News from Bulgaria / Apr 12, 96

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

Bulgarian Telegraph Agency Directory

EMBASSY OF BULGARIA - WASHINGTON D.C.

BTA - BULGARIAN TELEGRAPH AGENCY

12 April, 1996

CONTENTS

[01] WORLD BANK LENDS BULGARIA 26 MILLION US DOLLARS

The project for restructuring the health sector, amounting to 47.1 million US dollars, will support the reform programme of the Government, which participates with 7.8 million US dollars. The rest of the funds are expected to come from the Social Development Fund of the Council of Europe (11 million US dollars) and the European Union's PHARE programme (2.3 million US dollars).

The project of the World Bank is in four sections. The first one is for analyses and improvement of the management in the Health Ministry. The second section, in which the largest sum of 14.6 million US dollars is allocated, envisages improvement of primary health care in 75 municipal health services. The other two sections are for development of a well-organised national system for emergency medical aid, as well as improvement of the quality of blood transfusion and collecting blood and blood products. The World Bank's loan is granted for a period of 20 years and envisages an interest-free period of five years.

[02] BULGARIA HOSTS 5TH ANNUAL MEETING OF E.B.R.D.

Seminars, workshops and country presentations will take place during the meeting. Starting from April 13, the 25 countries of Eastern and Central Europe and the former Soviet republics the EBRD works with will present reports about the investment and business opportunities they could offer. There will be several workshops on current business problems. The meeting and the accompanying events will take place at the National Palace of Culture (NPC) in Sofia, innovated for the EBRD gathering. It is equipped with a new digital telephone exchange, an optic-fibre cable connecting the NPC and the world agencies and with 200 PCs, supplied by the Bulgarian firm ProSoft.

About 4,000 people are expected at the 1996 annual meeting of EBRD: 600 delegates, 2,700 representatives of the international business circles, 400 journalists and 300 EBRD officials. Hosting the meeting will cost 100 million leva; 60 percent of it are budgeted, and 40 percent are to be covered by the NPC. "The minimum cost we will pay for the meeting is due to a new formula, called Business Prosperity '96," NPC President Hristo Droumev said. "For the first time in the history of EBRD there is an opportunity to commercialize its annual meeting and use it for advertisement purposes," he said. It is planned to stage an exhibition of Bulgarian and foreign private and state institutions concerned with investment, banking and the food industry.

"Some EBRD financial projects for Bulgaria are expected to be finalized during the meeting," Deputy Prime Minister and Minister of Economic Development Roumen Gechev told a recent news conference. In his words, the funds floated by the EBRD exceed those provided by the World Bank and the International Monetary Fund taken together.

The EBRD has approved 16 Bulgarian projects worth Ecu 692 million for 1995; Ecu 49 million have already been received. The major projects are for telecommunications, the Maritsa-Iztok II Thermoelectric Power Station, the reconstruction of railways and transit roads and agricultural wholesale markets. Nine percent of the projects, worth Ecu 21.1 million, are to be implemented in the private sector. The EBRD approved a project of Ecu 45 million for the establishment of a post-privatization fund in Bulgaria. In this way fresh investments will be channelled to enterprises earmarked for privatization.

[03] MEETINGS OF COUNCIL OF EUROPE PARLIAMENTARY ASSEMBLY RAPPORTEURS

Bulgarian Parliament is unanimous on the European orientation of this country and there are no differences among the parliamentary groups in this respect, National Assembly Chairman Blagovest Sendov said at his meeting with the CE rapporteurs. Bulgaria's major problems are of economic nature, Sendov stated. The CE rapporteurs noted there is a confrontation between incumbents and opposition in Bulgaria. The two rapporteurs also met with representatives of all parliamentary groups, who made assessments of the political situation in Bulgaria.

Columberg and Setlenger were received by Justice Minister Mladen Chervenyakov. The talks focussed on the reform in the Bulgarian judicial system. The CE rapporteurs asked which conventions Bulgaria projects to ratify and whether the Framework Convention for the Protection of National Minorities is among them. Minister Chervenyakov did not commit himself to a concrete answer, but noted that all civil rights are observed in Bulgaria including these of minorities.

