Bulgarian Telegraph Agency (BTA), 97-02-12

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

EMBASSY OF BULGARIA - WASHINGTON D.C.

BTA - BULGARIAN TELEGRAPH AGENCY

12 February, 1997

CONTENTS

[01] PRESIDENT STOYANOV: `HISTORIC POLITICAL CONSENSUS'

[02] DOCUMENT: INTENTIONS OF THE PRESIDENT OF THE REPUBLIC OF BULGARIA ON CERTAIN URGENT ACTIONS TO BE TAKEN BY THE CARETAKER GOVERNMENT

[03] DOCUMENT: DECISION OF THE PARLIAMENTARY POLITICAL FORCES, CONVENED FOR CONSULTATIONS WITH THE PRESIDENT OF THE REPUBLIC OF BULGARIA, ON THE SOLVING OF THE CRISIS

[04] POLITICAL FORCES PLEDGE SUPPORT FOR CARETAKER CABINET, COMMENT ON THE AGREEMENT

[05] IBRD RESIDENT REPRESENTATIVE A. MUSALEM GIVES NEWS CONFERENCE

[06] ILLEGAL CAPITAL FLIGHT FROM BULGARIA

[07] BULGARIAN GOODS MEET READY MARKETS

[08] BNB GOVERNOR ON FINANCIAL SITUATION IN BULGARIA

[09] OFFICERS PAY RAISED, PROTEST ENDS

[10] NATIONAL TV STRIKE CALLED OFF

[01] PRESIDENT STOYANOV: `HISTORIC POLITICAL CONSENSUS'

The President thanked the politicians for the common sense shown and for enabling the caretaker cabinet to take decisions of vital importance for Bulgaria. `Expect good news tomorrow,' Mr. Stoyanov said. The President's Press Secretary Terzieva said the composition of the caretaker cabinet will be unveiled Wednesday. The text of the documents follows.

[02] DOCUMENT: INTENTIONS OF THE PRESIDENT OF THE REPUBLIC OF BULGARIA ON CERTAIN URGENT ACTIONS TO BE TAKEN BY THE CARETAKER GOVERNMENT

The President shall hold consultations on the parameters of such treaties with the political forces signatories to the decision, with the Prime minister, the Minister of Finance and the Governor of the Bulgarian National Bank participating.

2. Urgently ensuring the provision of aid from external sources in order to guarantee a minimum of necessary living conditions for the population.

3. Adjustment of the prices of basic food staples, as well as of fuels and electricity to correspond to the inflationary processes as well as adoption of measures to protect the socially disadvantaged groups of the population.

4. Maintaining all activities related to the defense and national security of the country.

[03] DOCUMENT: DECISION OF THE PARLIAMENTARY POLITICAL FORCES, CONVENED FOR CONSULTATIONS WITH THE PRESIDENT OF THE REPUBLIC OF BULGARIA, ON THE SOLVING OF THE CRISIS

Signatures:

For the Democratic Left: Georgi Purvanov /s/ Mariana Hristova /s/

For the MRF: Ahmed Dogan /s/ Stoyan Denchev /s/

For the BBB: Hristo Stoyanov /s/ Hristo Ivanov /s/

For the UDF: Ivan Kostov /s/ Yordan Sokolov /s/

For the Peoples Union, BANU, DP: Anastasia Moser /s/ Stefan Savov /s/

[04] POLITICAL FORCES PLEDGE SUPPORT FOR CARETAKER CABINET, COMMENT ON THE AGREEMENT

`I don't think this day will go unnoted in the history of Bulgaria because the political forces have realized the need of a modicum of consensus for Bulgaria's future,' President Stoyanov told reporters. He thanked politicians for showing understanding and concord and for empowering the caretaker cabinet to negotiate and conclude aid agreements. `Today's decisions merely launch us on our road, the difficulties and privations still lie ahead,' Stoyanov observed. `Still, I am an optimist that there is understanding in Bulgaria that what awaits us is far from easy,' he said. He indicated that during the three months of the caretaker government's tenure, the foundations of something good will be laid, and he hopes that will be continued by a next government enjoying support by a solid parliamentary majority.

