News from Bulgaria, 96-10-21

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

EMBASSY OF BULGARIA - WASHINGTON D.C.

BTA - BULGARIAN TELEGRAPH AGENCY

21 October, 1996

CONTENTS

[01] MACEDONIA'S RELATIONS WITH BULGARIA ARE GOOD BUT NEED NEW DYNAMIC, FRCKOVSKI SAYS

[02] YUGOSLAV JUSTICE MINISTER ENDS VISIT

[03] FOREIGN INVESTORS FAVOUR BULGARIAN INDUSTRY

[04] BULGARIA WILL CONTINUE SERVICING ITS FOREIGN DEBT

[05] PARLIAMENT DISCUSSES BULGARIA'S ACCESSION TO WTO

[06] BULGARIAN REPRESENTATIVE TO UNESCO ADDRESSES ITS 150TH SESSION

[07] PRESIDENT ZHELEV RETURNS AMENDMENTS TO PROTECTION OF DEPOSITS ACT

[08] BRITISH-BULGARIAN BUSINESS MEETINGS

[09] CENTRAL BANK PRESSURED TO LOWER INTEREST RATE

[10] BORDER CHECKPOINT AT ROUSSE EXTENDED

[01] MACEDONIA'S RELATIONS WITH BULGARIA ARE GOOD BUT NEED NEW DYNAMIC, FRCKOVSKI SAYS

Commenting on the so-called "language dispute", Frckovski expressed the view that it should be resolved in parallel to the development of relations in other areas without hampering them. There already are some acceptable solutions, he said, but the Macedonian side wants it to be clearly understood that there is a certain limit to the concessions Skopje could make. The Macedonian language is part of the Macedonian nation and statehood, and if histotians in Bulgaria want to argue about it, let them argue at home, Frckovski said.

[02] YUGOSLAV JUSTICE MINISTER ENDS VISIT

The two justice ministers considered in detail the control and prevention of crime and the related regional Balkan programme. They agreed that there are a lot of yet untapped possibilities to promote relations between the judicial authorities of the two countries.

Minister Krivokapic said Yugoslavia and Bulgaria have common problems with crime, stressing the importance of crime- prevention measures. In his view, one of the reasons for rampant crime is the geographical position of the two countries which makes them a road for the traffic of drugs and stolen motor cars.

Invited to express his personal view on capital punishment by BTA, Prof. Krivokapic noted the controversy was 2,000 years old and said that under the conditions of growing crime, this ultimate measure could have only a temporary effect. Only effective justice, adequate legislation, effective law enforcement and successful prevention can lead to curbing crime, the Yugoslav guest said.

Prof. Krivokapic was received by Deputy Prime Minister Svetoslav Shivarov today. Chervenyakov pointed out that the visit of his Yugoslav counterpart made it possible to review in detail the legal framework of Bulgarian-Yugoslav relations. Both sides pointed out the paramount importance of harmonizing the laws of their couyntries with the European and the world standards and agreed on the need of bilateral cooperation in this field, the Government Press Office said.

[03] FOREIGN INVESTORS FAVOUR BULGARIAN INDUSTRY

Foreign investors paid 15,500 million leva and assumed obligations totalling 8,200 million leva. Reinvested profits stood at 150,900,000 leva, or one per cent of the enterprises' equity capital. 34.7 per cent of the total amount of investment was used to repay obligations among companies.

Enterprises which are wholly owned by foreigners amount to 53.7 per cent of the total number of the enterprises included in the survey; investment in such enterprises added up to 27.9 per cent of total investment.

In the majority of the enterprises - 95.3 per cent, the invested funds came from one country, in 4.2 per cent - from two, in 0.4 per cent - from three, and in as little as 0.1 per cent of the enterprises investments were distributed among more than three countries.

Enterprises with a small amount of foreign investment - up to 100,000 leva, comprised a significant share - 48.3 per cent, of the total number of companies. In 32.3 per cent of the enterprises the amount of foreign investment was upwards 1 million leva; investments exceeding 100 million leva were made in as little as 3.3 per cent of the total number of enterprises.

Foreign investments were chiefly concentrated in the territory of Sofia district - they amounted to some 60 per cent of total foreign investment in Bulgaria.

