Press Room

Tourism: A Priority of the Government
Ms. Lubka Kachakova - Deputy Minister of Economy

Vital conditions for a new development of tourism in Bulgaria:
» Political stability
» Economic stability

Political stability

The new political situation in Bulgaria
» A coalition between the Simeon II National Movement (SNM) and the Movement for Rights and Freedoms (MRF) - 141 seats in Parliament, the largest parliamentary majority to support a Bulgarian government since 1990.

Foreign policy priorities
Bulgaria's public and political forces have reached full consensus on foreign policy priorities.
» NATO membership - Bulgaria is expecting to be invited to begin accession talks during the Prague Summit in 2002, and to join NATO in 2004;
» EU membership - The Government is striving to accelerate negotiations, to have all chapters opened by June 2002 and closed by 2003, as well as to meet all Maastricht criteria in the shortest possible term. As a country negotiating on EU membership, Bulgaria has concluded talks on 26 of all 29 chapters to date.

Bulgaria has achieved macroeconomic stability as a result of the Government's foreign exchange and financial policy, based on:
ť Support of a currency board, introduced on 1 June 1997, until the Republic of Bulgaria's accession to the EU;
ť Tendency towards budget balancing that leads to zero deficit;
ť Maintenance of low interest rates: the base interest rate approximates 4.5%;
ť Low inflation and low interest rates - 4.5% in 2001. The Government has achieved dynamic economic growth, manifested in a stable GDP growth - by 4.5% in 2001.

The ongoing economic reforms are aimed at:
ť cutting taxes;
ť implementing an active privatisation programme;
ť applying an active policy on foreign investment attraction.

Macroeconomic indicators
Expected:
ť Further stable GDP growth, with a real 4% rise in 2002;
ť Fall in inflation levels to 3.5% in 2002;
ť Further reduction in Bulgaria's budget deficit and foreign debt;
ť As well as a significant growth in direct foreign investments, reaching USD 1 billion in 2002.

The stability of public finances is proved by the continuing increase in Bulgaria's foreign-exchange reserves, achieved by means of:
ť Optimisation and limitation of budget expenditures as a percentage of GDP;
ť Active debt management.

Thanks to the Government's active policy on attracting foreign investments, revenues from foreign capital invested in the Bulgarian economy have been growing steadily in recent months.

At present, foreign investments in tourism account for a relatively small proportion -4% - of the aggregate in Bulgaria, but the Government is taking active measures to encourage foreign investors.

Economic priorities of the Government:

The purposeful actions to
ť Encourage investment activity;
ť Improve the balance of trade and the balance of payments on current account;
ť Conduct a restrictive fiscal policy.
Will lead to:
ť High and sustained economic growth of an average 5% to 7% a year within realistic terms,
Which, in its turn, will generate
ť Job creation;
ť Personal income growth.

The Government's priorities are on:
ť Providing state support for the development of small and medium-sized enterprises (SMEs);
ť Restructuring and liberalisation of the natural monopolies;
ť Infrastructure development;
ť Accelerating the privatisation process in the country.

The measures undertaken will achieve:
ť Sustained economic growth and improvement of the business climate in Bulgaria.

The government policy is aimed at maintaining high economic growth by:
ť Introducing radical tax reforms;
ť Attracting foreign investments and accelerating the privatisation process;
ť Conducting an active policy encouraging imports;
ť Improving the business climate;
ť Extending support for the development of small and medium-sized enterprises;
ť Developing capital markets;
ť State support for high-tech industry;
ť Improving the infrastructure in the tourist industry;
ť Further price and trade liberalisation.

Main priorities of the Cabinet's Governance Programme:
ť Creation of a favourable business climate, encouragement of investment activities and protection against unfair competition.
ť Pursuit of a national industrial policy harmonised with the processes of economic globalisation and world trade liberalisation.
ť Development of tourism as a leading branch of the national economy and as an effective instrument of socio-economic growth.
ť Transformation of foreign trade into a real factor for macroeconomic stability and income growth.
The implementation of this government policy will ultimately turn Bulgaria into a modern tourist country.

