Bulgarian Telegraph Agency (BTA), 97-03-18

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

EMBASSY OF BULGARIA - WASHINGTON D.C.

BTA - BULGARIAN TELEGRAPH AGENCY

18 March, 1997

CONTENTS

[01] BULGARIA, IMF REACH AGREEMENT

[02] PM SOFIYANSKI ON THE AGREEMENT WITH THE IMF

[03] BULGARIA STRIVES TO MEET NATO MEMBERSHIP REQUIREMENTS

[04] US UNDERSECRETARY OF DEFENCE SLOCOMBE: BULGARIA A STABILITY FACTOR

[05] FOREIGN MINISTER STALEV: BULGARIA STANDS GOOD CHANCE FOR NATO

[06] BULGARIANS EVACUATED FROM TIRANA

[07] GEORGE SOROS OFFERS INTEREST-FREE LOAN

[08] COUNCIL OF MINISTERS DECISIONS

[09] DEMOCRACY NETWORK TO PRESENT THIRD GRANT ROUND

[10] BULGARIA COUNTS ON AID TO END GRAIN SHORTAGE

[01] BULGARIA, IMF REACH AGREEMENT

Bulgaria will receive a financing package of SDR 479 million (some USD 659 at the current exchange rate) if the IMF Board of Directors approves the signed agreement, IMF Mission Leader for Bulgaria Anne McGuirk said at a news conference on Monday which was attended by Prime Minister Sofiyanski and Finance Minister Svetoslav Gavriiski. The details of the stabilization programme were specified late on Sunday evening. The financing from the Fund will have two elements: USD 510 million under a proposed 14 month stand-by arrangement and a USD 150 million for purchasing cereals. The first USD 180 million tranche will be disbursed in early April, McGuirk said. The remaining sum will be disbursed in equal tranches every quarter until March 1998.

"This is a strong and historical agreement", McGuirk said. By it the Bulgarian Cabinet undertook to introduce a currency board in June which is expected to quickly stabilize prices and the exchange rate, McGuirk added. The Mission welcomes Bulgaria's programme, says a press release of the IMF Resident Mission in Sofia. "The financial stabilization and structural reform set the stage for strong sustainable growth with low inflation. This commitment represents a clear break with the past, and can be expected to bring a rapid stabilization of prices and the exchange rate, according to the IMF.

The agreement should be backed by a sound fiscal policy and strong supervision on the part of the Cabinet. The programme provides for increases in budgetary wages and contains a social safety net to cushion the effects of the present recession on the poor.

The Government has also undertaken to implement a structural reform - privatization of the banking system and the production sector. A strong cash privatization programme will be implemented by June.

The IMF will extend USD 50 million for stabilizing Bulgaria's banking system. The lending institutions should be stabilized before a currency board is put in place and steps to their stabilization will be launched already tomorrow, Prime Minister Stefan Sofiyanski said. The people should not worry about their savings, Sofiyanski added.

The financial stabilization programme has been adjusted to the servicing of Bulgaria's foreign debt, Finance Minister Gavriiski said. It is almost impossible to achieve a rescheduling of the debt to the London Club which Bulgaria owes USD 250 million a year. "The agreement with the IMF gives us grounds to hope that we may receive an invitation to negotiations on a rescheduling of payments to the Paris Club soon," Gavriiski added. If the privatization programme is duly implemented, payments on credits received till 1991 will be no problem, Gavriiski said. It has been provided for internal and foreign debt payments to be effected not by taking fresh loans but by increasing production, exports and revenues from privatization.

The finance minister projected a steep drop in inflation in March, April and May. Inflation is expected to drop below 50 percent during these months. After the introduction of a currency board the inflation rate is projected at 1-2 per cent a month.

The budget deficit is expected to be up to 4 per cent of the GDP. The final decision on the budget framework will be made by the future Cabinet and Parliament, the Finance Minister said.

[02] PM SOFIYANSKI ON THE AGREEMENT WITH THE IMF

In his address the prime minister said Bulgaria has undertaken to implement concrete reforms for establishing market economy which may cause some financial hardships to the population. Electricity prices will increase between 30 and 60% in the coming months (on March 1 they were hiked 2.5- fold)

Central heating prices will also gradually go up. However, their increase will be steepest than the hikes of electricity prices. Petrol prices will also be liberalized but in Sofiyanski's view they are expected to remain close to the current ones. (Now one litre of A-93 petrol costs 1,000 leva.)

