing greenfield projects. Its team includes 35 specialists in Sofia and a few more abroad, all of them working in accordance with the highest project management, business confidence and integrity standards. TheIBAis authorised to contact directly all government institutions in Bulgaria with a view to facilitating the entry and development of investors’ business in Bulgaria. TheIBAis the authority issuing investor certificates and applying the investment promotion measures under the Investment Promotion Act. It provides custom administrative and information services to investors with regard to the investment environment and the business climate in Bulgaria, as well as the locations and industrial areas to invest in.

Useful links you can find detailed information on exchange rates on the official website of theBulgarian National Bank

You can find information on currency control on the website of the InvestBulgaria Agency.

Foreign investment promotion:

One of the main priorities of the Republic of Bulgaria is promoting investment within its territory, regulating the operations of government authorities in the field of investment promotion, as well as investor protection.

               One of Bulgaria’s main goals is improving the competitiveness of the Bulgarian economy through boosting investment in scientific research, innovation and technological development in high-added-value production and services, while observing the principles of sustainable development. Others include improving the investment climate and achieving inter-regional cohesion in social and economic development, and creating new, highly productive jobs.

Investment Promotion ACT

How to register a company

You can find more information on the websites of:

the Registry Agency

the Invest Bulgaria Agency

Bulgarian Chamber of Commerce and Industry

Import and export

You can find comprehensive information on the import and export terms and conditions on the following web portals:

Ministry of Finance

Customs Agency

Ministry of Economy, Energy and Tourism

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