The conditions of work of Bulgarian journalists, the extent of party and financial dependence of the separate media and freedom of speech were on the agenda of the meeting between the CE rapporteurs and journalists. The participants in the meeting discussed the discharges of journalists of the state-owned and private media. The Bulgarian journalists familiarized the CE Parliamentary Assembly rapporteurs with the specific problems they encounter in their work. According to the journalists, larger part of the papers are under the control of several influential financial groups, which replaced the party monopoly after the fall of the communist regime in November 1989. "We are for a state governed by the rule of law, division of powers and respecting of the human rights," Jean Setlenger said. He noted the necessity to stabilize Bulgarian private and state-owned media and not to admit political discharges, which is possible through the adoption of legislation on state employees and the media. Only then democratic changes will be guaranteed and Bulgaria will continue its work in the CE Parliamentary Assembly, the CE rapporteurs stated.

[04] PARLIAMENT ADOPTS DECLARATION ON HOLOCAUST DAY

[05] PARLIAMENT OVERRIDES PRESIDENTIAL VETO

"Some MPs supported the President's view when the parliamentary Budgetary and Finance Committee was considering the vetoed amendments," the Committee said in its final position. "However, most members of the Committee believe they are not convicning and unfounded," it was pointed by the Committee. "The new tax tables actually reduce the burden of taxes and relieves taxpayers," the Committee said in its reasoning. Addressing Parliament, Deputy Finance Minister Bisser Slavkov took the same view.

According to the Committee, the Act Amending the Aggregate Income Tax Act abolishes the provisions that place sole traders in a privileged position, thus making it possible to treat all taxpayers on equal footing. "The reference to subordinate legislation in certain cases is certainly not unconstitutional, besides it is in compliance with the Labour Code," the Committee majority stated. "The amendments do not restrict the business activites of sole traders; there is no need to provide privileged treatment for the buyers of government securities because government securities are now an attractive investment," the Budgetary and Finance Committee said. "The advance payment of aggregate income tax sole traders are required to make will be deducted from the annual tax amount determined on the basis of tax returns filed, therefore it does not violate the principle of annual taxation," the Committee stated in its reasonings. It proposed to the MPs to readopt the Act Amending the Aggregate Income Tax Act.

"It is not true that the privileges, which the amendments abolish, did not stimulate small private business," Mouravei Radev, deputy floor leader of the largest opposition force, the Union of Democratic Forces, said challenging the view expressed by MPs of the Democratic Left and repeated by the Budgetary and Finance Committee in its reasonings. "These were not privilages but a necessary incentive for private economic enterprise. Their abolition is a blow against small private owners who can hardly make both ends meet," Radev shouted from the rostrum. Alexander Djerov, MP of the opposition Popular Union, declared himself to be against any revisions of texts in the taxation legislation that impair the equal treatment of taxpayers and violate the Constitution. "We are not here to keep the Constitutional Court busy," Djerov observed.

"The debate on the President's suspensory veto was as hysteric as the one when the tax law amendments were first adopted," Stefan Stoilov, MP of the ruling Bulgarian Socialist Party, said commenting on the opposition MPs' statements. "The privileges abolished under the new Act were unjustified any way," he said. In Stoilov's opinion, the Constitutional Court is not likely to find anything wrong in the amendments.

[06] DELEGATION OF BUNDESTAG DEFENCE COMMITTEE VISITS

"Our visit will mainly seek to strengthen the good relations between the parliaments of the two states and to discuss issues, related to Bulgaria's possible entry into NATO and military cooperation," Mr Rose said. He said he personally supports Bulgaria in its wish to be removed from the EU visa black list. The German MPs met today with President Zhelyu Zhelev, Defence Minister Dimiter Pavlov and the parliamentary Committee on National Security. Bulgaria's membership in the EU and the Western European Union would become possible only after's its accession to NATO, President Zhelyu Zhelev said at a meeting with the German parliamentarians, said General Stefan Dimitrov, Chief of the President's Military Office.

