USIA - Text: World Bank Statement on Loan to Bulgaria, 97-05-09

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TEXT: WORLD BANK STATEMENT ON LOAN TO BULGARIA

($40 million loan to reduce commodity shortages) (530)

A Bank statement issued May 8 said the loan "will help finance the immeidate purchase of socially-important goods, such as medicine, wheat and fuels, which are currently in extremely short supply."

Following is the text of the World Bank statement:

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WORLD BANK HELPS REDUCE SHORTAGES OF VITAL COMMODITIES IN BULGARIA

"The Bank's loan will help alleviate some of the day-to-day hardship faced by the public and at the same time will help build public confidence in the government's new economic reform program," said Ms. Neeta Sirur, Task Manager. "The timely implementation of the program is critical to arresting and reversing the country's deep economic crisis and to restoring domestic and international confidence in Bulgaria's economic prospects."

Working closely with the International Monetary Fund, the European Commission, the World Bank, and other international donors, Bulgaria's interim government, in place since February 1997, took a series of important measures to overcome the political and economic crisis of the past year which included defining an ambitious macroeconomic stabilization and structural reform program. Results of the recently held elections in April 1997 have reaffirmed public support for the economic recovery program, and Bulgaria is expected to make continued progress in the program implementation over the next year and a half.

The main objective of the government's reform program is to achieve economic and financial stability in order to improve the living standards of the Bulgarian people by:

• Adopting a budget that eliminates the need for central bank credit;
• Introducing a currency board arrangement in mid-1997;
• Initiating banking sector reform, including the privatization of state banks;
• Beginning enterprise sector reforms through the closure of non-viable enterprises;
• Introducing an accelerated privatization program with cost cutting measures and tariff adjustment for public utilities;
• Promoting price and trade liberalization especially in the agricultural sector including land reform; and
• Improving the social safety net through the consolidation and better targeting of government programs.

The loan will be at the standard interest rate for LIBOR based, U.S. dollar, single currency loans with a twenty-year maturity, including a five-year grace period.

Since Bulgaria joined the World Bank in 1990, Bank commitments total approximately $933 million for 13 operations.

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