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News from Bulgaria / May 15, 96
EMBASSY OF BULGARIA - WASHINGTON D.C.
BTA - BULGARIAN TELEGRAPH AGENCY
15 May, 1996
CONTENTS
[01] PRESIDENT ZHELEV MEETS IMF MISSION LEADER MCGUIRK
[02] FOREX MARKET CALMS
[03] PARLIAMENT AMENDS PRIVATIZATION LAW, SCHEDULE
[04] REFUGEES IN BULGARIA
[05] ON IMPROVING THE LOT OF BULGARIANS IN YUGOSLAVIA
[06] PARLIAMENT PASSES AMENDMENTS TO BANKING ACT
[07] TRADE UNIONS, GOVERNMENT TO TALK ABOUT STRUCTURAL REFORM
[08] OPPOSITION DECIDES AGAINST NO-CONFIDENCE VOTE
[09] PM VIDENOV TO VISIT CHINA AND VIETNAM
[01] PRESIDENT ZHELEV MEETS IMF MISSION LEADER MCGUIRK
Sofia, May 14 (BTA) - The future of the structural reform in
Bulgaria and the problems in banking topped the agenda of a meeting
between Bulgarian President Zhelyu Zhelev and International
Monetary Fund Mission Leader for Bulgaria Anne McGuirk. Ms
McGuirk stressed the importance of the launch of the structural reform
and the passage of a law on bank failures that will get the reform in
banking going. She described the financial and economic situation in
the country as particularly difficult, said Presidential economic adviser
Kiril Velev. The shrinking foreign exchange reserves shrinks the
confidence of the public and foreign partners, Ms McGuirk is further
quoted as saying. President Zhelev promised to soon issue a decree on
the promulgation of the law on commercial bank bankruptcies.
Answering a question of the BTA, the presidential economic adviser
said the negotiation between Bulgaria and the IMF on the standby
agreement were not discussed at the meeting today. Ms McGuirk
would not comments on her talks with the President.
[02] FOREX MARKET CALMS
The papers write that at present the forex market is quiet,
following last week's record-high rally of the US dollar, which cleared
the 200 leva mark. Today's quotations are between 112 and 115 leva
for one US dollar. The selling rate will go down towards the buying
one unless there are many customers on the market, "24 Chassa"
writes. According to this paper's forecast, the market will remain quiet
throughout the day. The lev/dollar exchange rate will level off at some
106 leva for a US dollar. The official exchange rate of the National
Bank of Bulgaria for today is 106.480 leva/US dollar 1.
The surge of the US dollar exploded the country's housing
market, "Douma" writes referring to dealers of immovable property.
Companies which trade in leva stopped selling and other raised their
prices up to 300-400 US dollars for one sq.m. Yesterday
representatives of construction companies complained that the state
racketeers private contractors, "24 Chassa" writes. They have to
provide the supply systems of the new buildings themselves and this
additionally raises the cost of the projects. "The state twists our arms
and we do the same to our customers," Kiril Mladenov, chief of the
KTM 90 construction company, is quoted as saying. Expenditures on
sewerage facilities, telephones, central heating and electricity supply
equal the price of seven flats, constructors say.
The annual fees for private schools in Sofia are between 600 and
2,500 US dollars, "Standart News" writes. The amounts increased with
an average of 200 US dollars. More than half of the private schools are
with intensive foreign language teaching. The rest are specialized in
the learning of the basis of law and management. The annual fees for
private kindergartens are 500 to 2,000 US dollars.
