News from bulgaria / Dec 13, 95

From: bulgaria@access1.digex.net (Embassy of Bulgaria)

Bulgarian Telegraph Agency Directory

EMBASSY OF BULGARIA - WASHINGTON D.C.

BTA - BULGARIAN TELEGRAPH AGENCY

BULLETIN OF NEWS FROM BULGARIA

CONTENTS

[01] PRESIDENT ZHELYU ZHELEV MEETS WORLD BANK RESIDENT

Sofia, December 12 (BTA) - At a meeting today, President Zhelyu Zhelev and the World Bank Resident Representative in Bulgaria Alberto Musalem discussed relations between Bulgaria and the World Bank.

Musalem said after the meeting he was not fully familiar with the Government's draft budget for 1996, yet the draft looked acceptable for the World Bank. What the bank is still waiting to see are amendments and structural elements of the budget, the official said.

The issue of the signing of a new standby arrangement was not raised, but Mr Musalem's critical remarks indicated this was not feasible at this point, the President's economic adviser Boyan Slavenkov said after the meeting. According to him, the reason is the Government's failure to meet commitments in the fields of structural reform and the strengthening of financial discipline in industry and banking. Bulgaria's obligations are specific and clear, and unless they are met, there will be a realisitic danger of this country's isolation from international financial markets, Slavenkov said.

Musalem's critical remarks concerned the lack of financial discipline, breaches of law, and the delay of privatization and final liberalization of electricity prices in Bulgaria. The main problem is that without serious restructuring, macroeconomic achievements will prove unstable and frail, Slavenkov believes. He expressed a fear that a failure to agree with the World Bank on the Financial and Enterprise Sector Adjustment Loan would make a fourth standby arrangement with the IMF unfeasible.

[02] BULGARIAN FOREIGN MINISTER PIRINSKI IN BRITAIN

Sofia, December 12 (BTA) - In the second day of his official visit to Britain, Bulgarian Foreign Minister Georgi Pirinski met British Secretary of State for Defence Michael Portillo. The sides discussed the results of the London peace conference on former Yugoslavia held several days ago, the possibility for lasting stabilization of the Balkan region and the ways in which Bulgaria can contribute in this process, the Bulgarian National Radio reported.

Pirinski also met the President of the European Bank for Reconstruction and Development (EBRD), Jacques de Larosiere and discussed with him the prospects for and problems of Bulgarian-EBRD cooperation. In the afternoon the Bulgarian Foreign Minister had meetings at the British Parliament.

Addressing the parliamentary British-Bulgarian friendship group, Pirinski dwelled on Bulgaria's aspiration for full European Union membership, the opportunities for eliminating the economic aftermaths of the Yugosanctions through financing of long-term projects and lobbying for excluding Bulgaria from the EU visa blacklist. This evening the Bulgarian Foreign Minister will deliver a lecture on "The European Union and Eastern Europe: Challenges of Expansion" at the Royal Institute of International Affairs.

At 9:00 hours local time Pirinski is expected to give an interview at the CNN business studio in London on the economic policy of the Bulgarian government and Bulgaria's application for EU membership.

The two-day official visit of the Bulgarian Foreign Minister started yesterday. On the first day Pirinski and British Foreign Secretary Malcolm Rifkind signed an agreement on reciprocal investment promotion and protection.

Official talks between the two foreign ministers and their delegations were held after the signing.

The two sides discussed the implementation of the package of measures for consolidating the peace process in Bosnia and Herzegovina against the background of the London Conference. The Bulgarian Foreign Minister set forth this country's initiatives for strengthening stability in Southeastern Europe and the sides made a review of bilateral relations. The talks gave prominence to the EU enlargement in connection with Bulgaria's decision to file an official application for full EU membership and the Intergovernmental Conference of the EU countries.

On behalf of the Bulgarian Government, Foreign Minister Pirinski invited British Prime Minister John Major to visit Bulgaria. An invitation to pay an official visit to Bulgaria was also extended to Foreign Secretary Malcolm Rifkind.

Talks at chiefs of department level were held at the Foreign Office parallel to the talks between the two chief diplomats. These discussed bilateral cooperation, the situation in the Balkans, European integration and general problems of security and political planning. Yesterday afternoon Pirinski visited the Confederation of British Industry where he spoke of "Bulgaria's Economic Policy, Foreign Investment and Business Prospects".

Yesterday morning Pirinski and the delegation headed by him visited Bank of England where they conferred with Vice Governor Howard Davies. Then the Bulgarian delegation visited the British Museum.

[03] FINANCE MINISTER KOSTOV, CENTRAL BANK GOVERNOR VULCHEV

Sofia, December 12 (BTA) - The 1996 draft budget envisages 474,500 million leva public spending, Finance Minister Dimiter Kostov told journalists at a news conference he gave jointly with National Bank of Bulgaria (BNB) Governor Todor Vulchev.