`I think this is the first step towards overcoming the severe confrontation in society and achieving a consensus,' said the BSP leader Purvanov. `We gave our support for the President and the future caretaker cabinet and thus proved that we turn to a new political behaviour in compliance with the decision of the latest BSP congress,' he stated. In his view, this support is in line with the Socialist Party's overall aspiration to resolving Bulgaria's problems. Asked whether all his fellow-Socialists will accept the decisions taken Purvanov replied that he acted in compliance with a decision of the parliamentary group of the Democratic Left. The Left MPs gave him a broad mandate for the latest consultations under the President.

`Today's agreement is an important step out of the political crisis and for overcoming the economic catastrophe,' said after the meeting UDF leader I.Kostov. In his view the President and the caretaker cabinet will rely on this political consensus in their efforts to save Bulgaria. Time will show whether the country has missed the last train and whether the people will accept the solution offered by the parliamentary political forces, Kostov added.

`The signed decision showed that the Bulgarian nation is able to do something worth doing for the sake of the people,' S.Denchev of the MRF, said.

The political forces of the 37th National Assembly showed that they can take responsibility and this is hopeful for Bulgaria, according to BBB spokesman H.Ivanov. The BBB insisted that the caretaker cabinet provides social protection for the socially-disadvantaged. This proposal was prompted by plans to adjust prices of electricity, fuels and staple foods to inflation.

[05] IBRD RESIDENT REPRESENTATIVE A. MUSALEM GIVES NEWS CONFERENCE

The adjustment would constitute a fixing of debts and savings to a foreign currency, leaving them payable in their leva equivalent under the relevant current exchange rate. This would advance some of the features of a currency board, Mr. Musalem believes. It would also accelerate the return of the savings of the people into the banking system.

The World Bank maintains a dialogue with all legitimate government, Musalem said. However, there are restrictions in Bulgarian legislation requiring that loans have to be approved by Parliament. And since there will be no Parliament now, loans cannot be extended to the caretaker cabinet. The World Bank can only continue to disburse funds of already approved loans and provide small grants under technical assistance, Mr. Musalem said. Bulgaria has still to receive some USD 400 million under already approved loans from the World Bank. The disbursement of these funds, however, would depend on the speed of implementation of concrete projects, he said.

Technically Bulgaria is close to, but not yet in hyperinflation, Mr. Musalem believes. He declined to comment on Bulgaria eventually defaulting on its foreign debt. `I do not believe the government is working on such a scenario,' Mr. Musalem said.

[06] ILLEGAL CAPITAL FLIGHT FROM BULGARIA

Bankers are working out a procedure for checking money exported from Bulgaria in the form of parcels, the leader of the Podkrepa trade union Trenchev said last week. His said Podkrepa has information that lately $70 million have been leaving this country weekly. The government can officially request information from western financial institutions about valuable packages sent by Bulgarian banks, Trenchev said. He said it would be difficult to bring the money back but at least the nation would know who is involved. Asked for comments, Prosecutor General Tatarchev said Podkrepa should provide evidence for the prosecution to take the necessary steps.

Export of capital from Bulgaria takes place by perfectly legal bank transfers and cannot be controlled because of bank secrecy rules, outgoing Interior Minister Dobrev told last week National Television. In the last three years the press reported several schemes to legalize capital flight using forged documents.

World criminals are not especially interested in Bulgaria, not even for money laundering purposes, Ramon Candle, Secretary General of Interpol, recently told the paper `Demokratsiya'. He said the reason was its lack of financial tradition, stability and enough competent and well-connected financiers.

Bulgaria is experiencing a third wave of illegal capital flight, `Ikonomicheski Zhivot' wrote last summer. The first was the transfer of public funds to foreign accounts held by eminent BSP functionaries, the secret services and fronts after the break up of the communist regime ( in 1989. The second is linked to money siphoned off by pyramid investment schemes and invested in foreign banks and securities in 1991-1995. The third has probably began in April 1996 when many banks suspended payments triggering a financial crisis. Some estimates put Illegal capital exports as high as $3 billion.

