The Present FDI Statistical System in Bulgaria FDI Statistics and Policy in the Western Balkans and the South East Euro

1. The Present FDI Statistical System in Bulgaria FDI Statistics and Policy in the Western Balkans and the South East Europe OECD Investment Compact for Soth East Europe Istanbul, June 7 - 9, 2006 Prepared by Vera Rizakova Balance of Payments and External Debt Division Statistics Directorate Bulgarian Nationa Bank

2. The Present FDI Statistical System in Bulgaria • Responsibilities of national authorities and agencies • Legal framework • Methodological basis • Data compilation • Impact of FDI statistics on policy making • Resources

3. The Present FDI Statistical System in Bulgaria Responsibilities of national authorities and agencies • The BNB compiles monthly FDI flows and quarterly FDI stocks data for the BOP and the IIP statements. • The NSI compiles quarterly FDI flows and annual stocks data for the non-financial sector of the economy. • There is a close co-operation between the BNB and the NSI. The NSI is one of the main sources for the compilation of FDI annual data.

4. The Present FDI Statistical System in Bulgaria Legal framework for the BNB • The BNB Law - Article 42 “The Bulgarian National Bank shall compile the balance of payments of this country. For this purpose, all government and municipal authorities, as well as legal entities and physical persons, shall provide information to the BNB in accordance with a procedure established by the BNB”. • Foreign Exchange Law - Articles 7, 8 and 10 - specify the subjects that shall keep register for the purpose of the BOP statistics and provide the information to the BNB, also gives BNB the right to require from any person information, which may be relevant to the country’s balance of payments.

5. The Present FDI Statistical System in Bulgaria Legal framework for the BNB • Regulation No 27 of the BNB on the balance of payments statistics - establishes procedures for reporting and statistical declaration of transactions between residents and nonresidents, and provision of information on the balance of payments statistics.

6. The Present FDI Statistical System in Bulgaria Methodological Basis When compiling FDI in the country, the BNB follows the international standards and requirements of: • Balance of Payments Manual, IMF, Fifth Edition, 1993. • Benchmark Definition of Foreign Direct Investment, OECD, Third Edition, 1996. • The Foreign Direct Investment Task Force Report (March 2004) of the ECB and Eurostat.

7. The Present FDI Statistical System in Bulgaria Data Sources and Compilation In the compilation of the FDI Flows/Stocks, the BNB uses data from the following sources: • Commercial banks through the ITRS - data on equity capital flows (monthly data) • Banks Supervision Department of BNB - data on nonresidents' participation in the equity capital of the banks and their financial reports. (monthly data) • NSI - data on equity capital and financial results of non-financial enterprises (flows - quarterly, stocks - annually)

8. The Present FDI Statistical System in Bulgaria Data Sources and Compilation • The Agency for Privatisation - data on transactions related with privatisation deals (flows); • Financial Supervision Commission- data on nonresidents' participation in insurance and pension insurance companies (quarterly data) • Central Depository - data on non-residents transactions of shares in companies’ capital (monthly data) • Notaries public - on real estate purchased by non-residents

9. The Present FDI Statistical System in Bulgaria Data Sources and Compilation • The BNB surveys among non-financial sector enterprises on their equity capital and intercompany indebtedness(quarterly) • Information received from different sources is cross-checked

10. The Present FDI Statistical System in Bulgaria Data Sources and Compilation In accordance with the standard BOP presentation, FDI comprises: • Equity capital – acquisition/disposal of shares and equities by non-residents in/from the share or equity capital of Bulgarian enterprises. • Other capital – principal received and paid on loans (both on short- and long-term) between the direct investor and the direct investment enterprise. • Reinvested earnings – the share of non-residents in the undistributed earnings/ loss of the enterprise for the reporting period. • Direct investment is recorded in the country’s balance of payments on a directional basis: • resident direct investment abroad • non-resident direct investment in the country

11. The Present FDI Statistical System in Bulgaria Impact of FDI statistics on policy making • Foreign direct investment is an important macroeconomic variable for our economy. • Foreign direct investment is an important factor for the GDP and exports growth - FDI were 14% of GDP in 2004, 8.4% of GDP in 2005 according to preliminary data.

12. The Present FDI Statistical System in Bulgaria Impact of FDI statistics on policy making • FDI inflows are a key source for financing the current account deficit. • * 2005 FDI data are preliminary and are subject to revisions with the annual survey of the NSI.

13. The Present FDI Statistical System in Bulgaria Publication of FDI Data • FDI flows data are compiled and published monthly for the BOP purposes. Preliminary FDI stocks data are produced quarterly for the IIP. • FDI data are published according to an advance release calendar on the monthly BOP Report of the BNB and on the web site of the bank (www.bnb.bg). FDI data are published by type of investment, by geographical breakdown and by resident economic activity. • FDI data are reported to the ECB, Eurostat, the IMF. • The national primary users are the President of the Republic, the Council of Ministers, the Ministry of Economy, the InvestBulgaria Agency, etc. The BNB and the the IBA have an agreement on sharing data between the two institutions.