The meeting between the German delegation and Defence Minister Dimiter Pavlov today focused on cooperation with NATO and Western European Union structures and Bulgaria's participation in Partnership for Peace. Defence Minister Pavlov said that Bulgaria has started enhanced dialogue procedures with NATO structures and recalled that Bulgarian officers are being trained there. Pavlov thanked for the gratuitous aid extended by Germany to the Bulgarian army including automobile equipment, spare parts, communications equipment, aviation engines, etc.

The talks also discussed military cooperation between the two countries and in the Balkans. Defence Minister Pavlov expressed concern over the imbalance between the armed forces of Bulgaria and its neighbours imposed on Bulgaria by the Conventional Forces in Europe Treaty. He stressed that this imbalance has sparked no problems so far.

Germany is for the opening of NATO to new members but Bulgaria's membership is a matter solely of its sovereign decision, Dr Klaus Rose, Chairman of the Defence Committee of the Bundestag said at the meeting with the parliamentary National Security Committee. If Bulgaria decides to become a member of NATO, Germany will support its decision, the German parliamentarians said.

[07] BULGARIA - LEIPZIG FAIR

Minister Paparizov discussed today with the Polish Minister of Foreign Economic Relations Jacek Buhac and with Hungarian Minister of Industry and Trade Imre Dunai an agreement for the establishment of a free trade zone. Negotiations with Poland on the matter are expected start in mid-May and preliminary talks at an expert level will be held with Hungary. Minister Paparizov also met with Romanian Minister of State for Economic Reform and Strategy Mircea Cosea, with Ukraine's Deputy Prime Minister Roman Speck and with the economy ministers of Slovakia and Slovenia. Tomorrow, before the official opening of the Leipzig fair Mr Paparizov will have a meeting with German Minister of Economics Gunter Rexrodt.

[08] ALL BULGARIAN BREWERIES TO GO PRIVATE

The Dutch Heineken holds a majority interest in Bulgaria's largest brewery, Zagorka of the southern town of Stara Zagora. Interbrew of Belgium holds a controlling interest in Bourgasko Pivo of Bourgas (on the Black Sea) and Kamenitsa of Plovdiv, Bulgaria's second biggest city.

Breweries in Pleven (Northern Bulgaria), Varna (on the Black Sea) and Mezdra (Northwestern Bulgaria) are at the negotiating table, waiting for prospective buyers. The remaining six factories are subject to mass privatization. If things go well, the entire brewing industry will be in private hands by the year's end, said Paounkov.

One third of productive capacity has been mothballed, the Union of Brewers said. Bulgaria's 13 breweries made 500 million litres of beer in 1995, 200 million litres down on 1990. The industry's major problems are a shortage of funds, contraction of local demand and high tariffs on Bulgarian beer which block its export to Europe.

Bulgaria makes 50 brands of beer. Its brewing industry is over 100 years old. At the 34th Monde Selection ranking in Brussels in 1995 two Bulgarian beers won gold medals.

Brewers are seeking new markets abroad to offset the drop in domestic consumption. Zagorka is exported to the United States and Britain, and Astika made in Haskovo is available in a restaurant chain in London.

[09] ELECTRICITY AND HEAT POWER MARK UP AN AVERAGE 31 PER CENT

The appreciation will bring the prices of electricity close to its production costs, but coal mining and heat power industry will still be subsidized, Chairman of the Energy Committee Konstantin Rousinov said. According to estimates of the Committee, the energy industry posted 9,542,000,000 leva of losses in 1995. The losses in 1996 are expected to be 13,200 million leva. Another mark-up has been planned for October.

The Government also passed a decree for applying a mechanism to compensate the rise in electricity and central heating prices. According to the adopted scheme for protecting the socially disadvantaged groups of the population, the compensation is increased by 10 per cent and becomes 90 per cent, Labour and Social Welfare Minister Mincho Koralski said. Health and education establishments will also be subsidized from the budget. Almost 2,000 million leva have been allocated for compensations.

The latest increase in electricity and central heating prices planned by the Energy Committee, supported by the National Pricing Committee and approved by the Government, will deliver a devastating blow on the already strained finances of the Bulgarian citizen, reads a declaration of the Union of Democratic Forces sent to BTA today. The declaration says that the side effects of this increase will be fatal for the loudly advertized recovery of the economy. The increase will push up all other prices and unleash inflation.