In a recent interview for Deutsche Welle, the co-chairman of the New Choice Liberal Union Ivan Poushkarov, former minister in two cabinets, called the mass privatization process in Bulgaria a chimera, because, in his view, some of the main investment funds are backed by nomenklatura money. In the seven years since the fall of communism, the state has been plundered; the BSP guilt for that is enormous, Poushkarov said.

[07] BULGARIAN GOODS MEET READY MARKETS

Elprom Inc., based in Plovdiv (Southern Bulgaria), producing low-voltage commutation equipment, exports 75 percent of its production. The Scandinavian countries absorb some 15 percent of the company's exports. Elprom also has markets in ex-Yugoslavia, Greece, Turkey and the Arab countries. At present Elprom is drawing up an important project for exporting goods to India, the company's Executive Director Pepa Pancheva said. The growth of the company's production doubled as from 1995.

Ninety-five percent of the production of Elprom ZEM Ltd., seated in Sofia, is also exported. The company produces equipment for the power engineering, synchronous generators and hydro-alternators. Elprom ZEM also supplies all Bulgarian water-power stations with hydro-alternators. Recently the company launched a production of new, modern hydro-alternators using Japanese technology and license.

The company exports 25-30 percent of its products to the EU countries. The Elprom-produced goods a competitive, given that a few years ago the company was granted a certificate that its goods meet Western European technological and quality requirements, Elprom ZEM Director Kolyo Kolev said.

The two companies' directors were unanimous that at the moment Bulgaria's industrial enterprises operate in absurd conditions. Along with the unfavourable tax legislation, the pricing of home-made inputs also presents a serious problem.

[08] BNB GOVERNOR ON FINANCIAL SITUATION IN BULGARIA

`It is clear now that a currency board cannot be introduced before June,' the BNB believes. `A caretaker cabinet can sign a stand-by agreement which does not require ratification but a loan of this type would do us no good,' Lyubomir Filipov said. The condition to introduce a currency board in order to receive funds from the IMF may no longer be decisive as the situation has changed since December, Mr. Filipov believes.

Now the exchange rate is being pushed up by the interbank and not by the cash market and therefore restrictions on commercial banks will continue, Mr. Filipov said commenting on the banks' request for access to their minimum required reserves.

[09] OFFICERS PAY RAISED, PROTEST ENDS

Officers protested Monday and Tuesday against what they see as an inadequate pay rise. The protests were prompted by an outgoing Government decree providing for a 60 per cent increase of officers' wages, and not the 100 per cent cost-of-living adjustment in the rest of the state-financed sector. Attendees and instructors of the Rakovski National College in Sofia boycotted classes on Monday. Talks with the Chief of General Staff Totomirov, left officers unhappy and they held a silent vigil outside the President's Office.

`I am aware of your problems just as you are aware that I am not to blame for them,' President Stoyanov wrote Monday evening in a letter to the commandant, faculty and attendees of the Georgi Rakovski Military Academy. He pledged his personal commitment to the efforts to solve the problems arising from the outgoing Government's decree. `I will not, however, suffer Bulgarian officers to be involved in political manipulations and scenarios written by the people who brought the nation to this deplorable condition,' the Head of state wrote. Later in the date, President Stoyanov met with faculty members and attendees of the Rakovski Academy and told them he would urge the outgoing Government to solve the problem immediately.

`The General Staff of the Bulgarian Army supports the servicemen's demands and considers them fair. These are not demands for more money but for strict and prompt observance of the law, for social and sheer biological survival of servicemen and their families, for preservation of their human and military dignity,' the General Staff said in a declaration. At the same time, the General Staff does not believe that the problems of servicemen can be solved through unlawful actions. Such actions undermine the army's prestige and do not help achieve the legitimate demands, the declaration says.

[10] NATIONAL TV STRIKE CALLED OFF

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