TOURISM

Factors that have played a positive role in the development of tourism in Bulgaria in recent years:
ť Political and financial stability;
ť The legal framework in the sphere of tourism is currently being updated. The purpose is to improve business conditions for tourist companies and tour operators;
ť A process of privatisation that is nearing completion, and a growing role of private enterprise;
ť Constantly growing foreign investments in the sphere of tourism.

Purposes of the government policy encouraging tourism:
ť Increasing the GDP proportion of tourism;
ť Improving the quality of tourist services;
ť Integrating tourism into national infrastructure projects;
ť Attracting foreign and Bulgarian investments in the development of tourist infrastructure;
ť Boosting small and medium-sized business;
ť Financial support for the promotion of tourism.

Government support will take the form of:
ť Further exercise of the right to initiate legislation and improvement of the legal framework;
ť Elaboration and adoption of a national strategy on the development of tourism;
ť Relaxation of visa requirements, customs and border formalities, and travel conditions.

Financial support from the Government is offered through:
ť introduction of tax and financial incentives for companies in the sphere of tourism - preferential tax rates, accelerated depreciation, etc.;
ť softer terms of lending, microlending included;
ť creation of conditions for development of and investments in infrastructure;
ť support for active marketing and advertising in the sphere of tourism.

Improvement of available tourist services

Measures:
ť development of client-oriented tourist services;
ť improvement of facilities;
ť modernisation of the booking system;
ť modernisation of tourist infrastructure and of available equipment and technologies;
ť assistance in reformulating corporate strategies of development in accordance with world expertise in the branch;
ť adjustment of requirements and needs imposed by the international tourist market.

Support for SMEs employed in the sphere of tourist services

Measures:
ť Creation of a favourable financial and tax environment for balanced development of small and medium-sized business. The State will abide by clear rules and become a factor boosting the development of SMEs, in the sphere of tourism included;
ť Provision of state support for SME regional centres, for the purpose of providing services in the sphere of tourism.

Active marketing and promotion of the Bulgarian tourist product

Measures:
ť providing state financial support for the promotion of tourism. Developing a mechanism of co-funding with the private sector for the promotion of Bulgarian tourist services. Building an integral institutional and organisational system of marketing and promotion with the assistance of Bulgarian embassies abroad, the Trade Representative Office, business centres and overseas representative offices;
ť designing a new modern concept of Bulgaria's national promotion. This concept should cover both the advertising message and technical execution of the promotion (by means of multimedia, the Internet, CD-ROM, a new type of advertising materials, etc.);
ť elaboration of a national programme on marketing and promotion of the tourist product.

Integrated tourist services

Measures:
ť linking areas with non-developed tourism with nearby developed tourist sites;
ť developing "cluster tourism" by strengthening links with tourism-related industries;
ť state financial support for investment and development of business enterprise (building a network of traditional population centres, traditional restaurants and cafeterias, cultural itineraries, utilising the tourist potential of traditional local products, developing tourist sites in arts and crafts centres, etc.);
ť introducing state incentives for organisers of all-in tourist packages in tourist centres off-season.

Improvement of the different types of alternative tourism: congress, health and hydrotherapy, ecotourism, cultural, hunting and angling, rural, special interest, weekend and urban tourism, etc. Using their development to transform social problems in many population centres into a winning asset.
Measures:
ť simultaneous and balanced development of mass and special interest tourism;
ť financial support for alternative tourism - cultural heritage, Bulgarian national cuisine, development of traditional products;
ť financial support for projects on business ancillary to tourism (construction of swimming pools, conference halls, golf courses, skiing resorts, etc.). Creating conditions for the development of the entertainment business as an incentive for the advance of tourism - amusement and water parks, golf courses, etc.

Upgrading the skill levels of personnel in tourism

Measures:
ť state support for organising and conducting specialised training in the sphere of tourism;
ť conducting a reform in tourist sciences, developing new forms of training - seminars, on-site training, etc.;
ť elaborating criteria and standards of personnel training;
ť harmonising national and international training programmes in the sphere of tourism.

Partnership and dialogue between the state and private sector in tourist services
The Government is implementing its new concept of dialogue and partnership by applying measures designed to strengthen links between central and local government, overseas representative offices and international organisations for the purpose of creating an integral system for sustainable and dynamic development of tourism.