If the loan agreement with the European Investment Bank, the European Bank for Reconstruction and Development and the World Bank are frustrated, the Bulgarian Telecommunication Company (BTC) will find itself in a cash crisis, a news conference was told today by Alexander Ouzounov, Chairman of the Federation of Communications with the Podkrepa Labour Confederation (one of the influential trade union amalgamations in Bulgaria). The financial institutions may cancel the five-year grace period allowed for the repayment of 1, 150, 000, 000 US dollars, granted for the replacement of telephone facilities in Bulgaria, if the Bulgarian side does not fulfil the conditions stipulated in the agreements. The BTC did not update telephone charges as requested by the banks and if asked to start repaying the debt, it will be unable to do it due to the lack of funds, Ouzounov said. The Vazov Mechanical Engineering Enterprise in Sopot (Central Bulgaria), the defence industry's No. 1 for the first quarter of 1995, began to borrow money to pay its employees and suspended the implementation of export contracts after the managing director of the enterprise was replaced on April 7, 1995, a news conference was told by Pepa Nenova, Chairperson of the Podkrepa organization at the enterprise. The trade unionists are afraid that the enterprise may go bankrupt in the autumn and insist that the incumbent managing director be dismissed, Nenova said. At a meeting with President Zhelyu Zhelev later today, Konstantin Trenchev, leader of the Podkrepa Labour Confederation, acquainted the President with the problems of the BTC and the Vazov Mechanical Engineering Enterprise, asking him to intercede for resolving the problems. The President's adviser on social affairs, Yordan Hristoskov, told journalists that Dr Zhelev would take a position on the matter after an expert study of the records he was handed over by Podkrepa.
Sofia, August 3 (BTA) - Today the Cabinet approved a scheme of fees collected in the system of the MInistry of Health. A licence for the opening of a private establishment for medical care costs 10, 000 leva and for the production of medicines 75, 000 leva. The fee for the registration of a new medicine is 140, 000 leva, and for clinical tests of a medicine 15, 000 leva. Wholesale merchants of medicines should pay 70, 000 leva to get a licence. The money will be contributed to the Priority Medicines Supply and Registration Fund with the Ministry of Health. Fifty percent of the funds will be used to purchase life-saving medicines, 50 percent for the support of the licensing commissions, Deputy Health Minister Ivan Boukarov said.
The Cabinet had a three-hour closed sitting to consider energy policies. The ministers heard the sponsors of a strategy for the development of the energy sector until 2020, a methodology for electricity pricing and several projects for income adjustment for electricity price hikes. Due to the large volume of the draft documents, the Government will resume the discussion of its energy policy at an extraordinary sitting on Monday.
The Government approved an agreement with Ukraine on the international carriage of passangers and goods by road.
The Council of Ministers decided to negotiate the signing of a protocol between the defence ministries of Bulgaria and Greece on the training of military personnel at the two countries' military schools on reciprocal basis.
The Cabinet endorsed the hoding of the 11th General Assembly of the International Council on Monuments and Sites (INCOMOS) in Sofia from October 5 through 9, 1996.
The Governmet decided to propose to Parliament to ratify the Bulgarian-Portoguese agreement on the avoidance of double taxation and the prevention of tax evasion.
The Government will propose to Parliament to ratify an agreement with the Japanese Eximbank rescheduling Bulgaria's debt to Japanese creditor banks. The agreement pertains to loans extended to Bulgaria in 1980-1988 for financing economic projects. Rescheduled debts total 6, 400, 000, 000 yens and 6, 950, 000 US dollars. The debt is to be repaid in six-month instalments, the first of which is due on August 15, 1999 and the last one on February 15, 2003.
The ministers heard a report on a national programme for a phased limitation of the use of ozone- depleting substances in Bulgaria. Minister of Environment Georgi Georgiev briefed the Cabinet on the fulfilment of Bulgaria's international commitments with the assistance of the World Bank. Experts of the Institute of Refrigeration and Air-Conditioning Engineering, representatives of interested state-owned refrigeratory companies, consultants of the Danish Environment Agency and World Bank experts have drawn up 25 investment projects; 16 of them, totalling 11.9 million US dollars, have already been approved, Georgiev said. At its meeting on May 3-4, 1995 the Global Environment Facility endorsed the floating of the funds to Bulgaria as grant aid for restructuring and technological innovation. The World Bank was authorized to conduct negotiations and sign an agreement with Bulgaria on the aid.
Deputy Prime Minister and Minister of Economic Development Roumen Gechev proposed to the Cabinet to accept Franek Rozwadowsky as the new Resident Representative of the Intenrational Monetary Fund to Bulgaria.
