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CENTRAL & EASTERN EUROPE
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Czech budget woes
Petrolinvest records loss Petrolinvest, which specializes in oil exploration and LPG sales, recorded a dramatically low H1 result. It had a consolidated net loss of over z∏.283 million. The firm’s management, however, claims that the loss was largely an accounting matter, and that it will not happen again. Analysts agree that the result should be considerably better in H2. Despite this confidence, the company’s share price fell 5% on the news to z∏.44.17 per share.
No quick Bankier profit South African giant Naspers spent z∏.50 million on the acquisition of Polish financial internet portal Bankier.pl, but the company’s H1 results do not envisage a quick return on investment. The firm turned an H1 profit of z∏.0.93 million as compared to z∏.1.64 million a year earlier – a y/y drop of 43%. (Poland A.M.)
Hangover in Bulgarian wine industry
Worst deficit since 1993 By August 31, the Czech budget deficit was already more than double its full-year target The Czech Finance Ministry announced last week that the budget deficit stood at CZK89.6 (z∏.14.4) billion at end-August, far exceeding the CZK38.3 (z∏.6.1) billion fullyear gap forecast in the 2009 budget. The January-August result was the worst seen since 1993, the ministry said. In comparison, at end-August 2008, the budget showed a surplus of CZK5.3 billion (z∏.853 million). The budget for this year was approved on the basis of now unrealistic estimates of economic development. Due to the economic crisis, the ministry now expects a budget deficit of around CZK165 (z∏.26.5) billion for the full year. In particular, a shortfall in tax revenues is the main reason for the rising deficit. Some analysts say that if the current difference between planned and real development of tax revenues is not immedi-
ately addressed, the state coffers may be short of CZK190 (z∏.30.6) billion by the end of the year. Total budget revenues at the end of August were down CZK47.5 (z∏.7.6) billion compared to last year. “The year-on-year fall was mainly caused by [lower] revenues from taxes and fees and revenues from social security insurance,” the ministry said. Revenues from taxes and fees decreased by over 10 percent, to around CZK305 (z∏.49.1) billion, whereas the official budget had reckoned a growth of over nine percent. Corporate income tax revenues sank by nearly 35 percent to CZK48.6 (z∏.7.8) billion, compared to an official budget forecast of 2.5 percent growth. The CZK38.3 (z∏.6.2) billion budget deficit forecast for this year was based on expected economic growth of 4.8 percent. The ministry’s latest forecast, however, puts this year’s economic contraction at 4.3 percent. ● This is an edited version of an article which originally appeared in Czech Business Weekly
SEPTEMBER 7-13, 2009
Exports of Bulgarian wine were down 70 percent y/y in the first half of 2009, while at the same time domestic sales of wine fell by 35 percent. This picture of the industry emerges from separate statements by the country’s National Vine and Wine Chamber (NVWC) and by Branimir Botev, head of the supervisory board at the Rozova Dolina winery. According to the NVWC, quoted by Bulgarian daily Standart, exports in 2008 had also been lower than in 2007. The chamber also noted
that exports of bottled wines decreased by 21 percent y/y in H1 2009, and draught-wine exports fell by 30 percent. Going by the chamber’s figures, Russia and Poland were the industry’s main customers – 63 percent of exports went to Russia and 19 percent to Poland. Meanwhile, Rozova Dolina’s Botev told daily Pari that domestic sales in H1 2009 had dropped 35 percent and imports of wine by 15 to 20 percent. Unsold quantities of wine were likely to make their
way to the “gray” market, Botev said. A statement by National Vine and Wine Chamber head Plamen Mollov on September 1 seemed to concur with this. He noted that a huge share of the grape output was used for unlicensed production of alcoholic drinks. Mollov said that only half of the grape output was purchased by legitimate producers. Clive Leviev-Sawyer
This is an edited version of an article which appeared in The Sofia Echo
Joint Visegrad embassies possible The governments of Poland, the Czech Republic, Slovakia and Hungary are weighing a plan to establish joint embassies. The first of these would appear in Mongolia and Uruguay, according to Gazeta Wyborcza. Were the idea to be successfully put into practice, buildings bearing the name “Embassy of the Visegrad Group” could soon appear across South America, Asia and sub-Saharan Africa. The proposal to form joint embassies is primarily based on financial considerations; the global financial crisis has
led to some hard choices regarding diplomatic missions. “This year I have had to close four embassies and eight consulates. The same was done by my colleagues from Poland, the Czech Republic and Slovakia. In a number of important corners of the world, we are losing representation,” Hungarian Foreign Affairs Minister Péter Balázs told Gazeta Wyborcza. “No visas are being given, there are no contacts. Black holes are appearing on the map.” Top diplomats from the four Visegrad nations are expected
to meet in Sopot to discuss the details of the project. However, Polish Foreign Ministry spokesperson Piotr Paszkowski has already commented that Poland endorses the idea. The notion of sharing embassy space is not unprecedented. The nations of Scandinavia have had joint embassies for some time, and not only in far-flung nations. They share space in places as close to home as Berlin, where representatives from Denmark, Sweden, Finland, Iceland and Norway conduct diplomatic business in one building. Jon Jackson
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