News from Bulgaria / Mar 28, 96

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

Bulgarian Telegraph Agency Directory

EMBASSY OF BULGARIA - WASHINGTON D.C.

BTA - BULGARIAN TELEGRAPH AGENCY

28 March, 1996

CONTENTS

[01] PRESIDENT ZHELEV ENDS VISIT TO BRUSSELS

Bulgaria is pursuing a wise policy of balance and stability in the Balkans, said Dr. Zhelev. However, the international embargo against Yugoslavia brought serious losses to the Bulgarian economy and the country was isolated from Europe as a result of communication obstacles. It will be hard to manage by ourselves with the grave problems that have piled up, the Bulgarian President said calling upon MEPs to help Bulgaria protect its national interests. A mechanism should be developed to facilitate the economic reconstruction of the Balkans and the launch of big infrastructure projects that will help the region overcome its transport isolation within Europe, with Bulgaria playing a major part in this process, said the President.

The Bulgarian President was asked 15 questions by MEPs participating in the meeting. Answering one of them, he said no journalist is arrested by the authorities in Bulgaria but there is censorship at the national TV and radio, and the parliamentary Committee on Radio, Television and BTA is delaying the passage of a law on electronic media, eager to keep them under its control.

Dwelling on the condition of the Turkish minority in Bulgaria, President Zhelev said it is represented in Parliament and has many of its members appointed as mayors. "If thing look differently from aside, it is a result of the efforts of extreme nationalists, who do not enjoy broad influence in Bulgaria," said the President.

Commenting on Bulgaria's foreign policy, Dr. Zhelev said it did not make any gross mistakes over the past years. Said Dr. Zhelev, "this country has stated that it will not allow Russia to impose its views on Bulgaria's entry into NATO."

Following the talks at the European Parliament Dr. Zhelev visited the Brussels city hall where he met the Brussels Mayor.

Later the Bulgarian President attended an information session at the Brussels World Trade Centre, organized by the Belgian Foreign Trade Bureau. Meeting with representatives of Belgian business circles, Dr. Zhelev dwelled on Bulgaria's transition to democracy, the investment opportunities in Bulgaria for Belgian entrepreneurs, and Belgium as a traditional investor in Bulgaria and importer of Bulgarian-made goods.

President Zhelev left Brussels several hours ahead of schedule because of a strike of air-traffic controllers at the Brussels International Airport.

[02] DELEGATION OF RUSSIAN DUMA ENDS VISIT TO BULGARIA

During its three-day visit the delegation met Bulgarian National Assembly Chairman Blagovest Sendov, Prime Minister Zhan Videnov, Foreign Minister Georgi Pirinski, MPs of the parliamentary committees on foreign policy and national security, and Bulgarian Patriarch Maksim.

[03] BULGARIA'S EXPECTATIONS OF THE EU IGC IN TORINO

Bulgaria expects the IGC to adopt a decision favouring the enlargement of the Union, Emil Vulev, chief of the "European Integration" Department of the Bulgarian Foreign Ministry, told the press today. Mr Vulev will be member of the Bulgarian delegation to Torino.

Bulgaria expects negotiations on the accession of the associated countries to start simultaneously with all aspiring members shortly after the closing of the IGC and without awaiting the ratification of its decisions by the parliaments of the participating states. "Bulgaria is against the division of the applicants into groups," the Bulgarian diplomat said.

[04] BULGARIAN AMBASSADOR TO SWITZERLAND TO BE RECALLED

Sofia, March 27 (BTA) - "With her conduct and actions Bulgarian Ambassador to Switzerland, Ms Kircheva, has repeatedly violated instructions and has therefore long exhausted her credit of confidence as representative of the Republic of Bulgaria in the Swiss Confederation," Foreign Ministry spokesman Pantelei Karasimeonov told the press today.

Already six months ago the Government proposed that Ambassador Kircheva be recalled but then the President did not take the necessary steps. Following a second Cabinet decision this February, the President's office agreed to start a procedure for recalling Elena Kircheva who has headed the Bulgarian Embassy in Berne since August 1991. In early March Ms Kircheva was instructed to apply for an approval for the appointment of a new Bulgarian ambassador.

"In the weeks that followed it became obvious that Ms Kircheva has failed to act on these instructions. Regardless of the repeated inquiries, Ms Kircheva has not informed the Foreign Ministry whether she has submitted the request of the Bulgarian Government at the Swiss Federal Department of Foreign Affairs," the Bulgarian Foreign Ministry spokesman said.

The Bulgarian Foreign Ministry is alarmed by the fact that articles in the Swiss press about the Bulgarian ambassador and her husband, reproduced by the Bulgarian press, associate this country with facts and phenomena on which its stand is well-known, repeatedly confirmed and historically proven and for which Bulgaria has received the recognition of the international community.