The biggest share of the public spending - 25.8% - will go for payment of interest rates on Bulgaria's external and internal government debt. Close to this figure - 25.4% - is the share of social spending, which apart from the spending on social security include 5,400 million leva social spendings of the municipal budgets.

The budget of the health care system will be up by 35-36% from the 1995 target figure, and of defence up by 50%, said the Finance Minister.

The revenue side of the draft budget is heavily dependent on the measures to be taken in tax-related ligislation.

Finance Minister Kostov further dwelled on the demand introduced at Parliament, for increasing the 1995 budget deficit in a view of completing the swaps of the ZUNK bonds of the Economic Bank and Mineralbank. The parliamentary Economic Committee seems ready to accept an increase of the budget deficit by 9,200 million leva. This is less than the necessary figure but the government will draw on the budget revenues to make up the difference, Kostov said.

BNB Governor Todor Vulchev said the BNB will not utilize the 25,000 million leva central bank revenue target set by the 1995 Budget Act. He said the BNB contributions into the budget are likely to reach slightly over 16,000 million leva. Prof. Vulchev recalled that during the 1995 budget debates BNB experts brought to the fore the shinking effect lower inflation and interest rates have on the BNB proceeds. The 9,800 million leva BNB contributions target set by the 1996 budget bill is also hard to utilize, according to Vulchev. He believes this is equal to stepping back from the anti-inflationary policy, pushing commercial banks to the wall with higher mandatory minimum reserves and lower interest rate on them.

The depreciation of the lev in 1995 was just under 10% with an inflation of 30%, Prof. Vulchev said. The central bank will try to keep the gradual upward trend of the domestic currency leaving inflation going slightly ahead of it. The internal borrowing rose by a mere 14%. The BNB was not persistent with its restrictive approach in the management of the money supply, but next year it will try to avoid its outstripping inflation.

Members of the public hold 23% of foreign exchange savings, according to BNB figures. Private companies have reduced their share in the foreign exchange deposits from 68% in late 1994 down to 44% now.

The base interest rate in 1996 should go down parallel with inflation. The positive interests on deposits were too high this year and next year they will be kept down around the zero level, Todor Vulchev said.

The foreign exchange reserves will go down due to upcoming external debt payments. They include some USD 320 million to the London Club of commercial creditors, 210 million to the Paris Club of official creditors, 100 million on overdue loans of commercial banks, 270 million in payments on short- term loans from the International Monetary Fund, 40 million to the World Bank, 70 million to G-24 and other creditors, all this adding up to a total of USD 1,250 million. The payments due in 1997 amount to USD 1,060 million, Todor Vulchev specified.

[04] BULGARIAN DELEGATION ENDS VISIT TO BELGRADE

Sofia, December 12 (BTA) - An official Bulgarian delegation led by the Deputy Prime Minister and Minister of Trade and Foreign Economic Cooperation Kiril Tsochev ended a visit to Belgrade.

Tsochev today met with Yugoslav Prime Minister Radoe Kontic and Serb Prime Minister Mirko Marianovic, the Bulgarian National Radio correspondent said.

The two-day visit included a meeting of the Bulgarian- Yugoslav joint committee for economic and scientific technological cooperation which Tsochev co-chairs.

The sides exchanged drafts of accords on investment promotion, the avoidance of double taxation, scientific and technological cooperation, and cooperation in agriculture.

They clarified reciprocal debt terms; the final figures are being harmonized, with a view to a settlement next February, when the joint economic cooperation committee will meet in Sofia, the correspondent said.

Tsochev's last meeting today was with the head of the Yugoslav Chamber of Commerce and Industry Mihailo Miloevic. It was attended by the President of the Bulgarian Chamber of Commerce and Industry Bozhidar Bozhinov. The participants stressed the need for liberalization of bilateral trade and for legal regulation of bilateral economic relations. They discussed opportunities for upgrading the present border crossings and the opening of new ones, and for easing transport links.

[05] COURT DIVESTS MEDIA COMMITTEE OF SOME POWERS

Sofia, December 12 (BTA) - The Parliamentary Committee on Radio, Television and BTA cannot give opinions and take decisions on the structure, rules and programming of the three national electronic media on proposals by their managements. This ruling by the Constitutional Court today revoked clauses of an October 13 parliamentary decision amending the provisional statutes of the media. Two justices voted with a dissenting opinion.

These are the same powers of the Parliamentary Committee which were declared anti-constitutional by the Court in September, said Justice Tsanko Hadjistoichev, rapporteur on the case.

The case was instituted by the Prosecutor General who said clauses of the parliamentary decision replicated regulations already repealed by the Constitutional Court because they allowed the Parliamentary Committee to control the national media.

