Bulgaria's FDI 2.5 Times Smaller in Jan-Aug 2010 Y/Y

Foreign direct investment in Bulgaria dropped to EUR 836 M in the first eight months of 2010, according to the Bulgarian National Bank (BNB).

Preliminary data of the BNB shows that the foreign direct investment in Bulgaria for January – August 2010 was EUR 835.9 M (2.3% of GDP), compared to EUR 2.119 B (6% of GDP) attracted in January-August 2009, a decline of 61%.

On Thursday, Borislav Stefanov, head of the InvestBulgaria Agency said he expected the foreign direct investment in Bulgaria to reach EUR 2 B by the end of the year.

The Equity Capital (acquisition/disposal of shares and equities in cash and contributions in kind by non-residents in/from the capital and reserves of Bulgarian enterprises and receipts/payments from/for real estate deals in the country) attracted by Bulgaria for January-August 2010 amounted to EUR 623.9 M. It decreased by EUR 923.2 M compared to that attracted in the same period of 2009 (EUR 1,547.1 million).

Bulgaria's receipts from real estate investments of non-residents amounted to EUR 150.7 M, against EUR 405.7 M for the period January-August 2009.

The other capital, net (the change in the net liabilities of the direct investment enterprise to the direct investor on financial loans, suppliers' credits and debt securities) was positive, amounting to EUR 45.7 M in January-August 2010, compared to EUR 420.5 M in January-August 2009.

In accordance with the preliminary data, the difference of the flows for the reported period in comparison with the same period in the previous year was mainly due to the lower levels of received intercompany credits compared to previous years, on the one hand, and on the other – to the payments on intercompany lending in accordance with the loan repayment schedules of enterprises.

Based on preliminary data on profit/loss, the Reinvested Earnings (the share of non-residents in the undistributed earnings/ loss of the enterprise) in January – August 2010 are estimated at EUR 166.3 M, against EUR 151.2 M in the same period of 2009.

By country, the largest net direct investments in Bulgaria for the period January-August 2010 were those of the Netherlands (EUR 1.157 B), Russia (EUR 134.1 M) and Cyprus (EUR 119.1 M).

The net payments to Austria, the Netherlands Antilles and the UK amounted to EUR 777.9 M, EUR 102.4 M and EUR 97.9 M. The higher net receipts from the Netherlands and respectively net payments to Austria were mainly due to transactions associated with revolving intercompany credits.

According to preliminary data in January-August 2010, Bulgarian direct investment abroad increased by EUR 71.3 M compared to an increase of EUR 80.7 M in January - August 2009.