News from Bulgaria, 96-07-16

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From: Embassy of Bulgaria <bulgaria@access1.digex.net>

EMBASSY OF BULGARIA - WASHINGTON D.C.

BTA - BULGARIAN TELEGRAPH AGENCY

16 July, 1996

CONTENTS

[01] BULGARIA TO GET U.S. FINANCIAL ASSISTANCE FOR TRANSPORT INFRASTRUCTURE

[02] MINISTRY OF ENERGY AND ENERGY RESOURCES TO RECEIVE USD 100,000 FROM USA

[03] BULGARIA PARTICIPATES IN BIGGEST PFP EXERCISES

[04] PRESIDENT ZHELEV INTERVIEWED BY ASSOCIATED PRESS

[05] FORTHCOMING VISITS

[06] CABINET WILL GRANT CONCESSIONS FOR GAS TRANSFER

[07] SOME WAGES INCREASED AS OF JULY 1

[08] SOCIALIST M.P.S MEET PRIVATE ENTREPRENEURS

[09] MEETING OF CITUB LEADER K.PETKOV WITH WORLD BANK MISSION

[10] PRIVATIZATION FUNDS COMPETE UNFAIRLY

[01] BULGARIA TO GET U.S. FINANCIAL ASSISTANCE FOR TRANSPORT INFRASTRUCTURE

The document is consistent with US President Clinton's initiative for development of the Southern Balkans, that includes direct technical assistance for Bulgaria. Mr. Grandmaison said today President Clinton's initiative seeks to help the economic development of the region through US technologies and expert assistance.

The 2 million dollars will finance the construction of a railroad from Radomir, near Sofia, to the Bulgarian-Macedonian border. An additional 500,000 US dollars will be made available for a feasibility study for a container terminal in Sofia. Of the above, 250,000 dollars will be provided by the US Sea-Land Services. It is also envisaged to make feasibility studies on the East-West corridor. The US side will offer consultancy in transport infrastructure. According to Mr Grandmaison, the country can receive additional funds as well. For this purpose Bulgaria should offer concrete projects. Macedonia and Albania are also included in this initiative.

After the signing of the agreement with the US Trade and Development Agency Minister Stamenov said that the financial assistance provided by the United States will give a powerful impetus to the development of economy. It was said that the Bechtel company will extend 100,000 US dollars on the studies of the East-West corridor. The signing of the agreement comes to prove that the confidence towards Bulgaria has increased, Foreign Ministry Spokesman Pantelei Karasimeonov said at a news conference today.

[02] MINISTRY OF ENERGY AND ENERGY RESOURCES TO RECEIVE USD 100,000 FROM USA

[03] BULGARIA PARTICIPATES IN BIGGEST PFP EXERCISES

Attending is Bulgarian Defence Minister Dimiter Pavlov. Having arrived here early this morning, he met his Greek counterpart Gerasimos Arsenis. Peace Eagle are the biggest military exercises held under the PfP programme. Bulgaria is represented by an infantry company of the international cooperation training centre with Commander Cap. Stefan Botev.

The major task of the exercises is to improve the operative compatibility in peacekeeping operations. The ultimate goal is to boost the capacity for interaction in NATO's southern flank, particularly in multinational peacekeeping efforts. Peace Eagle-96 is held on a scenario based on IFOR experience in Bosnia. Exercises like this one are very useful and the Bulgarian participation in them is getting more and more successful, said Defence Minister Pavlov.

Bulgaria joined the PfP initiative in February 1994 and has since participated in a number of joint military exercises with the other member and partner states, both on its and on other countries' territories. Cooperation between Bulgaria and its NATO and PfP members is tangibly expanding in the technical, scientific and medical fields, in the training of personnel and information services. By the end of this year Bulgarian military are due to take part in joint PfP exercises in Romania, Hungary and the US and in the Breeze-96 naval exercises held annually in Bulgarian waters.

Speaking at a news conference after his return from Albania later today, the Bulgarian Defence Minister said the meeting of Balkan defence ministers should be scheduled for calmer times, probably after the presidential elections in Bulgaria, said this BTA correspondent. The meeting is expected to be attended by representatives of the US, Russia, NATO and the European Union. It will guarantee the success and implementation of the decisions the meeting will take, said Dimiter Pavlov. The Defence Ministers of Greece and Albania today reportedly voiced full support for the Bulgarian initiative.