The Court today declared unconstitutional a clause of the parliamentary decision allowing Parliament to exercise its powers through the Media Committee until the respective laws are passed. The Constitutional Court established that this was a way of delegating Parliament's powers to the Committee, which "Parliament has no right to do", said Justice Hadjistoichev.

The Constitutional Court turned down a claim by the Prosecutor General to declare unconstitutional "a refusal to allocate airtime to the judiciary" contained in Parliament's decision. "The Constitution has not been violated because it does not provide for the allocation of airtime to the judiciary," Justice Hadjistoichev said, stressing that the Court believed the judiciary should be entitled to airtime. "The matter should be regulated by a law on the media," he said.

[06] PARLIAMENT VOTES TO RAISE BUDGET DEFICIT

Sofia, December 12 (BTA) - At an extraordinary sitting today Parliament voted on first reading to increase the 1995 budget deficit. The amendment to that effect passed 115-5 (73 abstentions). The amount of the increase will be specified on second reading.

According to Finance Minister Dimiter Kostov, the increase will not boost inflation. According to him, the projected rise in non-bank financing of the deficit will be sufficient to offset possible inflationary pressures resulting from the step.

The Government, which sponsored the amendment, said the step was prompted by three factors: a rescue package for the Economic and Mineralbank in mid-year; the high interest rates in the first half of 1995, and the use of government securities to finance the budget deficit in a bearish market.

For the first time in years it is proposed to raise the deficit without citing specific figures, the leader of the opposition Union of Democratic Forces and former finance minister Ivan Kostov said. He described the Government demand as "hand wringing", saying the Cabinet launched the rescue operation bypassing Parliament. He emphasized that no funds had been budgeted for it. Nonetheless, the Government went ahead and issued high- interest securities to repurchase low-interest bad debt bonds. According to the Government itself, that raised spending by 9,200 million leva. According to the opposition, the latter amount is significantly larger.

A similar view was expressed by Ventsislav Dimitrov of the opposition Popular Union (of Democrats and Agrarians). Both MPs, however, supported the amendment, with the qualification that a figure must be specified before the second reading.

The budget for interest payments on domestic debt has been exceeded by about 13,500 million leva, according to a statement by the parliamentary Budgetary and Finance Committee. Interest payments on the foreign debt will be about 2,000 to 2,500 million leva less than the projections, thanks to a stronger lev. That will partially offset the deficit increase, which the committee estimates at 9,200 million leva.

[07] BUSINESS PRESS

Sofia, December 12 (BTA) - By November 30 the foreign exchange reserves of the National Bank of Bulgaria (BNB, the central bank) amounted to 1,408 million US dollars, "Continent" writes, citing the press office of the BNB. According to banking experts, this sum suffices for the BNB to intervene on the forex market and maintain a smooth increase in the dollar/lev exchange rate.

Famous Russian nuclear equipment producer, Atommach, won the tender for the delivery of four new reactors for petrol and other oil products at Neftochim - Bourgas (this country's largest oil refinery), "Troud" reports. The old reactors at Neftochim are to be replaced by the end of 1996.

Greek businessman Theodoros Vassilakis received the Hertz licence for Bulgaria, "24 Chassa" reports . As of January 1, 1996 he will be entitled to work in Bulgaria under the name of this world rent-a-car leader for the next ten years. This daily recalls that over the past seven years Hertz was represented in Bulgaria by the Balkan Holidays Rent-a-Car state-owned company. Vassilakis already represents Seat and Audi in Bulgaria.

The US Rotschild giant has asked for a ten-year lease of the Varna thermo-electric power station (on the Black Sea), "Standart News" reports, citing reliable sources. The power station has been experiencing severe shortages in Ukrainian coal over the past two years, this daily writes. The power station has six 210 MW generating units. "Standart News" cites unnamed experts as saying that Bulgaria will lose from the lease because it would necessitate either the disconnection of the plant from the national power system or the purchase of electricity from the plant at prices much higher that the present. According to power engineers, it would be more profitable for Bulgaria to invest in the exploitation of coal mines in Russia.

[08] SIMEON II WANTS TO RETURN TO BULGARIA

While not specifying a date for the visit to Bulgaria, Simeon, who lives in Madrid, says next year will mark half a century of the day when the Bulgarian royal family fleed this country.

Simeon says the address of the 101 matched his desire to return to Bulgaria: something he has postponed until now out of fear that it will stand in the way of democratic processes in this country.

"I have always followed with concern and excitement all events connected with Bulgaria," Simeon Coburg-Gotha says in the letter. He believes his iderect presence in the political and public life has grown tangibly over the past six years which indicatates a need for his participation in "a discussion on a way to overcome the apathy dominating the Bulgarian society".

Simeon II further writes in the letter the immediate contact with figures of all spheres of life will help him get a full picture of things in Bulgaria.