BULGARIA – CURRENT ECONOMIC SITUATION
Bulgaria’s economic development depends heavily on the ability of the country’s production to compete on the European market. From 2000 until 2006 the industry has experienced a speedy development. The invested capital has increased three times. The original capital has increased 3.4 times and the floating capital – 2.9 times. At the same time the effectiveness of expenses is low and the increase is insignificant. For this period one lev of expenses has resulted in 1.06 levs of income. The profitability of the invested capital is 6% – rather disappointing in comparison to the level of the interest rates of the bank credits. The increase of the production is mainly due to the increase of the number of producers, rather than good organisation. The reason for this is the structure of the industry which is still to a great extent ineffective. As result there is a necessity to develop a new strategy for the Bulgarian industry and to underline priorities. The emphasis should be on highly effective projects. Another significant problem related to this one is the decrease of the profitability of the long-term assets and the inadequate qualification of the workforce.
The situation is much better in relation to the use of the current assets. The improvement is obvious and it is expressed in the decreased time for the turn over of the material reserves and the decreased need for materials. One lev of goods has been serviced by 0.16 levs of material reserves, which is an increase of about two levs.
The short term debt to suppliers has increased and also both the number of days for the collection of the short term debts and for paying the short term debts. The ratio observed is that for one lev of receipts from clients, there are 0,83 levs of short-term debts to suppliers.
Generally, there is a tendency for the short term improvement of the financial situation of the companies and their liquidity has increased which mainly due to the good work of the management.
Category: Bulgaria, Economy | Tags: assets, Bulgaria, capital, debt, development, Economy, industry, interest, profitability, project, rate, workforce One comment »
July 14th, 2009 at 14:18
I think it would be useful to have in East Europe (Russia, Ukraine, Belarus, Bulgaria, Greece, Serbia, Armenia, etc) a market of new ideas,
realistic and feasible projects, about which we could find information in journals, on Internet, maybe even on TV.
Personally, I would like to have access to a Website that would allow us to choose among such projects in which we might decide to invest our money (something similar to the system based on company shares in western countries).
This type of investment gives also a good visibility of the money that is invested.
At the same time, it should be allowed to anyone who has the required skills to propose interesting projects in order to be analysed by experimented professionals in economy and technology.
If the recommendations of these professionals were positives then those projects would be accepted for the database of new projects.
These project promoters could be rewarded by offering them shares for the future project.
Such economic system which encourages innovative persons and facilitates the investments in creative new ideas would allow also to
create new job opportunities and to absorb unemployed manpower.
Of course, many of us would prefere to work in a state company or in a multinational company which have more stability but almost anyone needs
an alternative, a plan B (just in case).
If we want that such economic system works efficiently and reliably, we need a legal framework, simple and clear, which should facilitate such type of investment.
The politicians from East Europe could significantly help to establish such legal framework which should encourage and
protect autochthonous entrepreneur citizens.