ECONOMY

Balkan leaders do their best to attract foreign investors

SOFIA (Reuters) – Leaders of Balkan countries called yesterday for joint efforts to change the world’s perception of the region as Europe’s powder keg and attract foreign investment in the continent’s poorest corner. After being hit by a decade of wars in former Yugoslavia, the Balkans are now stable, with most governments dedicated to market reforms, tamed inflation and budget deficits. But economic prosperity and the goal of European Union membership depends on countries improving cooperation, speeding up reforms to lure foreign capital and cracking down on red tape and corruption, the leaders told a regional economic forum. «We must accelerate our cooperation and change together Europe’s perception of its southeast… because investment in the region is investment in Europe’s peace and stability,» said Bulgarian President Georgi Parvanov. Bosnian Prime Minister Mladen Ivanic added, «Creating a common market is the key to attracting foreign investment because our separate markets are too small to draw attention.» Participants said inviting Bulgaria and Romania to join NATO at a November summit in Prague would help to further assure investors in the region’s stability. «For the first time, investors can view the region as a whole rather than as a patchwork of separate and sometimes squabbling countries,» said Noreen Doyle, first vice president of Eastern Europe’s development bank, EBRD. She said economic growth in the Balkans had begun gradually to catch up with better performing central European countries. The region posted a 5 percent growth last year, up from 3.7 percent in 2000 and growth is expected to reach 4.0 percent this year despite the global slowdown. According to the EBRD, Bulgaria was leading the way in economic reforms with Romania and Serbia following suit. But foreign direct investment is still low. The EBRD expects it to reach 4.0 billion euros this year, well below 21 billion in investment seen in central Europe and the Baltics. Doyle said the Balkan countries still needed to address major obstacles to foreign capital – poor infrastructure and communication links, corruption, excessive red tape, and unpredictable legislation. Reducing poverty and unemployment are other challenges facing the region. Incomes per capita in the Balkans are three times lower than the levels in central Europe, while unemployment rates are among the highest in Europe. «We have to admit that our region is the less developed part of Europe in the beginning of 21st century but we also have to show the world that it has the biggest prospects for development,» Bulgaria’s Economy Minister Nikolai Vassilev said. Preliminary figures unveiled on Monday show that Bulgaria’s cumulative gross foreign debt fell by a net $20 million at end-August from end-July mainly due to principal payments. The Balkan state’s gross foreign debt stood at $10.716 billion at end-August, compared to $10.736 billion at end-July and $10.626 billion at end-2001. In August, Bulgaria paid $30.8 million in principal on debt to the International Monetary Fund, $14.4 million in principal on debt to the World Bank and $18.7 million in principal to the Paris Club of official creditors. In January-August, Bulgaria paid a total of $1.413 billion to service its foreign debt, of which $1.126 billion was in principal and $287.6 million in interest. It received $864.3 million in new loans in the first eight months of this year.