ECONOMY

In Brief

Bulgaria’s May CPI rises to 1.9 percent year-on-year SOFIA (Reuters) – Bulgarian consumer price inflation rose to 1.9 percent year-on-year in May from 1.8 percent a month earlier, driven mainly by costlier fuel and cigarettes, the statistics office said yesterday. The center-right government expects consumer prices to be rising by 2.2 percent by the end of the year, saying an expected economic recovery will boost inflation. Under the EU-harmonized consumer price index, inflation stood at 3 percent on an annual basis in May and was flat on a monthly basis, compared with respective rises of 3 percent and 1.2 percent in April. High inflation used to be the key obstacle to Bulgaria’s efforts to join the eurozone but Bulgaria’s chances of entering the pre-euro ERM-2 waiting room are now being hampered by huge fiscal deficits anticipated for this year and registered in 2009. On a monthly basis, consumer prices measured by the domestic data fell 0.2 percent in May, down from a 1.1 percent increase in April. Food prices were down 0.8 percent on the month. Bulgaria’s economy contracted by 3.6 percent in the first quarter but the government hopes recovering exports will return it to growth of 1 percent over 2010 as a whole. The government said the budget deficit, planned at 4.8 percent for 2010, would not affect the Balkan country’s lev currency peg to the euro, a regime which significantly curtails monetary operations. Sofia says it will keep the peg until joining the eurozone. Romania limits debt sale ahead of confidence vote BUCHAREST (Reuters) – Romania sold less debt than planned in a tender yesterday, hoping it will create a more stable political backdrop and ease pressure on yields a day later by winning a no-confidence vote. Uncertainty over Romania’s ability to enforce austerity measures, needed to keep afloat a 20-billion-euro deal led by the International Monetary Fund, has pushed yields on its sovereign debt higher in recent weeks. Besides domestic woes in recession-hit Romania, the government is also up against increasingly negative sentiment toward the region’s debt, as shown by a poor auction in Hungary last week and rising yields in the Czech Republic. Prime Minister Emil Boc looks likely to defeat the no-confidence motion, called over planned cuts of 25 percent in public sector wages and 15 percent in pensions but a tight vote would leave question marks over both government and economy. «While the outcome of tomorrow’s no-confidence vote against PM Boc is still uncertain, its expected failure is likely to avert a political crisis for now,» Capital Economics analysts said in a note. «But equally, it will do nothing to raise the near-term prospects for the economy, either.» Romania’s constitutional court could hamper the government’s plan to enforce the drastic pay cuts, aimed at capping the budget deficit at 6.8 percent of gross domestic product this year. Piraeus Bank Egypt Piraeus Bank Egypt is to increase its capital by 35 million euros to expand its credit portfolio. The bank, almost fully owned by Greek group Piraeus Bank, will raise its capital by 24 percent over the next 70-75 days, Chief Executive Nayera Amin told reporters. «This capital increase shows that the mother bank in Greece sees Egypt as a promising and growing market even during Greece’s debt crisis,» Amin said yesterday. (Reuters) ELPE-Petkim Petkim Petrokimya Holding AS, Turkey’s biggest chemicals maker, and Hellenic Petroleum SA (ELPE) of Greece held talks to cooperate on trade and technical matters, Petkim said in a filing with the Istanbul Stock Exchange yesterday. (Bloomberg) Turk repo auction Turkey’s central bank injected 2 billion lira ($1.27 billion) in a one-week repo auction yesterday at an average fixed rate of 7 percent. Total bids were 3.62 billion lira and the repo will mature on June 21. (Reuters)