Accounting for 32.3 per cent of the total amount of foreign investment, Germany topped the list of this country's biggest investors, followed by Britain - 16.2 per cent, the United States - 7 per cent, Greece - 6.3 per cent, Belgium - 5.4 per cent, Luxembourg - 5.3 per cent and France - 5.1 per cent.

Bulgarian-Greek joint ventures comprised the highest number of JVs registered in 1995 - 19.9 per cent, followed by companies with a German stake - 12.4 per cent, with Italian - 9.2 per cent, with Russian - 6.7 per cent, with Austrian - 6.1 per cent and with Turkish stocks - 5.7 per cent. Italian investors account for the biggest relative share of reinvested profits 36.2 per cent, followed by investors of Luxembourg with 30.8 per cent, U.S. investors - 14 per cent, Greek investors - 4.2 per cent, German investors - 2.9 per cent and British investors 2.8 per cent.

Bulgarian industrial enterprises proved to be the most attractive sector to foreign investors in 1995. 44.3 per cent of the total amount of investment was made in such plants. Next come foreign investment in transport - 25.9 per cent, followed by those in trade - 20.1 per cent. More than half of the investment in industry went to enterprises of the food-processing sector; the funds came mainly from Belgium, Luxembourg, Greece and the United States.

The mechanical and metal-working industry attracted the second biggest share of foreign investments which came mainly from German, U.S., British and Swiss companies. Nearly the whole amount of investments in transport were made in the car-making sector, where Germany continued to be the biggest investor. Investment in the construction industry came mainly from France, the United States and Russia. Britain and the United States made the biggest share of investments in Bulgarian communications.

[04] BULGARIA WILL CONTINUE SERVICING ITS FOREIGN DEBT

Bulgaria's foreign debt equals some 10,000 million US dollars which had been accumulated mainly by 1990, Kostov added. (Late 1989 saw the collapse of totalitarian regime in Bulgaria.) Following the agreements signed with the Paris and London clubs on the debt's reduction and rescheduling it was set to 7,300 million US dollars, the Finance Minister recalled.

After 1990 Bulgaria has run up 2,600 million US dollars worth debts given that all credit agreements signed were ratified by the National Assembly, Minister Kostov said. The new loans have been extended by the international financial institutions, the EU countries and G-24, he added.

Signing the agreements on the foreign debt settlements Bulgaria committed to service them regularly and untill now it has duly made the necessary payments, Minister Kostov said. Some 900 million US dollars were paid on the foreign debt in 1995, about 1,1 billion will be paid by the end of 1996 and in the next few years the payments will equal about 1 to 1,1 billion dollars, Kostov stated.

These commitments make topical the question about Bulgaria's foreign exchange reserves, Dimiter Kostov said. The reserves (which has dwindled in the past 12 months) can be replenished and stabilized mainly through acceleration of the cash privatization, increasing of production and exports and completion of the structural adjustment, he stated. It is necessary to provide not only a production growth but also to reduce and liquidate production losses, according to the Finance Minister.

It is equally important in these conditions to maintain contacts with the international financial institutions and provide their support, in the medium term, for the development of Bulgarian economy, Kostov said. A moratorium on or delay of the foreign debt payments would have a negative effect and deprive Bulgaria from access to new external financing, he stated, adding that this pertains both to the state and the banking sector. Besides, it would reduce the amount of foreign investments to Bulgaria, the Finance Minister said.

[05] PARLIAMENT DISCUSSES BULGARIA'S ACCESSION TO WTO

"Bulgaria is the first East European country joining WTO on a non-discriminatory basis," Paparizov stated. Negotiations were favourable for Bulgaria especially as far farming is concerned, the Trade Minister said. This country has the right to subsidize this branch and increase custom duties. The most important commitments joining WTO involve improvement of the legal framework concerning government contracts and anti-dumping policy, he added.

Apart from the protocol on Bulgaria's joining the Marrakesh Agreement Establishing the World Trade Organization the MPs approved an agreement on trade in civil aviation aircraft. The agreement is included in the non-obligatory annexes and is subject to separate ratification.