[03] PARLIAMENT AMENDS PRIVATIZATION LAW, SCHEDULE
Parliament today passed at second reading cabinet-sponsored
amendments to the law on privatization of state-owned and municipal
companies. The MPs adopted a privatization schedule for 1996
envisaging the launch of 414 privatization procedures and signing of
467 privatization deals, and approved the government's report on the
1995 performance in the field of privatization. Denationalization this
year is expected to bring nearly 21 million leva in proceeds. This was
an extraordinary parliament sitting held at the request of Prime
Minister Zhan Videnov who urged last week for the speedy passage of
laws that are essential for the structural reform. The government
believes that the amendments will facilitate and step up vouchers and
cash privatization. The amendments were also called for by difficulties
that emerged from the implementation of the law in its original form,
as it was passed in April 1992. Furthermore, they make the law
consistent with the newly passed law on concessions. The amendments
concern mostly employee and management buy-outs, and the
preferences they enjoy in the purchase of shares. The amendment
provides that employees can pay in installments for the shares they
have acquired in their company only when at least half of the staff is
participating in the process and the balance sheet value of the
company is 150 million leva at the most. For companies worth over
150 million leva employees shall pay in installments for the shares
they have acquired only after the government has issued a permit to
that effect. This was one of the most controversial points during the
debates on the amendment. Alexander Bozhkov MP of the opposition
Union of Democratic Forces said this provision will place the staff of
big enterprises into a position in which they will have to beg from the
government. Under the amended law, the creditors of a company
going private will have to inform the prospective buyers of their
receivables from this company no later than six months after the
decision for launching a privatization procedure is gazetted. Those
failing to so do lose the right to claim their receivables. The report on
the implementation of the 1995 privatization schedule shows that
decisions were taken for the denationalization of 551 units 192
companies and 395 separate parts. The number of units that have
actually gone private still compares unfavourably to the number of
privatization decisions. Privatization deals in 1995 totalled 309, a
mere 53% of the target figure. The above includes 104 whole
enterprises (34%) and 205 separate parts (66%). The report identifies
a rise of employee and management buy-outs. The majority of
privatization deals in 1995 were signed with Bulgarian investors (305
making up 98.7%). There were only four deals with foreign investors
(1.3). Foreign investment under 1995 deals amounted to 293,700,000
leva (7% of 1995 total investment). The opposition criticized the
failure of the competent authorities to meet the 1995 privatization
targets, the low amount of foreign investment and the suspension of a
number of privatization procedures. Cash privatization is practically
blocked, privatization in Bulgaria has ground to a halt, said Bozhkov,
who is deputy chairman of the parliamentary economic committee.
The opposition MPs further said the 1996 privatization programme is
unfeasible. Bozhkov said the government has failed to say what its
priority is: cash or voucher privatization.
[04] REFUGEES IN BULGARIA
"My three-day visit has been very useful and open," Hashim
Utkan, Deputy Director of Regional Bureau Europe of the United
Nations High Commissioner for Refugees, today said in an interview
for "Douma". Utkan had meetings with officials from President's
Office, the Government and Parliament. "My impression of these
meetings is encouraging, as I understand that despite economic
difficulties of the transition, many people are thinking of refugees.
Compared to other countries I've been to, the emphasis here is on the
real issues, and we were not told you do not have the time, or cannot
afford the luxury of dealing with marginal problems," says Utkan,
whose visit was in connection with a law on refugees under
preparation. In April 1992 Parliament ratified the 1951 Geneva
Convention and the 1967 New York protocol on the status of refugees,
which took effect in Bulgaria in August 1993. A Sofia office of the UN
High Commissioner for Refugees opened in early 1992. The end of
that year saw the establishment of a governmental National Bureau for
Territorial Asylum and Refugees, which has four facilities to
accommodate refugees. Utkan was impressed with the openness with
which refugee problems were treated in this country, and the fact
political forces agreed on refugee issues. No political force is seeking
to reap political benefits, he said. The guest informed that all officials
he talked with expressed concern about the financial aspects of refugee
issues. Utkan said fears that more refugees will flee to Central and
Eastern Europe, with Western Europe becoming more restrictive,
looked unjustified. "The total number of refugees who asked for
asylum in Bulgaria is 1,300, one-third of whom are Afghanistanis
willing but unable to return home. So we cannot speak of a big influx,"
the official believes.
