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The moratorium on the acquisition of agricultural land in Bulgaria for foreigners

Comments on the decision of the Bulgarian Parliament to prolong the moratorium on the acquisition of ownership of agricultural land in Bulgaria by foreigners and foreign legal entities

Moratorium on economic development of Bulgaria . This is how we can briefly summarize the decision of the Bulgarian Parliament to extend the moratorium on the acquisition of ownership of agricultural land in Bulgaria by foreigners and foreign legal entities to early 2020. When Bulgaria joined the European family a temporary period was given in which to prepare for the full opening of the market for agricultural land to foreigners. This period expires on January 1, 2014 and the accession treaty of Bulgaria does not provide any possibility for extension. The decision of the Parliament directly violates the commitments that the country has undertaken when joining EU


Why in fact this moratorium applies strong impact on the economic recovery of the country?

First, it shows no desire for policy to support and enforce a free market in agricultural land , namely the opposite. Leads to monopolization of the sector by large landowners . To those who get more than two thirds of the funds under the operational programs simply because their projects are large and extensive , and the remaining small portion of the financial support is distributed to thousands of small entrepreneurs. It monopolizing the market and bringing barriers to entry on it, leading to a vicious addiction that big are getting bigger at the expense of smaller ones that fail because they can not withstand the heavy pressure .


Why opening the market is so important?

Bulgarian economy is quite small and open . As such, it is easily influenced by foreign investment coming into it. As a small economy , the country needs a relatively small amount of investment in order to show a positive influence and growth .

The economic crisis has led to an outflow of investment, as these money were used elsewhere. Despite the visible processes of economic recovery in the world wide , the signals that the Bulgarian political life was giving , brought additional uncertainty about the future of the country in the investors, which on another hand decreases the investments.

According to preliminary data FDI for the period January - August 2013 is 772.5 million (1.9 % of GDP) in 1593.5 million ( 4% of GDP ) for January - August 2012 Only for August 2013 their amount is negative -34.2 million compared to a positive growth from 395.6 million in August 2012 receipts from the investments of non -residents amounted to EUR 87.8 million against EUR 163.9 million for January - August 2012

The arguments for the widespread colonization of the country after January 1, 2014 , which will lead to economic slavery and dependence of Bulgaria imposed by rich foreigners has no real economical grounds and correspond with economic ignorance.. A glance over the past 10 years shows us that one of the first major foreign investment in the country were the establishment of joint stock companies with investment trusts ( REITs) , whose focus was (and still is ) the acquisition and processing of agricultural lands. It is these foreign investments that made abandoned agricultural lands lucrative investment. For the past 10 years agricultural land has increased its price more than 6 times, and only in 2008 price growth was 35-40 per cent.

Actually foreign investment in Bulgarian agricultural lands it appears to increase the value of the land and creats jobs



The consequences of the decision to extend the moratorium will have a negative impact for the country 's economy . First, this will give a clear signal to all foreign investors that their investments are not important in Bulgaria . Creating additional barriers to them will make them consider countries like Romania as far more promising andwith a significant plus - large internal market.

Further to the above , failure to comply the existing commitments to EU would scare the investors that business environment in Bulgaria is unpredictable which will result in an overall deterioration in the business climate. Another reason why foreign investment can decline.

Another problem will be that European Commission (EC ) has already confirmed that if Bulgaria does not open its market from the beginning of 2014, as agreed in the contract for its EU membership , this will lead to legal procedure and the corresponding fines. EC has no power to allow the extension of the moratorium in Bulgaria and if our country wants to keep it in force after the beginning of next year , will have to obtain the consent of all the other 27 countries of the European Union , which means the revision of the accession treaty of Bulgaria and re- ratification by 28 Member States.


Fractional Comment from the personal blog of Hristo Hristov "Economy and Society"