[06] BULGARIAN REPRESENTATIVE TO UNESCO ADDRESSES ITS 150TH SESSION

At the discussions of UNESCO's new two-year plan and budget Bulgaria upheld its priorities. The country voiced its readiness to host an European forum on renewable energy sources and a parliamentarians' meeting on cultural, scientific and educational issues. The participants were familiarized with Bulgarian-sponsored multinational projects involving the Southeast European countries. The participants opted for a policy of reforms and economies of UNESCO and attracting additional funds from extra-budgetary sources for the organization's programs. The forum stressed on UNESCO's relations with the Council of Europe and the European Union on a regional level.

UNESCO will upload the information of two Bulgarian CD- ROMs on its WEB page in Internet. This will be the first information about Bulgarian culture run by Internet.

[07] PRESIDENT ZHELEV RETURNS AMENDMENTS TO PROTECTION OF DEPOSITS ACT

According to the President, if the fund for state protection of deposits and accounts is short of the required financial means, the law might either not be applied at all or need to be amended again. In his motives for returning the amendments to the Act President Zhelev also said that he views this as just another case in which the Bulgarian citizens are given unrealistic promises. Zhelev challenges the legislation as in his view it does not guarantee social justice in accordance with the current needs of the depositors. The President pledges that the Bulgarian citizen be provided with the possibility to dispose of part of their money to effect payments for medicines, heat power and taxes.

In his motives the President says he is against the different treatment of citizens and companies by the law. "Personal deposits, no matter if they are millions of levs, are guaranteed 100 per cent, while those of companies are guaranteed only 50 per cent no matter that they may be several hundred thousands," he says. Zhelev also opposes the 100 per cent guarantees provided only to foundations which are members of the Union of Bulgarian Foundations.

"Confidence in the banking system can only be returned with a clear and concrete programme, in conformity with the financial condition of the state, rather than with halfway measures, which are constantly amended depending on the circumstances or with unrealistic promises," President Zhelev says in conclusion.

[08] BRITISH-BULGARIAN BUSINESS MEETINGS

Companies of Britain's food industry, oil and gas industry, light industry, construction, tourism and electronics were represented in the delegation which arrived here a few days ago.

Tim Gorin, a trade expert for Bulgaria and head of delegation, told BTA the mission sought to find partners rather than sign contracts right away. The British business representatives were fully satisfied with their meetings in Bulgaria and may come again soon, according to Mr Gorin. Mr Gorin said the mission wanted to encourage British exporters, adding that exports to Bulgaria in 1996 were larger than in the preceding years. British investors are showing an interest in the privatization of the Bulgarian Telecommunications Company, Mr Gorin said. Two British companies, Bimond and Solfacatans, are bidding for the chemical giant Sodi Devnya.

[09] CENTRAL BANK PRESSURED TO LOWER INTEREST RATE

According to popular financial expert and former vice governor of the BNB Emil Hursev, the central bank should have lowered the base interest rate already before October 20 which is the date on which the banks set their terms on one-month deposits. The commercial banks would lose a lot if they make agreements on the higher interest rate and it then drops, he emphasized. The legal business and the real economy cannot progress neither at 300 per cent nor at 240 per cent interest rate and unless the levels are lowered more seriously, the negative effects will be considerable in short as well as in long perspective.

The change in the interest rate influenced psychologically, rather than economically the forex market today, dealers of the Bulgarian Foreign Trade Bank (Bulbank) and of the Bulgarian Post Bank told BTA. The dollar will remain under pressure because an interest rate of 240 per cent is not much lower than 300 per cent. As a result of BNB's intervention as a purchaser on the market the US dollar retained its previous day levels of 221-223 leva/1 US dollar on the interbank market. Dealers expect the BNB to keep exercising tight control.

[10] BORDER CHECKPOINT AT ROUSSE EXTENDED

The checkpoint extension covers an area of 13 hectares. It is designed to handle outgoing motor traffic which will pass customs control here; until the eastern extension is built, eight of the lanes will be used incoming traffic. The modern equipment at the passport control booths costs 50 million leva; the money was provided by the European Union.

The strategy now being worked out for Bulgaria's railway and road structure will match that part of the transport infrastructure approved by the Romanian Parliament which concerns the Danube crossings, Minister Stamenov said. The Council of Ministers may endorse Bulgaria's strategy as early as November 1996.

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