In recent years, when cash for emerging markets was there for the asking, countries in Eastern Europe all banked on the same recipe to lure investors – good location, low wages, tax breaks and the ease of doing business. Now that capital inflows have dried up and the region finds itself in a tough spot, Bulgarian officials are keen to emphasise that the country is still a safe haven for investment.

The underlying message of every presentation delivered during the Bulgaria Business & Investment Summit on March 5-6 was that with its track record of political stability, Budget surpluses and the currency board, Bulgaria would avoid the worst of the economic woes that hit the rest of Eastern Europe.

Meglena Plougchieva, the Deputy Prime Minister in charge of EU Funds, and Petar Dimitrov, Economy and Energy Minister, both focused on the measures implemented in recent years, which brought foreign direct investment of about six billion euro to Bulgaria in both 2007 and 2008.

At 46 per cent of the European Union average, Bulgaria offered the cheapest opportunity to do business in the bloc, Dimitrov said.

Having lowered the mandatory social contributions burden on business to the fourth lowest in the EU, Bulgaria now asked the European Commission for permission to lower the capital gains tax to zero for a period of five years on all investments above five million euro, Dimitrov said.

Neither Plougchieva, appointed to oversee the drive to stamp out EU funds fraud, nor Dimitrov paid any attention to corruption, the source of constant criticism from the EU, which sees the issue as the main obstacle in the way of Bulgaria’s further development.

‘Increasing aggressiveness’
Central bank governor Ivan Iskrov reiterated the same list of advantages Bulgaria had, but chose to focus his keynote address less on what Bulgaria had to offer and more on the negative coverage the country and the region received in Western media.

"I am surprised by the increasing aggressiveness towards emerging European economies, shown by some Western analysts and institutions, especially Anglo-Saxon ones," he said.

"Some investment bankers, independent analysts and even simple speculators are rushing to explain how bad the economic situation in our part of the world is, which makes no sense when one checks the figures.

"It is ridiculous that the institutions that criticise us most are themselves the ones that needed government support to cope with the gaps in their balance sheets. But they still continue to give advice to the investors in emerging market countries."

Investors should avoid generalisations across the region, which carried no harm when it was growing quickly over the past five to six years, Iskrov said. But as the credit crunch magnified the differences between the countries in Central and Eastern Europe, investors had to differentiate and be aware of the particular features of each country and economy.

For Bulgaria, the biggest difference setting it apart from its neighbours was the currency board and the fixed exchange rate, Iskrov said. Foreign ownership of the banking systems in the region means that the bulk of the loans given by banks were denominated in foreign currencies, which created significant risks amid exchange rate volatility. In Bulgaria’s case, with the lev pegged to the euro, there was no risk, making Bulgaria’s banking system one of the most stable in the region.

Nor would it change: "It is crucial for investors to know that, no matter what adjustment the Bulgarian economy may undergo, it will be under the existing monetary regime of currency board arrangements and at the existing level of the exchange rate that has been maintained over the past 12 years."

"Bulgaria will not make any experiments and gamble with its monetary regime and macroeconomic and financial stability."