News from Bulgaria / May 14, 96

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

Bulgarian Telegraph Agency Directory

EMBASSY OF BULGARIA - WASHINGTON D.C.

BTA - BULGARIAN TELEGRAPH AGENCY

14 May, 1996

CONTENTS

[01] PRESIDENTIAL CAMPAIGN PICKS UP SPEED

The ruling Bulgarian Socialist Party, which in 1994 won the parliamentary, and a year later the local, elections, is not concealing its ambition to gain the presidential post, currently held by the former dissident, co-founder and first leader of the opposition Zhelyu Zhelev. Several names are in circulation Foreign Minister Georgi Pirinski, ex- BSP leader Alexander Lilov, National Assembly Chairman Blagovest Sendov and Socialist MP Nikolay Kamov. Pirinski's chances to win the Socialist nomination are seen as considerable. Socialist MPs, however, have indicated he does not enjoy the support of Prime Minister Zhan Videnov, leader of the party. There are also fears of constitutional obstacles, as Pirinski was born in New York and his mother is American. Whoever the Socialist nominee is, he has good chances of success, with a view to the large support which the BSP got at the last polls. The Left's chances may recede, however, if it strongly commits itself to unpopular measures for economic stabilization.

The opposition, which suffered a crucial defeat in December 1994, sees the presidential polls as a chance to stage a comeback. According to members of opposition forces, in case of victory, the opposition will try to provoke early parliamentary elections. A win, however, would be possible, if the opposition parties back a single presidential contender. After several months of negotiation, the parliamentary opposition - the Union of Democratic Forces (UDF), the Popular Union and the ethnic Turks' Movement for Rights and Freedoms- agreed to support a single candidate after primary elections. It signed an agreement to hold primaries on June 1. Running are incumbent President Zhelyu Zhelev and UDF-sponsored MP Peter Stoyanov. Both said they will accept any outcome, and work for a successful opposition bid. Both have mounted vigorous campaigns, convinced of a win at the primaries. Zhelev is counting on respect and popularity gained during his two presidential terms. Stoyanov is urging a "fresh start", and says he will rely not only on hard-core UDF voters, but also on voters disillusioned with the Socialist government and the young. Zhelev also claims a large voter base. "If you add up all opposition votes, they will still not be enough to elect a President. One million votes are missing. These votes should come from somewhere, and there is no other place but a candidate's own base, which he either commands or does not," Zhelev says.

The ballots this time will be white, according to amendments to the electoral law voted by Parliament last week.

In a sense, Madrid-based exiled Bulgarian King Simeon II will also have a role in the campaign. He is planning to visit this country in late May, days before the opposition primaries. Opposition members say they are not embarrassed by the visit; rather, they expect it stimulate voters. The interest generated by the monarch 50 years after Bulgaria was declared a republic in a referendum may upset the plans of Bulgarian politicians. The presidential campaign may take an unexpected turn, making the result of the race even less predictable.

[02] INTEREST RATE IMPACT ON THE ECONOMY

The country's internal and external debts dwindled as the dollar strengthened against the lev; the new base rate will push them up again, "Troud" says. According to it, at a rate of over 70 leva to the dollar the internal debt becomes impossible to pay. The jump of the dollar led to a twofold depreciation of the lev and hyperinflation became inevitable, the daily comments. The increase in the base rate, which will defuse the foreign exchange crisis for a while, will empty the coffers, what with the country's old debts and the new ones incurred through new issues of government securities.

The exorbitant base interest rate will have a detrimental effect on production, the daily says. In these circumstances entrepreneurs and manufacturers will not borrow money, and there is no production without lending, "Troud" comments. Private companies will be the first to go bust as they can expect neither state support nor rehabilitation programmes, the daily adds.

[03] PRICE SHOCK AS OF JUNE 1

Fuel prices will be updated twice a month as of June 1, "24 Chassa" quotes Transport Minister Stamen Stamenov as saying. According to the paper, a new pricing method will be adopted in response to the dramatic strengthening of the dollar against the lev and the rise in fuel prices in the Mediterranean market. What Stamenov did not say was that the IMF wants fuel prices to be marked up by 20 per cent by September. Higher fuel prices will push up bus and train fares, "24 Chassa" says.

The daily writes about the impact of the dollar-lev exchange rate on telephone charges. It quotes Lyubomir Kolarov, President of the Posts and Telecoms Committee, as saying that a new jump in prices can be expected if the dollar levels off at 105 leva.

Flour prices will go down because the increase in the last few months was unrealistic and was caused by panic among producers, "24 Chassa" says. The high base rate endangers all goods subject to seasonal rises in consumption such as cooking oil, the daily writes. It predicts the market will crash if the base rate remains unchanged.

A jump in sugar prices is unlikely because it has a short shelf life and manufacturers would suffer heavy losses if demand dropped due to a speculative price rise.