According to these articles, Ms Kircheva's husband dentist Peter Hadjidimitrov, a Bulgarian emigrant to Switzerland since more than 20 years whom she married late last year, is among those denying the holocaust and has documented his closeness to anti-Semitic and revisionist circles. These publications show that Kircheva has shown understanding to right-wing extremists and has taken part in initiatives organized by her husband. These articles caused a stir among the Swiss and Bulgarian public. "If these allegations correspond to the truth, we cannot remain indifferent to what kind of people are representing this country abroad," says a letter of the Shalom Organization of Jews in Bulgaria, addressed to Foreign Minister Georgi Pirinski.

The Bulgarian Foreign Ministry spokesman also said that the Foreign Ministry cannot but consider Ms Kircheva's stands and statements on this issue "as the stands and opinions of a private person owing an explanation to the public". The Bulgarian Foreign Ministry shares the concern of the Bulgarians living in Switzerland and of representatives of the Swiss public, of those working to promote Bulgarian-Swiss relations and expresses its conviction that these relations will continue to develop in a spirit of friendship and cooperation, the Bulgarian Foreign Ministry spokesman said.

Ms Kircheva herself claims that the purpose of these allegations is to "provoke a scandal to terminate her mandate". In an interview for the "Demokratsiya" daily yesterday she says that with its allegations a Swiss daily has become an "instrument for spreading untruths and malicious speculations unsupported by a single fact, related to my mission as an ambassador". Ms Kircheva said that her husband was a political emigrant to Switzerland who fled from the repressions of the communist regime. "The campaign against him is aimed at discrediting me as an ambassador," Ms Kircheva says in her interview published in yesterday's issue of "Demokratsiya".

[05] PARLIAMENT PASSED AMENDMENTS TO INCOME TAX ACT

Sofia, March 27 (BTA) - Today Parliament passed a Government-proposed bill amending the Aggregate Income Act under which sole traders and privately practicing physicians and dentists are chargeable with a 20 percent income tax on a quarterly basis. This advance payment of annual income will have to be made by the 15th of the month following the respective quarter. Interest is charged on overdue payments. Certain categories of persons working under contracts of service will also make such payments towards their annual income tax.

A scheme providing for the advance payment of annual income tax was introduced for free lancers and some other categories by Reneta Indjova's caretaker cabinet in late 1994 and repealed by Zhan Videnov's Government in the spring of 1995.

However, as early as the end of 1995, the executive branch announced its plans to ensure the implementation of the 1996 national budget by tightening taxation and financial discipline. For this it is relied on a package of 13 tax bills which Parliament has been passing one after the other thanks to the parliamentary majority of the Bulfgarian Socialist Party and its coalition. With a view to fuller budget implementation, the new legislation vests more powers in the tax authorities and imposes higher taxes both on individuals and businesses.

Under the amendments the monthly tax threshold for individual wage incomes is raised from 3,000 to 3,500 leva, while the annual tax- exempt amount is set at 42,000 leva. Taxation for free lancers who are allowed 30 percent imputed costs starts at an annual amount of 60,000 leva (US dollar 1 exchanges for 78.577 leva). The 2 percent mandatory pension contributions made by individuals working under contracts of employment are deductable from taxable incomes. According to the new tax table, larger incomes bear a much greater amount of tax than before.

Parliament approved the rate bands for taxes collected by the municipal authorities and imposed on certain businesses which is difficult to tax by applying the usual procedure. Businesses that involve handmade knitwear, pottery, i.e. arts and crafts which are a centuries-old tradition in Bulgaria, are exempt to encourage their development. Foreign natural persons - lecturers and consultants, as well as individuals receiving copyright and licence royalties or perform technical services are liable to a tax of 32 percent under a pay- as-you-earn system.

The new legislation abolishes almost all tax reliefs small and sole traders enjoyed before. The tax scheme is applicable to the incomes of privately practicing physicians and dentists. The tax-exempt amount of travel, accomodation and per diem expenses is reduced and brought down to the level of the exempt amount for state employees. The tax- exempt amount of entertainment allowances before VAT is reduced from 3 to 1 percent of net profits.

Sole traders' investments are also liable to taxation. Income tax is payable on assets such as expenditure on the construction of buildings, machinery, equipment , automobiles and repairs. Only depreciation allowances are deductible from the amount liable to income taxation. Government securities also become taxable.

According to opposition MPs, the new legislation will severely impede small businesses. "Small traders will have to close down and go out on the labour market," Ventseslav Dimitrov, MP of the opposition Popular Union, stated.

[06] PARLIAMENT DEBATE ON USE OF WATER OF RIVER MESTA

At the same time the ministers signed an agreement on opening three new checkpoints between Bulgaria and Greece. It is the next scheduled for ratification by Parliament.

The River Mesta agreement was moved for ratification by the parliamentary foreign policy, European integration and environmental protection committees. Opposition MPs called the ratification "betrayal of the national interests," "profiteering," "an illustration of the ruling party's hypocritical policy," and "paying old Bulgarian Socialist Party debts to PASOK."

Opposition MPs recalled that according to a 1990 Parliament resolution, Bulgaria should use no less than 75% of Mesta water. They questioned the applicability of the hydrological data on which the agreement was based.

The parties to the agreement are not placed on an equal footing, the floor leader of the largest opposition Union of Democratic Forces (UDF) Yordan Sokolov said. The term of the document is inadmissibly long, said another UDF MP.

