Bulgaria will not be among the countries in Southeastern European worst by the drop of foreign direct investments in 2009, according to the Economics Institute at the Bulgarian Academy of Sciences, Bulgarian National Radio (BNR) said on June 18 2009.  
 
Since 2000, countries in Southeastern Europe have received more than $11 bln worth of FDIs and Bulgaria accounted for the largest share of it.

"In the past 10 years, about 20 per cent of the investment flow was mainly directed to the construction business and real estate,"  said Iskra Balkanska from the Economics Institute at the Bulgarian Academy of Science (BAS). The Bulgarian food industry and telecommunications also presented serious interest.  

"The extended operation of multinationals in the steel industry led to the set-up of a regional network of SEE steel producers," Balkanska told BNR. "This is a fact worthy of mentioning since the steel industry attracted foreign investment relatively later. After the process of transformation of the social-economic systems and the transition to a market economy, the most preferred countries for direct foreign investments were the ones in Central Europe. Practically, these countries are some 10 years ahead. Now, we can safely say that such a process has begun in the SEE countries."

In Bulgaria, the aftermath of the crisis is tangible as is the case in all other SEE countries," Balkanska told BNR.
First of all, international banks feel the need of liquidity. They restrict crediting and these restrictions directly affect the behavior of foreign companies and they reduce their investment projects. Second of all, if up until now, the size of investments were the most important, from now on, not only more investments would be sought but also such that lead to the production of goods with higher added value. The crisis doesn’t have only negative effect," Balkanska said.  

"The investment in sectors such as construction and real estate that have disproportionate growth may shrink on the expense of other sectors of the economy. All in all, the competitive advantages of Bulgaria as well as the other SEE countries should be reassessed. In this case all countries in the region compete against each other," she told BNR.

According to her, in order to continue attracting direct foreign investments, Bulgaria should set up additional tax incentives for investors.

In 2008, Bulgaria had received more than six billion euro worth of FDIs, according to data published by Bulgarian National Bank. The forecasts of the Bulgarian Investment Agency state that foreign investments may decrease by about 30 per cent in 2009, that is, about 4.5 billion euro, BNR said.

On June 17 2009, Bulgarian National Bank data said that FDIs to Bulgaria took a steeper slide, narrowing by 50 per cent to 955 million euro in January to April 2009 from 1.9 billion euro in the year-ago period, Bulgarian-langauge Dnevnik daily reported.
 
Foreign capitals to the country shrank by 10 per cent in January and by a precipitous 71 per cent in April 2009 when they lost more than 500 million euro compared to the same month last year when they stood at 722 million euro.
 
Bulgaria’s financial account shrank to 278 million euro through April from 3.8 billion euro in the first four months of 2008 which is an improvement from the negative result in December 2008 and January when foreign banks pulled out resources from their Bulgarian divisions.
 
The annual contraction in the financial account is due to the lower FDI and tight credit. Georgi Ganev from the Centre for Liberal Strategies attributed the downtrend to the export of money from the banking system which, he said, would not last long as local lenders continue to make profits and are unwilling to let money abroad.