Bulgarian-made foods did not see large mark-ups in the past, "24 Chassa" comments. Chances are that if the base rate remains at its current level, Bulgarian products may become more expensive than imports, says "24 Chassa".

[04] NIKOLAI DOBREV TAKES OFFICE AS INTERIOR MINISTER

Prime Minister Zhan Videnov introduced today the new interior minister to the ministry's leadership at a ceremony not open to the press. Videnov pointed out that a lot of efforts will be needed to meet the expectations of the public for more efficient combat against crime, the Interior Ministry's press office said. He also said it is necessary to improve the legal framework and ensure large public support to carry out the tasks which the Interior Ministry is facing.

Nikolai Dobrev identified as his key priority the combat against of crime and promised that in his work he will seek cooperation with the other law enforcement authorities as well as the support of all political forces and the large public. The problems of the combat against crime are so significant, that ideological and other contradictions should not be an impediment to the three institutions to act together, Mr Dobrev told reporters minutes after his appointment to the position. He voiced his decisiveness to act with an iron hand, however in the frame of the law. "I intend to turn the combat of crime from a formal into an actual priority of the Left," Dobrev said.

[05] BSP TOP LEADERSHIP SPECIFIES DECISIONS ON STRUCTURAL REFORM

The Government will be given support in its pledge to close down loss-making companies, under one of the decisions. Doing this the incumbents should take into consideration the companies' financial indicators, technological condition, competitive power, national interests, national material balances and regional rates of employment. The fired employees should be provided with severance pays. Social and economic programs on new jobs' opening are to be drafted. The actions of the Council of Ministers should be coordinated with the drafting of next year's budget so as to be provided financially.

The measures in the sphere of privatization should be aimed to attract foreign investments and additional preferences; cash privatization should be sped up through the participation of managers and employees.

The National Bank of Bulgaria (BNB) and the banking supervision should improve their performance and the consolidation of commercial banks should continue so as to stabilize the banking system. The reform can entail the liquidation of certain banks, if necessary, in order to achieve recapitalization and increase of the banking sector efficiency. The Cabinet and the BNB Governing Board should guarantee the people's deposits and the servicing of the external debt.

The parliamentary group of the Democratic Left was urged to provide the opportune adoption of the amendments to the legislation on privatization, banks and lending during the Parliament's summer session. The Left's parliamentary group should also lobby for the adoption of bills on guarantee of deposits, stimulation of employment and protection against unemployment, the 1996 privatization program and BNB annual report for 1995.

[06] DEPUTY P.M. PAPARIZOV TO DISCUSS CUSTOMS PROBLEMS IN MOSCOW

In late April Bulgarian Prime Minister Zhan Videnov reportedly sent a message to his Russian counterpart Viktor Chernomyrdin. With it Bulgaria offered Russia customs preferences for the import of Russian equipment for Bulgaria's Kozlodoui Nuclear Power Plant, for the gas pipeline crossing Bulgaria and for the Kremikovtsi metallurgical plant near Sofia, against reciprocal concessions for Bulgarian imports into Russia. A reciprocal preferential treatment and reduction of customs duties is meant to pave the way for opening a free trade zone between Bulgaria and Russia. The list of reciprocal customs concessions is expected to be ready by mid-summer, said Paparizov.

The question about customs preferences was brought to the fore during a 1995 visit to Bulgaria by Russian Prime Minister Chernomyrdin, but an year later the question remains open. While Bulgaria wants preferential duties, the Russian partners are more willing to discuss complete lifting of the customs barriers and opening a free trade zone between the two countries.

The system for customs preferences effective in Russia envisages zero duties for poorly developed countries. The second group, where Bulgaria wants to be considered, are the developing countries; they pay half the regular customs duties. The discount does not apply for alcoholic drinks, watches, audio and video equipment and artificial fibres, among other commodities. Bulgaria pays a 30% average customs duty for its imports in Russia, while Russian imports in Bulgaria are charged a 5-10% duty on the average.

In 1994 Bulgaria posted a USD 629.280 million deficit in its trade with Russia, that, according to unofficial data, went up to 833.825 million last year.

[07] IMF REPRESENTATIVE ROBBED IN SOFIA

Ms McGuirk arrived in Bulgaria last week with an IMF mission.

[08] BULGARIA, YUGOSLAVIA TO COOPERATE IN SCIENCE

Today Education Minister Ilcho Dimitrov also conferred with Serbian Education Minister Dragoslav Mladenovic. At the talks Dimitrov raised the issue of Bulgarian language classes in the schools of Bulgarians living in Serbia. Dimitrov said the rights of the ethnic Bulgarians guaranteed by the Constitution of the FR of Yugoslavia should be real and equal to those of the other minority groups in the FR of Yugoslavia. Bulgaria does not wish to internationalize this problem because it believes that it can be resolved, Dimitrov said.