News from Bulgaria / Mar 8, 96

From: bulgaria@access1.digex.net (Embassy of Bulgaria)

Bulgarian Telegraph Agency Directory

EMBASSY OF THE REPUBLIC OF BULGARIA - WASHINGTON D.C.

BTA - BULGARIAN TELEGRAPH AGENCY

8 March, 1996

CONTENTS

[01] PRESIDENT ZHELEV TO PAY OFFICIAL VISIT TO BELGIUM

[02] COUNCIL OF MINISTERS DECISIONS

A full licence for foreign trade in arms will cost 300,000 leva, under a decree issued by the Government today. The decree sets the fees collected under the Foreign Trade in Arms and in Potential "Dual Use" Goods and Technologies Control Act. A limited licence will cost 150,000 leva and a licence for trade in dual use goods 75,000 leva.

An ordinance regulating the growth of wages in 1996 provides possibilities for raising wages in enterprises of the manufacturing sector. Tax regulation of wages growth remains but conditions are established for a closer interrelation between wages funds and the financial performance of the enterprise. The Ordinance introduces considerably eased tax rates which makes it possible for a number of branches to raise their average wage under more favourable conditions. The Ordinance provides for lifting wages funds regulations on profit making enterprises. In December 1995 the average monthly working wage in this country was 9,400 leva.

The Council of Ministers approved the Convention of the Law of the Sea signed in Montego Bay in 1982 and will introduce it in Parliament for ratification. The Convention regulates all sea areas and the entire spectrum of activities related to the use of the world ocean and its bed.

The Council of Ministers approved a draft agreement between the governments of Bulgaria and Russia on cooperation in environment protection and authorized the environment minister to sign it after the holding of negotiations.

The Council of Ministers discussed a draft treaty on friendly relations and cooperation between Bulgaria and Lithuania. The document is due to be signed during the forthcoming visit of the Lithuanian President to Bulgaria.

The Cabinet approved a draft trade agreement with the Arab Republic of Egypt as well as an agreement on avoiding double taxation between Bulgaria and Libya.

The mayor of Dobrich (Northeastern Bulgaria) was chosen to chair the Bulgarian delegation to the Congress of Local and Regional Authorities in Europe. This forum will hold its third plenary session from July 3-4 in Strasbourg.

The Government sanctioned the French ship Vektor to sail in Bulgarian territorial waters from April 10 through June 15, 1996. The ship will implement the Kafos project for laying a sea bed cable between Turkey, Bulgaria and Romania. The project is executed by the French Alcatel company and has been assigned by the Bulgarian Telecommunications Company.

The Council of Ministers approved today a draft document on the reconstruction of the Gyueshevo border checkpoint (on the Bulgarian- Macedonian border). Its reconstruction is funded by the UNDP. The Government decided to guarantee a credit for the Vazov Mechanical Engineering Works in Sopot for reconstruction and repairs.

The ministers heard a report on the stand of the Bulgarian Government at the session of the Bulgarian-Greek programming and control committee of the PHARE programme, cross-border cooperation and the INTERREG II programme.

The Council of Ministers supports the conditions for Bulgaria's participation in the Social Development Fund of the Council of Europe but will refrain from granting specific financial guarantees for the implementation of investment projects in the postwar reconstruction of Bosnia and Herzegovina until the reaching of an agreement on the participation of Bulgarian companies in their implementation.

[03] BULGARIA, MACEDONIA TO REVISE TWO-WAY FREIGHT TARIFFS

Sofia, March 7 (BTA) - Working groups of the Bulgarian and the Macedonian trade ministries will reconsider the two countries' bilateral freight tariff policies before the end of April, Bulgarian Transport Minister Stamen Stamenov said today. Last year's licences were extended until the end of March during a visit which Mr Stamenov completed to the Republic of Macedonia last night. As Macedonian carriers moved more freight across Bulgarian territory last year, the Bulgarian Ministry would like tariffs to be revised. Mr Stamenov and his Macedonian counterpart Dimitar Buzlevski considered opportunities for the opening of new border crossings between the two countries. This matter will also be on the agenda of a forthcoming meeting of the South Balkan defence ministers, Mr Stamenov said. Mr Stamenov insisted that several Bulgarian construction companies be admitted to the tenders for construction of a railway between Bulgaria and Macedonia. Hydrostroy and the construction element of the Transport Ministry Troops could win subcontracts for the project, the Transport Minister said.

[04] FIRST SESSION OF BULGARIAN-YUGOSLAV COMMISSION

Bulgaria and Yugoslavia want to tap opportunities to develop their trade and economic ties after the stagnation due to the Yugoembargo, Konakchiev said. The meeting removed all obstacles to broader economic cooperation, said Jovan Zebic, Deputy Prime Minister and leader of the Yugoslav delegation. In his view, the sides reached agreement on long- term trade and cooperation programmes.

Bulgaria and Yugoslavia set a high priority on three trade issues, Konakchiev said. First, the two countries' central banks will sign an agreement which will form the framework of commercial settlements. Bulgaria and Yugoslavia must name banks for the purpose, said Konakchiev, adding that state-owned banks are the most likely choice. Second, Yugoslavia committed itself to propose cuts in transportation fees as Bulgaria will start exporting perishable goods to Central and Western Europe in late March, Konakchiev said. In his view, Yugoslavia will grant Bulgaria a large number of permits to pay part of its debt, while the rest will be paid off with imports of railway equipment and free freight traffic across Yugoslav territory. Third, Yugoslavia wants to barter finished products for Bulgarian raw materials, Konakchiev said. The Bulgarian side spelled out its preference for foreign currency settlements, stressing that barter is going out of use.