Over 80%, and even up to 90%, of the water flows into Greece anyway, said MPs of the ruling coalition, led by the Bulgarian Socialist Party. Bulgaria is not in a position to control the flow of the river, lacking the hydrological equipment, they said. The protocol on Bulgaria's association with the European Union calls for regulation of the question of transfrontier rivers, and the ratification is essential in this respect, the Chairman of the environmental committee Boris Kolev said. Despite extending its working hours, Parliament failed to hold a second-reading vote, closing the meeting for lack of a quorum.

[07] GERMAN-FRENCH CONSORTIUM OFFERS TO OVERHAUL N-PLANT

The project of the consortium will be completed within three years. It will be realized in three stages during the regular stopping of the units for re-fuelling, Mr Buerkle told the news conference. Some USD 259 million will be needed for the realization of the project. According to the Siemens-Framatome consortium, 80% of the engineering work may be performed by Bulgarian experts. A possible suitable partner is the Bulgarian Energoproekt institute. According to French and German experts, the realization of the project would require close cooperation with Russian engineering companies.

Adaptation to European safety requirements for high-voltage electrical systems, enhanced fire safety of the units and improvement of the reactors' control system in general were cited as merits of the project. The implementation of the project would also increase the efficiency of the Kozlodoui N-plant as a whole and lengthen the life of the units by 20 more years.

Euroatom, a financial structure with the European Union, will provide half of the funds needed for the implementation of the project. The loan will include risk insurance and the interest rate would be most acceptable, the experts said. The consortium will seek the assistance of German, French and Bulgarian banks in providing the remaining sum.

The upgrading of the two units will not affect electricity prices because reconstruction expenditures will be written off as depreciation allowances, it became known at the news conference. At the same time the experts were unanimous that electricity prices do not cover the electricity generation costs of the N-plant which is the main reason for proposing a markup in prices. Siemens and Framatome are leading companies in the field of reactor equipment safety and upgrading. Since the 1970s they have upgraded ten reactors across the world. Siemens has been chosen to take part in upgrading the Kalinin 3 N- plant in Russia which is of the same type as Generating Units 5 and 6 of the Kozlodoui N-plant. The consortium has also undertaken to overhaul the Mohovece and Bohunice N-plants in Slovenia as well as nuclear reactors in Finland.

[08] INFLATION SURGE EXPECTRD UNLESS AGREEMENT WITH IMF IS SIGNED

The press comments today on the prospects for the Bulgarian economy in case the Government does not sign an agreement with the International Monetary Fund (IMF).

"The Central Bank of Bulgaria will have to pledge gold as security unless we sign agreement with IMF," the economic daily "Pari" says. The paper quotes Central Bank's Governor Lyubomir Filipov as saying that the state banks are some 75,000 million leva short and the private banks 25,000 million leva short to meet the capital adequacy requirements.

"Continent" says that the IMF preconditioned the signing of an agreement with a requirement that Bulgaria stops the outflow of funds from non-efficient banks and enterprises.

According to "Pari", unless this condition is met and the agreement is signed, the central bank will be forced to pledge 4.5 tonnes of gold from its strategic reserves abroad as security for the country's foreign debts.

"Standart News" quotes a report of the governmental Agency for Economic Coordination and Development (AECD) which says that unless Bulgaria signs agreement with the IMF, it will face inflation surge, depreciation of deposits and the end of investments.

According to the same report, quoted by "Standart News", if Bulgaria agrees with IMF on a 340 million US dollars loan, the average 1998 annual inflation in the country will be 15 per cent and the growth of the Gross Domestic Product will reach 3 per cent this year and 4.5 per cent in two years' time.

AECD experts said that if market demand increases, the country's economic growth may be expected to reach and surpass the world average values. "Standart News" runs figures, cited by the Agency, according to which industrial output in Bulgaria rose 5 per cent from the previous year.

"24 Chassa" says that at a meeting of central bank governors with cabinet members yesterday it was decided to set up a committee to coordinate the efforts for stabilizing the financial sector. The idea was promoted by the IMF some time ago. The committee should be set up before renewing the negotiations with the international financial institutions and will include representatives of the BNB, the Cabinet, the National Assembly as well as IMF and World Bank representatives, "24 Chassa". The daily also says that a similar structure has already been set up in Lithuania.

[09] PRESLAV WINERY OUTPUT ENJOYS INTERNATIONAL FAME

In 1995 Vinex filled 22 million bottles, of which it exported 13 million to CIS, 3.5 million to the U.K. and Benelux, 1 million to Poland, 500,000 to the Czech Republic and sold 4 million bottles on the home market.

At this year's Vinaria'96 exhibition in February the enterprise received 12 "Wine of the Year" awards and its products ranked among the first three award-winners. The plant makes Shardonnay, Mouskat, Cabernet, Merlot and Riesling wines.

The winery lost its markets in the US over the past few years but will stake on entry into the markets of Germany and the Scandinavian states as well as on retaining its stable positions on the markets in Great Britain and Russia.