Prices of farm goods and the import and export regulations of these products will also be decontrolled. This may at one moment reflect heavily on the consumer but it is high time that the Bulgarian agriculture gets what it deserves, the Prime Minister noted.

However, the Cabinet policy will also be aimed at helping the socially disadvantaged, Stefan Sofiyanski said. Bulgaria will receive some 120 million US dollars outside the agreement with the IMF for severance payments. He stated that 58,000 people from the state-financed sector will be laid off in the transition period.

[03] BULGARIA STRIVES TO MEET NATO MEMBERSHIP REQUIREMENTS

The Bulgarian President said that what Bulgaria focuses its efforts at the moment is a radical change in civil-military relations in compliance with the new role of the military factor in the political system and civil society, the codification of the principles of democratic control in security and defence, reform in the armed forces and reconsideration of the national defence concept.

"In my opinion the thesis that Bulgaria's desire for NATO membership amounts to a challenge to Russia or even a hostile act in regard to it is absolutely irrelevant and groundless," President Stoyanov said. In his opinion, seeking integration with NATO is in line with Bulgaria's desire for intensive development of relations with Russia. "This country's desire for NATO membership will not thwart its relations with Russia, on the contrary, it can make them more clear and transparent and less ambiguous," Mr Stoyanov said.

"It would be incorrect to say that the budget restrictions will not have an impact on the army," the President said in reply to a question about the fate of the army in the conditions of a currency board. He believes that it would be necessary to find the optimal balance of the most important parameters of military planning. If there is a discrepancy between requirements and possibilities, compensating mechanisms will be sought, the President said. They will be sought through NATO, through more comprehensive confidence and security building measures with neighbouring countries, and through activation of relations with the members of NATO, Russia, Ukraine and the Vishegrad group, the President said in the interview.

Sofia, March 17 (BTA) - Bulgaria can become NATO member only when it meets all membership requirements, and there is no requirement in the NATO questionnaire on the expansion that were are not in a capacity to meet, Bulgarian President Peter Stoyanov says in an interview for the Monday issue of the "Bulgarska Armiya" newspaper.

The Bulgarian President believes Bulgaria now should concentrate on making a radical change in civilian-military relations; using democratic instruments for establishing the principles for control in the field of security and defence; and reforming the armed forces.

The President also says the decision for Bulgaria's accession to NATO is a political one, adding the responsibility for it rests solely with the political elite in the country and it should not shun it through referendums or other procedural manipulations. "I believe firmly that Bulgaria can only benefit from NATO membership," says he.

The interviewee further advocates an intensive development of relations with Russia on the basis of mutual respect, independence and mutual benefit. He is definite Bulgaria's application for NATO membership will not mar the nation's relations with Russia. "Just the opposite: it will make them clearer, more transparent and less ambiguous," says he.

"A state with a weak army has little chances to defend its national interests," says the President. He goes on dwelling on the reforms that has to be carried out in the military sphere. He says the concept on the Bulgarian armed forces by 2010 that has already been adopted, has yet to be specified and introduced at Parliament that will then adopt a long-term programme and ensure its financing.

[04] US UNDERSECRETARY OF DEFENCE SLOCOMBE: BULGARIA A STABILITY FACTOR

"We are firmly resolved to make up for the lost time and not to become a gray zone," President Stoyanov was quoted by the President's Office as saying at the beginning of his meeting with Walter Slocombe. "Bulgaria's joining NATO will not strain but, on the contrary, improve the relations with Russia," the President is quoted as saying.

Earlier in the day Slocombe conferred with Bulgarian Defence Minister Georgi Ananiev. Bulgarian caretaker cabinet's decision as from February 17 to declare officially this country's desire to join NATO was on the agenda of the discussions. Minister Ananiev noted the importance of this decision saying that no political force in Bulgaria, even the Socialist Party which was in office until recently, has categorically opposed Bulgaria's membership in NATO. After the talks with Ananiev Walter Slocombe said the USA supports this step of the Bulgarian government. Washington has not yet made its own decision as to which countries should be admitted first to an expanded NATO, Slocombe stated. He added Bulgarian will be treated on an equal footing with the other applicant countries. The US Under Secretary of Defence stated the stance of the United States and NATO that the doors of the Alliance will not be closed after the admission of the first wave of applicants.