[05] ON IMPROVING THE LOT OF BULGARIANS IN YUGOSLAVIA
Belgrade, May 14 (BTA correspondent L. Mitakev) - Bulgarian
Education, Science and Technology Minister Ilcho Dimitrov, who is
paying a visit here, today held talks with Yugoslav Prime Minister
Radoje Kontic. "I specified our expectations about equal education
rights for Bulgarians, as stated in the Yugoslav Constitution and
enjoyed by other minority groups," Dimitrov told BTA after the
meeting. "I emphasized the Bulgarian Government's idea that the
improvement of the situation of Bulgarians is one factor for improving
the general climate of relations between the two countries," Dimitrov
said, stressing the constructive atmosphere of the meeting. Prime
Minister Kontic admitted certain problems in exercising
constitutionally-guaranteed rights, which he linked to the country's
general economic condition. He recommended that Bulgarians' rights
be addressed on the ministerial level. Later today, Dimitrov met with
representatives of the Bulgarian community in Bosilegrad. He
familiarized them with the intergovernmental programme for
cooperation in education and science. For the first time, the
programme regulates issues such as providing textbooks and teaching
aids from Bulgaria, training courses for Bulgarian language teachers,
admission to Bulgarian colleges, radio programmes in Bulgarian,
direct cooperation with Bulgarian cultural and educational institutions.
etc. Dimitrov also said he felt hopeful about the future of the Bulgarian
minority after his talks.
[06] PARLIAMENT PASSES AMENDMENTS TO BANKING ACT
At an extraordinary sitting today Parliament passed government-
sponsored amendments to the Banks and Lending Act, regulating the
failure of commercial banks. Prime Minister Zhan Videnov said last
Friday this law is vital for the launch of the structural reform. The
Union of Democratic Forces, which is this country's major opposition
force, refused to participate in the debates. The amendments to the
law, due to take effect on the day of their promulgation, provide for
forcible measures that the central bank can take whenever a
commercial bank is faced with insolvency or the rules and procedures
for declaring a bank bankrupt, are being violated. The central bank is
the only institution authorized to ask the court to launch a bankruptcy
procedure. A new chapter in the law gives a definition of "danger of
insolvency". Danger of insolvency exists whenever the capital
adequacy of a commercial bank is under the accepted minimum or the
bank is likely to suspend payment of its liabilities because of the
condition of its assets. Bankruptcy procedures are launched when the
commercial bank is no longer solvent. The amended law further
regulates the powers of trustees in bankruptcy appointed by the central
bank in commercial banks facing insolvency. The banking sector in
Bulgaria was plunged in a grave crisis by the sizable amount of bad
loans. Many banks - state and commercial ones alike - have liquidity
problems and have lost the confidence of the public. The rehabilitation
of the banking sector is one of the conditions which Bulgaria should
meet if it is to get financing from the international financial
institutions. It is also one of the priorities in the government's
structural reform plans.
[07] TRADE UNIONS, GOVERNMENT TO TALK ABOUT STRUCTURAL REFORM
The Confederation of Independent Trade Unions (CITUB, one of
the two most influential trade union amalgamations in the nation) does
not accept the Government's approach in planned closures or
rehabilitation of money-losing state-run companies, CITUB leader
Krustyu Petkov said today, meeting with Deputy Prime Minister
Doncho Konakchiev, the CITUB Press Office reported. The CITUB is
ready to negotiate with the Government on impending bankruptcies
and the impact of the forex and financial crisis on the nation. The
amalgamation, however, will not negotiate with the present team,
which plunged industry and the financial sector into a deep crisis, the
Press Office said. At a meeting of the National Council for Tripartite
Cooperation (NCTC, of employers, trade unions and the Government)
tomorrow, the CITUB will submit a memorandum on the issue, and
announce its terms for negotiation about the list of companies subject
to restructuring. A plenum of the ruling Bulgarian Socialist Party
(BSP) last Sunday decided to close down about 60 companies, giving
Prime Minister Zhan Videnov the political support to urgently launch
structural reforms. After meeting with Videnov, Konstantin Trenchev,
leader of the other major amalgamation, the Podkrepa Labour
Confederation, said the Prime Minister assured that the list will be
ready for tomorrow's NCTC meeting. The NCTC's third union
member, the Union of Free Trade Unions in Bulgaria, has not re-
registered, after its biggest member, the General Amalgamation of
Branch Trade Unions, left the organization last year. The CITUB will
hand the Government a draft income protection package, the Press
Office said. Tomorrow the amalgamation begins consultations in the
companies concerned. At tomorrow's meeting, Podkrepa will insist
firmly and categorically that the staff to be laid off be compensated