Sofia, August 3 (BTA) - The Council of Ministers approved a mechanism for payments in leva under the agreement between the governments of Bulgaria and Russia on the settlement of mutual debt. Bulgarian exporters will be paid 1.05 leva per one transferable rouble to settle outstanding debts accrued before 1990, Finance Minister Dimiter Kostov specified. There are two conversion rates for the settlement of payments under the clearing agreement of 1991: 12 leva per one clearing doolar for oil deliveries and 5 leva per one clearing dollars for all other goods. The settlement of payments due for the export of special purpose supplies, contracted and effected in US dollars, will be based on the exchage rate of the US dollar of December 31, 1991.
Sofia, August 3 (BTA) - The Government today adopted an ordinance regulating the organization and operation of a National Environment Trust Fund, appointing former environment minister Valentin Bossevski Chairman of the Fund's Governing Board.
The National Environment Trust Fund is a juristic person managing the proceeds from debt-for-environment swaps and other external financial resources intended for environmental protection in Bulgaria. The Fund is headquartered in Sofia. It will be serviced by the Bulgarian Foreign Trade Bank. Representatives of governments, financial and other institutions permanently represented in Bulgaria, which have provided money or assistance to the Fund, will be included in an Advisory Board, established as a subsidiary body to the Governing Board.
In April 1995 delegations of the governments of Bulgaria and Switzerland signed a protocol and a draft agreement on a debt-for-environment swap. Later on, Parliament passed an amendment to the Environmental Protection Act making it possible to establish such a fund.
Sofia, August 3 (BTA) - The Council of Ministers today dismissed the Director of the Centre for Mass Privatization Yossif Iliev, replacing him by Kalin Mitrev, so far deputy director of First Bulgarian Stock Exchange (FBSE). The personnel change is prompted by Mr Iliev's request to pass from a managerial to an advisory position, a member of the Government Press Office explained. The Centre for Mass Privatization was set up in June 1994 after the passage of amendments to the Privatization Act, and Yossif Iliev was appointed director in early February 1995 by the Zhan Videnov Cabinet.
The new head of the Centre for Mass Privatization declared that he will continue his predecessor's work in implementation of the concepts which they had worked out together. In his opinion, arrangements for mass privatization are practically complete.
Mr Mitrev once worked as a diplomat. He left the Foreign Ministry in 1992. Since 1993 he has been in charge of information services at FBSE. He has specialized in stock exchanges at the US Securities and Exchange Commission and has work experience with American financial firms.
As planned by the Government, mass privatization is supposed to start in the autumn. At least 4.5 million Bulgarians will be entitled to receive vouchers, the Director of the Centre for Mass Privatization said. Each of them may receive voucher books to the value of 25, 000 investment leva, paying 500 leva. The vouchers may be entrusted for managament to investment funds or may be converted into shares by the holder himself.
Sofia, August 3 (BTA) - The Bulgarian National Bank (BNB) and the government have never suggested that the dollar should rise to 100 leva by the year's end as the press claimed yesterday, the dailies say today quoting a statement by the Ministry of Economic Development. The issue has not been discussed by the Ministry and the BNB, either. Claims that the dollar would rise sharply against the lev would serve only the speculative interests of cash- strapped economic groups. The central bank has bought over 1, 600 million dollars this year which allows it to head off any attempt at hiking up the dollar for a personal benefit. Several weeks ago the central bank decided to take steps towards the smooth strengthening of the dollar with a view to encouraging exports. The appreciation of the dollar will depend on further forex market developments and the decision rests with the central bank, the press office of the Ministry of Economic Development said.
The dollar rose 0.50 leva to 67 leva at most foreign exchange offices; in bank trading it did not exceed 66.55 leva, "Standart News" reports, quoting dealers who said that lending institutions bough up the available dollars.
Members of the public who might exchange their savings for dollars after the base rate on lev-denominated deposits was cut would be disappointed because some financial institutions have cut interest on dollar-denominated deposits. However, the latter remain unchanged at most banks, "Douma" says.
The equity capital of the lending institutions totals 83, 500 million leva according to May figures released by the BNB, "Standart News" says. The lending institutions allocated 33, 300 million leva for provisions and paid 114 million leva in taxes for the first five months of the year. "Douma" says that the commercial banks posted losses of 23, 900 million leva for the January-May period and realized a profit of 663 million leva. Deposits made in the first five months totalled 718, 000 million leva, of which 396, 000 million leva by financial institutions and 322, 000 million leva by companies and members of the public.