Minister Ananiev familiarized the guest with the national program on Bulgaria's accession to NATO and this country's participation into the Partnership for Peace program. Walter Slocombe handed the Bulgarian Defence Minister a letter by US Defence Secretary William Cohen in which he praises Bulgaria's participation in Partnership for Peace.

In Slocombe's view Bulgaria is well aware that joining NATO is a long process which will take a lot of time and requires many successive steps. The applications of all countries willing to join NATO will be carefully considered at the Madrid meeting due in July. According to Slocombe, the important thing now is Bulgaria's desire to join the European security structures.

Meeting Prime Minister Stefan Sofiyanski, Walter Slocombe voiced the US Government's support for Bulgaria's embarking on the difficult road of reforms. The sides agreed that there are prospects to promote bilateral cooperation in defence and other spheres in the future.

The guest had talks with Colonel General Tsvetan Totomirov, Chief of the General Staff of the Bulgarian Army and with Foreign Minister Stoyan Stalev.

The cabinet decision to declare officially Bulgaria's will to join NATO was high on the agenda of the annual meeting of the bilateral working group with the Bulgarian and US defence ministries, Bulgarian Deputy Minister of Defence Roumen Kunchev said after the meeting. This is the group's fourth successive meeting which considered topical issues of the Bulgarian-US military and technical cooperation, Kunchev added.

Walter Slocombe ended his visit to Bulgaria with a lecture before the Atlantic Club. Slocombe arrived here Sunday evening.

[05] FOREIGN MINISTER STALEV: BULGARIA STANDS GOOD CHANCE FOR NATO

The meeting was to discuss a government decree on the setting up of an Intergovernmental Committee on Bulgaria's Accession to NATO and the national accession programme.

The meeting discussed concrete steps in implementation of the programme. Foreign Minister Stalev said that it is in Bulgaria's strategic interests to be included in NATO's enlargement schedule, regardless whether in the first or second group of countries. Stalev said that the first and most important step in this direction will be the answering of a NATO questionnaire to be completed and sent to the NATO headquarters in Brussels in the next few weeks.

Bulgaria has good chances of becoming a convincing applicant thanks to its foreign policy over the past few years as a factor of stability in the Balkans, Foreign Minister Stalev believes. There are no opponents to NATO membership in Bulgaria. Rather there are some unclarified stands, Foreign Minister Stalev said.

[06] BULGARIANS EVACUATED FROM TIRANA

[07] GEORGE SOROS OFFERS INTEREST-FREE LOAN

The meeting was attended by members of the governing board of the Open Society - Sofia Foundation, Georgi Prohaski and Stefan Tafrov, Bulgarian Ambassador to the United Kingdom.

Kostov told Soros of the difficulties experienced everyday by ordinary Bulgarians which are continuing despite the enocouraging results of the first steps taken by the caretaker cabinet in overcoming the deep economic crisis.

In response Soros proposed to extend Bulgaria an interestfree loan of USD 25 million to be used for buying medicines and foods. Soros also promised to send an additional USD 1 million in humanitarian aid through the Open Society - Sofia Foundation. This sum will be added to the sum of USD 1.8 million already donated by George Soros in support of hospitals, for grants to socially disadvantaged students and for 40 soup kitchens across the country.

All funds donated by Soros under humanitarian projects will be distributed outside the regular budget for educational and cultural programmes of the Open Society - Sofia Foundation which amount to USD 7 million for 1997.

The meeting also discussed the extension of considerable funds for crediting small and medium-size business in Bulgaria following the introduction financial stabilization measures.

Kostov and the representatives of the Open Society - Sofia Foundation thanked George Soros for his generous support in these difficult times for Bulgaria, the press release of the Foundation says.

[08] COUNCIL OF MINISTERS DECISIONS

The government also heard reports by Foreign Minister Stoyan Stalev and Education Minister Ivan Lalov on the preparation of a draft agreement on cooperation in education and science and a draft memorandum of understanding between the Bulgarian and US administrations. The documents envisage assistance for the American University in Blagoevgrad, Southwestern Bulgaria. The government further approved a framework agreement with Germany on technical assistance under the TRANSFORM programme.

