The future of the defence industry in Bulgaria is uncertain and prospects vary greatly from company to company. The key question remains whether the current level of military expenditure can be maintained. However, the focus of any government spending will likely be on high technology, commensurate with a programme of modernisation. As such, Bulgarian companies, focused largely on low-tech products such as small arms, will not see major increases in demand. NATO-compatible companies such as Arcus and Arsenal can reasonably hope to win contracts supplying the Bulgarian army with small arms. In addition, membership of NATO and the EU are pushing the military increasingly towards professionalisation.
Having resided over the healthiest public finances in the EU, the shock announcement on April 9 2010 that Bulgaria's 2009 fiscal deficit was nearly twice that originally reported, has once again raised concerns over financial and economic stability. According to the government, hidden procurement deals signed by the previous Bulgarian Socialist Party-led government mean that last year's general government fiscal deficit was closer to 3.7% of GDP, rather than the 1.9% figure previously published.
Aside from the financial and economic impacts of the government's fiscal woes, the latest development will deal a further blow to relations with the EU. Given that Bulgaria continues to incur criticism over its inability to tackle corruption and organised crime (which previously led to the suspension of official EU funds), the data revision will further dent relations. That governments across the EU have flouted the Growth and Stability Pact criteria (fiscal deficits should be below 3% of GDP), and given that Bulgaria's public finances are still among the healthiest in the bloc, will provide some leeway. This will not, however, get the government off the hook, with pressure from Brussels likely to mount further.
With Bulgaria preparing a claim against Turkey for property lost by refugees in 1913, we caution that bilateral relations could suffer. While there is scope for Bulgaria to veto Turkey's EU accession bid should Ankara fail to satisfy the compensation claim, we believe that Sofia will opt for a less aggressive and more tactful approach for now, especially given the importance of bilateral trade during the domestic economic downturn.
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Report Table of Contents:
Executive Summary
SWOT Analysis
- Bulgaria Security SWOT
- Bulgaria Defence Industry SWOT
- Bulgaria Political SWOT
- Bulgaria Economic SWOT
- Bulgaria Business Environment SWOT
Global Political Outlook: Q210 Update
- Table: Election Timetable, 2010
Central And Eastern Europe Overview
Security Risk Analysis
- BMI's Security Ratings
- Table: Europe Security Risk Ratings
- Table: Europe State Terrorism Vulnerability To Terrorism Index
- Bulgaria's Security Risk Ratings
- City Terrorism Rating
- Table: BMI's Central And Eastern Europe And Central Asia City Terrorism Index
Political Overview
- Domestic Politics
- Foreign Policy
Security Overview
- Internal Security Situation
- Table: Regional Insurgent Groups
- External Security Situation
- Bilateral And Multilateral Security Relations
Armed Forces And Government Expenditure
- Armed Forces
- Table: Regional Armed Forces, 2007 (Including conscripted, '000)
- Modernisation Programme
- International Deployment
- Weapons Of Mass Destruction
Market Overview
- Industry Trends And Developments
- Table: Key Players In Bulgaria's Defence Sector 2008
- Arms Trade Overview
- Procurement Trends And Developments
Industry Forecast Scenario
- Armed Forces
- Table: Bulgaria's Armed Forces, 2007-2014 ('000 personnel, unless otherwise stated)
- Government Expenditure
- Table: Bulgaria's Defence Expenditure, 2007-2014
- Macroeconomic Forecast
- Table: Bulgaria - Economic Activity, 2007-2014
Company Profiles
- Arcus
- Arsenal
Country Snapshot: Bulgaria Demographic Data
- Data Section 1: Population
- Table: Demographic Indicators, 2005-2030
- Table: Rural/Urban Breakdown, 2005-2030
- Section 2: Education And Healthcare
- Table: Education, 2002-2005
- Table: Vital Statistics, 2005-2030
- Section 3: Labour Market And Spending Power
- Table: Employment Indicators, 2001-2006
- Table: Consumer Expenditure, 2000-2012 (US$)
- Table: Average Annual Wages, 2000-2012
BMI Methodology
- How We Generate Our Industry Forecasts
- Defence Industry
- City Terrorism Rating
- Table: Methodology
- Sources
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