[04] PRESIDENT ZHELEV INTERVIEWED BY ASSOCIATED PRESS

Zhelev seems to be staking a claim to hold onto power, the AP says, recalling the President's address on the national television and radio on Saturday in which he called for a strong presidential rule as a better way than the current parliamentary system to take Bulgaria out of trouble. He expressed uncharacteristic bitterness at having lost the primary election to nominate the opposition presidential candidate, the AP said.

On June 1, 1996, the major Bulgarian opposition forces: the Union of Democratic Forces (UDF), the Popular Union coalition (the Democratic party and the Bulgarian Agrarian National Union), and the ethnic Turks' Movement for Rights and Freedoms, held primary elections to nominate a single opposition's presidential candidate. The two contenders were Zhelyu Zhelev nominated by the Popular Union and Peter Stoyanov of the UDF. Stoyanov won the primaries. Under an agreement, which the two contenders had signed before the primaries, the loser will not run in the real presidential elections.

Speaking to the AP interviewer, Zhelev said that gigantic manipulation was behind Stoyanov's victory, and stressed that neither Stoyanov nor Georgi Pirinski, candidate of the ruling Bulgarian Socialist Party and incumbent Foreign Minister, have much to offer Bulgaria. I am not very enthusiastic about these elections, because nobody is offering anything really new. Bulgaria needs not so much presidential elections, as a new role of the president himself, Zhelev told the AP.

Zhelev has long been at odds with the Socialist Government of Prime Minister Zhan Videnov over a range of internal and external policy issues. He now seems to be suggesting that the opposition could do better, and offering himself as an alternative, the AP says.

[05] FORTHCOMING VISITS

Franz Fischler, Commissioner in charge of agriculture and rural development with the European Commission, will visit here from July 26 to July 28 at the invitation of Agriculture Minister Krustyo Trendafilov.

The EU-Bulgaria Joint Committee will hold its third session in Sofia between July 24 and 26.

[06] CABINET WILL GRANT CONCESSIONS FOR GAS TRANSFER

The working group is to specify the proposal on the granting of the concession within two months. Topenergy has listed all activities and sites for which it wants to receive a concession, including the construction of new pipelines and completing of existing ones.

Topenergy was set up in 1995 with an equal participating interest of the Bulgarian and Russian sides. The Bulgarian stakeholders are Bulgargas participating by 25.1 percent, Bulbank, by 3.15 percent and the Overgas private company, by 21.8 percent, and the Russian stakeholder is the Gasprom Russian company. The state should have more shares in the concession partnership than in Topenergy, Nikolai Minkov, Head of the Concessions Department with the Council of Ministers, said. The concession will be granted for a term of 35 years.

[07] SOME WAGES INCREASED AS OF JULY 1

The minimum monthly wage has been set at 4,000 leva, up from 3,040 leva, as of July 1. Wages of workers in state-financed organizations will grow by an average of 20 per cent as of July 1. The increase of wages in material production will not exceed 70 per cent of the real inflation. Loss-making state-run enterprises are not allowed to increase their workers' wages.

From 1,800 leva, the social pension has been set at 2,160 leva. The Cabinet also increased by 38.9 per cent to 2,600 leva the base income used to calculate social benefits, thus increasing unemployment benefits, students' grants, child benefits and other social payments.

The Cabinet's decrees protect at the highest degree the interests of people with lowest incomes, Minister of Labour and Social Affairs Mincho Koralski said after the meeting. According to Koralski, the trade unions did not have any serious objections as regards the Cabinet's proposals. The social partners will hold talks by the week's end to discuss measures for wage protection as of October 1; the talks were prompted by the question for the correspondence between the budget framework and the mechanisms for social protection raised during last week's talks, Koralski said.

Over the past two weeks alone, however, bread prices across the country increased by 25.5 per cent, the National Statistical Institute today said. Prices of Cabinet-monitored goods rose by 12.4 per cent in June 20- July 15. Food prices grew by 12.1 per cent, bus fares by 17.1 per cent. Public transport fares grew by 18.9 per cent and coach fares by 15.8 per cent; sugar prices increased by 13.3 per cent, while pasta products grew by 11.8 per cent.