The cabinet ministers gave a hearing to Deputy Prime Minister and Justice Minister Haralambi Anchev on the preparation of the April 19 early general elections.

The government revoked the 1997 privatization schedule adopted by the former Socialist government of prime minister Zhan Videnov. The aim is to give the government to be appointed by the next parliament, a chance to draw up a new privatization programme based on its policy and priorities.

The government amended the ordinance regulating the conduct of centralized auctions for sale of shares of state-owned enterprises to the public. From now on the Auction Committee will announce publicly the bids of privatization funds with a view to making the privatization process more transparent.

The rules for the structure and activity of the National Security Service (NSS) were amended on the proposal of NSS Director Gen. Dimiter Vladimirov. The amendments, taking effect as of March 1, regulate the payment of fringe benefits to civilians working in paramilitary establishments.

[09] DEMOCRACY NETWORK TO PRESENT THIRD GRANT ROUND

The DNP, which is being carried out in 11 countries from Central and Eastern Europe, was launched in Bulgaria in February 1995. The three- year Program aims to provide assistance in four areas: establishment of democratic practices, building up a social safety net, economic development and environment protection.

The assistance, given within the DNP, is intended either to promote the NGOs' institutional strengthening or the implementation of their projects.

Fifty one applicants were admitted in the first two grant rounds and they were funded with the total of 550,000 US dollars. Other 50,000 US dollars were extended for training and technical assistance to more than 70 non- profit organizations.

Eight of the projects, financed under the DNP, are related to resolving the problems of the Roma population in Bulgaria. These are local projects and aim to integrate the Roma into the public life, reduce unemployment among young Roma, allocate land to landless Roma families and monitor Roma rights observation.

The Journalists for Tolerance Foundation has received assistance for two of its projects: one for processing, computerization and use of the journalist archives concerning the situation and the problems of Bulgarian minorities. The second project is designed to promote ethnic tolerance in the region of Kurdjali (an area densely populated with ethnic Turks).

Other two projects: on improving democratic practices through harmonizing Bulgarian legislation and Community Law and on jurors' training, have been financed within DNP. The Program helped the institutional strengthening of the Bulgarian Helsinki Committee and six structures of the Bulgarian Association for Fair Elections and Human Rights. Other projects that have received financial assistance involve helping families of people with mental disorders and building up an information system to resolve problems of children at risk.

The Institute for Sustainable Communities have been working in Bulgaria since 1992 in the field of environment protection mainly. Institute experts exerted assistance in the developing of a national policy for solid household waste disposal.

[10] BULGARIA COUNTS ON AID TO END GRAIN SHORTAGE

Things are getting back to normal as the government unlocked the contingency reserve and the first shipments of imported grain arrived. This relieved an acute wheat shortage at the flour mills which had led to round- the-block bread queues.

The first shipment came from Poland. The deal was initiated by President Peter Stoyanov during a visit to that country earlier in March. The shortage will be relieved somewhat by the import of 100,000 tonnes of Polish wheat, said Rangelov. The cabinet has decided to offer it at 150 dlrs/t to flour mills, which will bring bread prices down, Rangelov said, adding that this would defuse social tensions. He said Bulgaria had not experienced such a crisis in at least 80 years. Polish grain will help to meet domestic requirements in March and April.

A second shipment of 31,200 tonnes of Polish grain is to be unloaded in the Black Sea city of Bourgas. Payment is guaranteed for the next shipment of 30,000 tonnes. "We will do our best to feed the people until the new crop is gathered," Rangelov said. Expectations are the 1997 crop will be good which will allow the country to repay a 200,000-tonne tied credit to Poland and companies that will supply grain in March and early April.

Bulgaria will need more wheat to meet requirements. Switzerland has provided some 30,000 tonnes in humanitarian aid. France has also offered humanitarian aid including 3,650 tonnes of flour. Talks have been held with the European Union to supply grain worth 30 million dollars. Syria is ready to supply 70,000 tonnes of wheat. Greece has offered 2 million dollars for grain supply. The contingency reserve is also part of a plan to ease tension in the country.

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