under special programmes, e.g. with IMF support, Trenchev told a
news briefing today. At the briefing Trenchev and other Podkrepa
officials sharply criticized a memo by Deputy Prime Minister
Konakchiev and Labour and Social Affairs Minister Mincho Koralski,
of which he learnt at his meeting with the Prime Minister. The memo
addresses ways to cushion the social impact of reforms. The proposed
alternative employment measures provide practically no security, says
senior Podkrepa official Oleg Choulev. The Ministry of Labour and
Social Affairs and the Forestry Committee today signed a programme
to open 3,200 five-month jobs in forestry. The Videnov Government
should clearly state its intentions to 29,000 people to be made
redundant, senior officials of the two big amalgamations, which signed
a joint action agreement a year ago, urged at news briefings yesterday
and today. Prime Minister Videnov is convinced that if an agreement
is reached with the IMF, 25,000 laid-off employees will receive
compensations, Trenchev told the media today. Podkrepa calls for
employee involvement in liquidation and rehabilitation, respect for
collective contracts of employment, care for company assets and for
preventing present managers from taking charge of liquidation,
Trenchev said. Trenchev also said he familiarized the Prime Minister
with evidence of corruption in "quite a few spheres" and of torpedoing
negotiations conducted by the Privatization Agency and the Centre for
Mass Privatization. There is still a hope that things will take the right
turn; otherwise there will be a scandal- "the documents are in the
folder," the trade union leader said. Zhan Videnov admitted noone
outside the BSP had been in the Government's way since the start of
last year, the Podkrepa leader said. The Prime Minister agreed with
Trenchev's view the structural reform could have been launched a year
ago, the official said. The participants in the meeting shared "the
understanding that the complexity and length of the reform call for a
continuous constructive dialogue," the Government Press Office said.
Many CITUB and Podkrepa organizations nationwide have staged
joint protests against the planned layoffs, trade unionists told the press.
Separate federations have sent protest addresses to state institutions.
Local activists told the media they had no information about the
economic condition of their companies. The last few days saw protest
rallies in Sofia and other cities. Working people have no idea of their
future in case they are laid off, trade unionists said.
[08] OPPOSITION DECIDES AGAINST NO-CONFIDENCE VOTE
The Union of Democratic Forces (UDF) will not move a no-
confidence vote in the Cabinet but will work for provoking early
parliamentary elections, it became known today after the session of the
top leadership of Bulgaria's largest opposition force. The session
discussed whether to move a no-confidence vote. Opinions were
divided and the issue was not put to the vote, a participant in the
session said. This evening the UDF came out with a declaration on
National Television stating that it would step up its actions to topple
the Cabinet by early parliamentary elections. The UDF accused the
Socialist Cabinet headed by Zhan Videnov, which has been ruling this
country for 17 months with the support of the parliamentary majority,
of the grave crisis in this country threatening the very survival of the
people, the disastrous state of production, the alarming depreciation of
the national currency and the dwindling foreign exchange reserve.
Early parliamentary elections are the only way to save Bulgaria, the
UDF says in its declaration. The UDF is planning to hold political
consultations with opposition parties, coalitions and the trade unions
seeking their assistance in achieving this goal. The UDF will insist on
setting up commissions of inquiry to investigate the grain crisis, non-
purchased agricultural products, the exhausted foreign exchange
reserve, etc. The UDF will also demand that the Prime Minister set
forth in Parliament the Cabinet's intentions for liquidating loss makers
and for updating the national budget. The Popular Union (the
parliamentary coalition of the Democratic Party /DP/ and the
Bulgarian Agrarian National Union /BANU/) is also against the
moving of a no-confidence vote now, DP deputy leader Evgeni
Milchev said at a news conference today. He said such a step would be
rash and would lead to nothing. "The idea launched by some circles in
Parliament for a national salvation cabinet is totally unacceptable both
to us and to the other representatives of the opposition," said BANU
leader Anastasia Moser. Ms Moser explained there were no points of
contact between the Policy of the Popular Union and the Bulgarian
Socialist Party.
[09] PM VIDENOV TO VISIT CHINA AND VIETNAM
Prime Minister Zhan Videnov will pay and official visit to China
from May 20 through 23 at the invitation of Li Peng, Premier of the
State Council of the People's Republic of China, the press office of the
Council of Ministers said. From May 24 through 26 Videnov will pay
an official visit to Vietnam at the invitation of Prime Minister Gen Vo
Van Kiet.
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