BULGARIA: CURRENT ACCOUNT DEVELOPMENTS

1
BULGARIA CURRENT ACCOUNT
DEVELOPMENTS FINANCING REQUIREMENTS

• Presentation for the Investor Trip organized by
  JP Morgan
• Sofia, 27 September 2001
• Prepared by Emil Dimitrov
  Dimitrov.E_at_bnbank.org

2
Worsening of the External Environmentin 2001

• Overall world GDP growth 1.4 in 2001 compare to
  3.8 in 2000
• GDP growth decline in EU (51.3 share of exports
  in 2000) 1.9 in 2001 compare to 3.4 in 2000
• Germany, 0.9 in 2001 (3.0 in 2000)
• Italy, 1.9 in 2001 (2.9 in 2000)
• Crises in Turkey (10.1 exports share in 2000)
• Between 6-7 GDP decline in 2001 compare to 7.2
  growth in 2000
• Key Commodity prices decline (as of July 2001,
  yoy)
• Steel - 26-34
• Copper -15.2
• Urea - 26

3
The worsened external environment was behind the
mixed exports picture in Jan-July 2001 (1)

• TOTAL EXPORTS WERE UP 7.3 YOY (25 YOY IN
  2000)
• Exports growth increase
• Consumer goods 17 yoy (7.8 in 2000)
• Clothing and footwear 28.4 yoy (20.7 in 2000)
• Investment goods 5.2 yoy (-11.1 in 2000)
• Exports growth decline
• Intermediate goods 0.4 yoy (34.6 in 2000)
• Mineral fuels electricity 10.5 yoy (153 in
  2000)

4
The worsened external environment was behind the
mixed exports picture in Jan-July 2001 (2)
5
The worsened external environment was behind the
mixed exports picture in Jan-July 2001 (3)

• TOTAL EXPORTS WERE UP 7.3 YOY (25 YOY IN
  2000)
• Exports increased to
• CEFTA countries 42.6 yoy (10.2 in 2000)
• USA 51.1 yoy (29.6 in 2000)
• CIS and Baltic countries 6.0 yoy (-25.5 in
  2000)
• Exports declined to
• EU 11.8 yoy (23.5 in 2000)
• Italy 1.7 yoy (39.1 in 2000)
• Turkey -10.0 yoy (69.4 in 2000)

6
The worsened external environment was behind the
mixed exports picture in Jan-July 2001 (4)
7
Lower External Demand and Lower Oil Prices
Affected the Imports Growth in Jan-July 2001 (1)

• TOTAL IMPORTS WERE UP 14.1 YOY (19.2 IN
  2000)
• Imports growth increase
• Consumer goods 23.2 yoy (9.0 in 2000)
• Intermediate goods 22.7 yoy (13.1 in 2000)
• Imports growth decline
• Investment goods 9.1 yoy (10.0 in 2000)
• Mineral fuels electricity 2.2 yoy (50.6 in
  2000)

8
Lower External Demand and Lower Oil Prices
Affected the Imports Growth in Jan-July 2001 (2)
9
Real Exchange Rate Appreciation Contributed to
the Imports Growth in 2001 (1)

• Real effective exchange rate appreciated 8.1 in
  June 1997 - July 2001
• Factors behind that appreciation were
• CPI difference
• Net capital inflows
• Ballassa-Samuelson effect
• However, against the DM real exchange rate
  appreciation was 30.1
• Total imports growth Jan-July 2001 was 14.1 yoy
  while the imports from EU 23.2 yoy

10
Real Exchange Rate Appreciation Contributed to
the Imports Growth in 2001 (2)
11
Real Exchange Rate Appreciation Contributed to
the Imports Growth in 2001 (3)
12
The Travel - a Key Current Account Item
13
The Trade Balance is Behind the Increasing
Current Account Gap
14
Higher Financing Requirements in 2001-2002

• In 2001 larger public sector principal payments
  57.9 yoy, but slightly lower in 2002 3.9 yoy
• Under this scenario the current account deficit
  is 6 of GDP in 2001 and 5.5 in 2002.

15
Despite the financing sources the IMF support in
2002 is necessary

• A decrease in public sector disbursements 15.8
  in 2001 yoy but 26.1 increase in 2002
• Almost 50 of the FR in 2001 are expected to be
  covered by FDI, and 55 in 2002

16
BULGARIA CURRENT ACCOUNT
DEVELOPMENTS FINANCING REQUIREMENTS

• Presentation for the Investor Trip organized by
  JP Morgan
• Sofia, 27 September 2001
• Prepared by Emil Dimitrov
  Dimitrov.E_at_bnbank.org