“This comes as no surprise, but the main focus of the government is still the COVID-19 crisis,“ says Stefan Tzakov, Managing Partner at Kambourov & Partners in Sofia. Although the situation in Bulgaria was not as bad as in some other countries, Tzakov says, it nonetheless “gave the politicians a good chance to show strength — and for the two months that we’ve had a state of emergency in place they have tried to do just that.“
During the crisis, Tzakov says, the government has ushered in a lot of new legislation, although not without controversy. “The negative impacts of the crisis were felt across the board” he explains, "not just in the narrow specter of businesses that the government provided measures for.“ As a result, he says, a lot of his firm's clients voiced their concerns about the stimulus measures “not being enough.” Among other problems, he reports, is that “a lot of companies, which seem to be unaffected at first glance, still suffer due to their partners backing out of deals because their businesses have been affected. The ripple effects of the crisis need to be dealt with, not just the most obviously impacted areas.“
Tzakov says that “financial burdens like taxes, social, and health contributions could have been further reduced, and some more exemptions could have been introduced. On the whole, I think that the circle of businesses designated as ‘affected’ should have been broadened.“ In his opinion, more flexibility is the key. “We could drag on disputes about whether or not this is a force majeure until the end of time, and nobody would be able to get their own day in court. I think that the government should have focused on more types of businesses in other sectors and that this would have circumnavigated a lot of issues.“
Still, Tzakov says, some business sectors are doing well. “The banking sector is still going very strong and has been doing okay even during the pandemic,” he notes. "Also, the hypermarket sector has been booming in the last few years in Bulgaria.“ He reports that large hypermarket chains have been purchasing land plots, investing in the development of new locations for stores, and continuing to open doors to consumers. “The demand for goods one can acquire in hypermarkets went up as the virus spread and more and more people started stock-piling and switching to a more domestic-based consumption, as opposed to, say, restaurants and the like.“ This drew much political attention as well, with the government “placing incentives to stimulate these chains to provide local producers with beneficial conditions. These weren’t that kosher at all times, and even the European Commission weighed in to say that this is not in line with the principle of free movement of goods, but nothing has changed yet.“
Tzakov says that the renewables sector is active as well, “reflecting the recent EU incentives initiative to end coal-fired power plants.” According to him, “the renewable sector in Bulgaria is at its most active in the past seven years,“ and he says that some other ambitious energy projects are going on, including the establishment of the Balkan GasHub gas exchange. “This is aimed to counter the strong position Gazprom has had on the Bulgarian market, and we’ll have to wait and see if it does in the long run.“ Also, he says, plans for the development of Bulgaria’s second nuclear power plant are moving forward. “There have been some hurdles, like, for example, interested parties having to perform due diligence on-site and in-person because most of the documentation for the project is classified and exists as a physical copy only – no digital version – which means that it has to be inspected in person, but the good thing is that this is going somewhere.“ He reports that the project is more likely to actually be completed now, especially given the “EU trend of stimulating different energy sources than the ones we have now.“