In a bid to curb the smuggling of excisable goods the Finance Ministry will order that imported cigarettes and alcohol be cleared only through the customs at Sofia and Plovdiv Airport, "Standart News" says. Only one third of the projected amount of customs and excise duty was collected in the first seven months of the year.
Western companies buy up Bulgarian mineral water exported to the Arab countries and destroy it, it emerged at the first national fair "Bulgarian Mineral Waters and Soft Drinks" held in Bourgas (Eastern Bulgaria).
Sofia, August 3 (BTA) - The all-out stir on the forex market today pushed up the exchange rate of the US dollar against the lev. In some cases it was exchanged for 68 leva (today's central exchange rate was 66.284 leva/1 US dollar). However, the volume of turnover was not large and the central exchange rate of the National Bank of Bulgaria (BNB) for tomorrow is 66.882 leva/1 US dollar or 0.60 leva more than today. Less than 35 million US dollars were sold today, which accounts for 65 percent of the amount normally traded. The transactions concluded at an exchange rate of 67.20-68 leva for one US dollar account for less than 15 percent. BNB did not intervene on the market. BNB bankers said it will not intervene tomorrow either. "A small amount of the foreign exchange reserve will be enough to prevent a jump of the dollar if the upward tendency persists, " BNB Governor Todor Vulchev said. Governor Vulchev called on members of the public and money changers not to buy large amounts of US dollars, warning that they would gain nothing by that. The exchange rate of the US dollar will not exceed 70 leva now, he said. The activation on the foreign exchange market is caused by press publications predicting that the dollar will jump to 100 leva, the BNB Governing Board said. The fact that the buying and selling price margin of foreign exchange offices reached 1.40 leva comes to prove it, bankers said. Many buyers purchased only small amounts of US dollars 200 to 500. For a long time BNB has been trying to prevent a drop in the exchange rate of the US dollar increase it smoothly to stimulate exports, BNB officials recalled. "The fact that in ten months trade on the money market became brisker and the the US dollar climbed by 0.60 leva is rather good news, " Todor Vulchev said. He ruled out the possibility of a sharp rise in the cost of living and cited the results of a study by German experts which show that given the composition of imported and locally available inputs in Bulgaria, the rise in domestic market prices and production costs represents only one- third of the increase in foreign exchange rates.
Sofia, August 3 (Tanya Tsekova of BTA) - Three posh Sofia hotels - the Sheraton, Sofia and Rodina - will be put up for sale this autumn, the Supervisory Board of the Privatization Agency decided last night. The original intention was to sell them through negotiations with potential buyers in the spring, but the offers were unacceptable to the Supervisory Board.
At least one of the three hotels may remain state- owned, Supervisory Board Chairman Dimiter Stefanov says. The best of them, the Sheraton, attracted groups from Liechtenstein and Belgium but their tender dossiers did not contain enough details and they did not provide bank guarantees. They bid 20 million to 27 million dollars while the hotel's market price is estimated at 46 million dollars.
A total of 118 privatization deals were made between January and July, of which 25 by the Privatization Agency and the rest by the ministries in charge of individual sectors. In the first seven months of 1994 sixty-three deals were concluded.
The pace of privatization is alarmingly slow, said former Privatization Agency Executive Director Alexander Bozhkov, now deputy leader of the opposition Union of Democratic Forces. He said that of the 845 deals made by the Agency since its setting up in 1992 only 80 were concluded by Zhan Videnov's Socialist cabinet which took office in January. There has not been a major deal or a large foreign investment so far this year according to Bozhkov.
The Privatization Agency has been criticized mostly for the slow pace of privatization. Executive Director Vesselin Blagoev counters the attacks by saying that some units had to be reappraised so as not to sell off profitable enterprises at token prices. According to recent press reports, Bulgaria's largest textile factory Brilyant in Plovdiv was sold to the management for 120 million leva, while its actual price is put at over 200 million leva. The Agency's executive director signed a contract for the sale of a 78 per cent stake in the factory on July 24. Brilyant is the largest manufacturer of textiles and clothing, the bulk of which is exported to Canada, Germany and Switzerland. The Industry Ministry objected to the low price and last night the Chairman of the Supervisory Board demanded a thorough check of all papers related to the deal.
At a July 28-29 national conference the Socialist Party recommended that the cabinet speed up socially oriented privatization and mass privatization. The more radical left-wingers believes that only large private entrepreneurs benefit from privatization now.
The Privatization Agency will use a different method in negotiations with potential buyers, Executive Director Vesselin Blagoev said. The parameters of all offers for each enterprise will be entered in a separate file and will be readily available for comparison to rule out partiality in decision-making.