[08] SOCIALIST M.P.S MEET PRIVATE ENTREPRENEURS

He said that of the 508,000 working firms registered as of last year, 446,445 with 1.2 million staff were private. 65,000 new private companies emerged last year. The private sector accounted for a 30% share of the GDP. Last year 79% of the private companies reported a profit and 19% a loss. Incomes tax payments by private entrepreneurs last year made up 6% of the total tax proceeds, said Deputy Finance Minister Bisser Slavkov.

If the structural reform makes a good progress, the base interest rate is likely to go down in the coming months, central bank Governor Lyubomir Filipov, who also attended the meeting, said but he would not commit himself to specific deadlines.

National Pricing Committee Chairman Dimiter Grivekov told the participants in the meeting the inflation's critical point has already been overcome and prices should therefore be adjusted to it.

A the meeting with Socialist MPs, the chairman of the Union for Private Economic Enterprise called upon Parliament to take a principled stance on Bulgarian entrepreneurship. Representatives of private entrepreneurs' unions demanded clear laws on the development of the private sector.

Speaking after the meeting, Socialist floor leader Krassimir Premyaniv said he was satisfied with the talks and added the Democratic Left is planning to expand the dialogue with Bulgarian entrepreneurs.

[09] MEETING OF CITUB LEADER K.PETKOV WITH WORLD BANK MISSION

The amalgamation has recently joined forces with the other influential labour confederation, Podkrepa, and an employer's organization, the Bulgarian Industrial Association. These questions are not mere curiosity: the World Bank is contemplating mechanisms to force Bulgaria to implement our own decisions, Mr Petkov commented. In 1995 the Videnov Government strictly implemented all measures including the IMF-proposed monetary instruments: shrinking of wages and consumption etc., the CITUB leader recalled. Still, 1995 largely became a real prelude to the crisis in 1996, he noted. The international financial institutions have lost a great deal of their confidence in the Bulgarian institutions at large and above all in the government, Mr Petkov also said at the breifing.

The trade union leader suggests that the multilaterals' assistance for the former socialist countries, including Bulgaria, be controlled by a special authority supervised by non-governmental organizations. If the political systems ground to a complete halt, somebody still has to carry on the structural reforms with broader social support, at the same time avoiding corruption in the government spheres, he argued. The broader the social base of, social support for and consensus on its undertakings, the more money will a government - any government - get from the international financial institutions, Krustyo Petkov emphasized.

[10] PRIVATIZATION FUNDS COMPETE UNFAIRLY

One of the funds received a rap on the knuckles for failing to indicate in its materials that share prices may fall and profits cannot be guaranteed. Corporate chiefs, including the directors of the Bourgas branches of First East International Bank and Trade & Savings Bank, allegedly forced employees to transfer their voucher books to funds of which the bosses are promoters. Cooperative members allegedly come under pressure to join the fund of the Central Cooperative Union. A fund named AKB Fores, reportedly advanced to 344 people in the area of Kyustendil the fee charged for registration of a voucher book in exchange for an undertaking to have them transferred to it. Two of the AKB Fores funds have been denied registration by the Commission on Securities but they nevertheless promote their business in violation of the law. The funds has more than 5,000 salaried agents nationwide. This is not against the law, provided that the agents are not employees of the postal administration.

Postal officers are now the top target of funds' corruption encroachments. Fund officers allegedly pay postal employees 100 leva for each voucher book which is transferred to the assets of AKB Fores. In the post office of Aytos, clerks have put up a notice saying that only the transfer to the Family and Industrial funds is free of charge. In other places, postal employees allegedly refuse to register transfers to certain funds under the pretext that they have already raised their authorized capital. Bulgarian Posts Ltd. denied allegations that postal employees are involved in the unfair competition between privatization funds. The company conducted an inquiry and did not find any financial abuses or falsifications on the part of postal employees in the processing of mass- privatization voucher books. At the same time, Bulgarian Posts Ltd. did not deny that some of the clerks have engaged in malpractice and have been penalized.

A total of 84 funds have been granted registration by the Commission on Securities so far, and 41 have been definitively turned down. Of the 140 funds which have presented prospectuses, 33 are re- submitting theirs after corrections. One hundred and sixty thousand voucher books have been transferred to funds by the end of last week. The closing date for transfers is July 31.

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