[10] COUNCIL OF MINISTERS' DECISIONS

The Cabinet heard a report by Foreign Minister Georgi Pirinski concerning Bulgaria's participation in the 2nd conference of the donor countries on the reconstruction of Bosnia and Herzegovina in Brussels on April 12-13. The participants are expected to confirm the commitments they assumed at the first conference and provide over half a million US dollars as planned. They are also expected to assume similar commitments for 1996 and the next years. The Bulgarian delegation to the conference will be headed by Deputy Foreign Minister Konstantin Glavanakov.

The Government adopted a decree, according to which the 1923 refugee loan bonds to be bought out under the Mollov-Kafandaris agreement of 1927 will be purchased until September 1996 at 0.50 leva to a par value of 1 lev; the total amount allocated in the 1996 National Budget Act for this purpose is 315 million leva.

The Government increased the members of the Board of Directors of Bulgargas from 7 to 9. Peter Tsonev was removed from the Board. Its new members are Nedelcho Popov, chief adviser to the Council of Ministers, Ivan Peichev, a Bulgargas employee, and Metodi Vachev, former employee of the company.

[11] GOVERNMENT APPLIES DOUBLE STANDARDS, MULTIGROUP SAYS

The Multigroup chiefs denied suggestions that this economic grouping is run from abroad or by a political force. They distanced themselves from Andrei Loukanov MP of the Bulgarian Socialist Party (BSP), former BSP prime minister, stressing that they are not political hostages or figureheads. "We are a corporation with a prominent leader and team of experts who have proven their professionalism at different levels," Ivan Kolev said.

In 1995 Multigroup paid 575,124,000 leva in direct and indirect taxes, direct taxes amounting to 263 million leva, said Lilia Hristova, General Director for Financial Accounting. The profit and the profits tax paid by Multigroup are a corporate secret, she said. The 1995 turnover of Multigroup-Bulgaria amounted to USD 183,123,000. And the turnover of Multigroup and a multinational company exceeded USD 1,813 million, said Radoslav Nenov. Multigroup employs a total of 9,728 people, the average monthly wage being 14,500 leva, Hristova said.

Multigroup is ready to take part in the implementation of projects for the overhaul of Sofia Airport and Port Bourgas. Investment into new construction continues to play an important role after participation in privatization deals, Vice President for Investment Policy Nikolai Vulkanov said. These are funds directed to gas distribution stations, the Ares network of petrol stations and cable systems. In 1995 Multigroup direct financial investment totalled USD 32 million, said Radoslav Nenov.

[12] PRIME MINISTER VIDENOV'S STATEMENT

"The reform means liquidation of loss-making enterprises, but also a combat for traditional and new markets and, hence, the opening of new jobs; curbing irresponsibility in banking, but also state guarantees for people's savings; giving up administratively determined low prices, but also successully fighting inflation for two years now; tight taxation discipline for everybody, but also curbed crime, a stronger state and citizens better provided for," the Prime Minister pointed in his statement. Videnov stressed that the Government of the Democratic Left and its representatives in the local authorities will continue to act pragmatically and in a socially responsible way, and will conduct dialogue with all the political and public forces concerned about Bulgaria's fate.

Videnov reproached Bulgarian President Zhelyu Zhelev for having "gone beyond all bounds" in his desire to please the potential participants in the preliminary elections for presidential candidate. According to the Prime Minister, the total blocking of the enforcement of legislative acts, the deliberate ruin of public finances and the fanning-up of the warfare among institutions is tantamount to making a mockery with the national prosperity, dignity and security. This week President Zhelev imposed his suspensive veto on two tax acts and returned them for reconsideration to Parliament.

Prime Minister Videnov believes that it is high time that private companies assume the same commitments to the Bulgarian society the state ones have already assumed by paying a profit tax that is at least a little closer to the European standards. He recalled that the money spent on health care, education, public utilities, pensions, scholarships, welfare benefits, the army, the police and the law courts come from these taxes.