[05] MEETINGS OF BULGARIAN DEPUTY P.M. GECHEV

New York, March 7 (BTA) - Bulgarian Deputy Prime Minister and Minister of Economic Development Roumen Gechev, who is in Baltimore to attend the East-West Trade Ministers' Conference, today met with ministers of the economy. During his talks with Russian Economic Minister Evgeny Yassin, Gechev discussed issues of the bilateral economic cooperation. Yassin stressed that Bulgaria has a priority status in Russia's foreign policy. The Russian Minister assured Gechev that Bulgaria will receive the expected preferential terms during the approval of the 1997 state budget.

The meeting between Gechev and Slovenian Minister of Economic Relations and Development Janko Dezelak focused on the opportunity for a speedy signing of a bilateral agreement on a free trade zone.

Gechev's meeting with U.S. Secretary of Commerce Ronald Brown, the host of the conference, analyzed the reforms in Bulgaria. Gechev defended Bulgaria's position for the participation of this country's companies in the postwar reconstruction of former Yugoslavia which will ensure the partial compensation of the losses Bulgaria sustained as a result of enforcing the U.N. sanctions against former Yugoslavia. The two officials also addressed the possibility for Bulgaria's receiving a permanent most favoured nation status in trade with the US, the Cabinet's press office said.

[06] BULGARIAN PARLIAMENT CONDEMNS BOMB ATTACKS IN ISRAEL

"The Bulgarian National Assembly strongly condemns these acts of terrorism and extends deepest condolences to the relatives of the victims, as well as to the whole Israeli people," the declaration says. The Parliament voiced hope that these acts would not draw a similar response on part of Israel, which "would increase the tension and seriously threaten the peace process."

[07] BULGARIAN MISSION IN BOSNIA-HERCEGOVINA TO COST 6 MLN LEVA

[08] BULGARIA, UKRAINE SIGN DEFENCE COOPERATION PROTOCOL

Sofia, March 7 (Andrei Sharkov of BTA) - Ukraine will supply Bulgaria with essential military equipment and spare parts for the Bulgarian Army on a barter basis in 1996-1997. Bulgarian and Ukrainian military scientists will engage in joint research developments at military research centres. The two countries' armies will swap notes on their participation in peacekeeping operations. These are part of the highlights of a Protocol on Expansion of Cooperation between the Bulgarian and the Ukrainian Ministries of Defence, signed here today by the two ministers, Dimiter Pavlov of Bulgaria and Valerii Shmarov of Ukraine. Mr Shmarov arrived in Sofia yesterday on an official visit at the head of a military delegation. He was received by President Zhelyu Zhelev, National Assembly Chairman Blagovest Sendov and Prime Minister Zhan Videnov. After the signing ceremony, the two defence ministers said they were pleased with the accords. "Our cooperation will safeguard the two states' sovereignty," the Ukrainian guest told BTA. Bulgaria and Ukraine pursued military coopertaion on the basis of a framework agreement signed in 1992, which is particularlized in annual cooperation plans. An express protocol on cooperation between the two countries' navies was signed by the Commander of the Bulgarian Navy, Vice Admiral Hristo Kontrov, when he visited Ukraine half a year ago. The two navies' commands are reactivating their ties which were disrupted while the Black Sea Fleet was being distributed between the Russian and the Ukrainian navies, a process which Mr Shmarov said is drawing to an end. Delegations of the Bulgarian Transport Ministry Troops and the respective branch of the Ukrainian Army signed a document on cooperation in January 1996. Yesterday and today, the two ministers repeatedly stressed to the media the need to tap the underutilized potential for cooperation between the military establishments of Bulgaria and Ukraine.

"What is particularly important is to lend specific meaning to the common understanding that has been reached," Mr Shmarov said after the signing today. "The future of bilateral cooperation rests on the sound traditions in Bulgarian-Ukrainian relations; this cooperation is not directed against anybody," Mr Pavlov emphasized. The sides will explore opportunities to join efforts in the modernization and repair of aircraft engines, radar sets, air-defence missile systems, various combat vehicles and engineer equipment, and artillery pieces of over-100 mm caliber, the document provides. Wider cooperation will be pursued in military medicine, servicemen recreation, welfare support, exchange of information etc. Bulgaria will be able to use Ukrainian training grounds for its military exercises. The lack of a mechanism for reciprocal payments impedes military economic cooperation, the two ministers told reporters at the Ministry of Defence today. They promised to do everything possible to sort out the problem. At the end of 1995, four Bulgarian ordnance factories were among the co-founders of a Bulgarian- Ukrainian Investment Bank, which is awaiting licence. This raises hopes and prompts expansion of trade precisely in special-purpose supplies, an inside source of the Ukrainian Embassy commented for BTA. The two countries are drafting an express document on their cooperation in the defence industry, including integrated production with the giant Ukrainian arms manufacturer Ukrainmach. The document will probably be signed when Ukrainian Prime Minister Yevgeny Marchuk visits Sofia at the end of July 1996, the source added. Bulgaria and Ukraine have honoured their commitments under the Treaty on Conventional Armed Forces in Europe, and reciprocal cascading of materiel is no longer possible (that idea was discussed in 1993, when the then chief of General Staff of the Bulgarian Army, Colonel General Lyuben Petrov, visited Ukraine). Special-purpose supplies can only be bartered or sold, and this will be settled, probably in May 1996, between the chiefs of the respective departments at the two defence ministries, BTA learnt from Dimiter Mitkov, Deputy Minister of Defence for Military Political Affairs. The use by the Ukrainian Army of the Bulgarian firing practice range near Shabla (on the Black Sea, Northeastern Bulgaria), in which a Ukrainian delegation showed interest in 1994, was not on the agenda of the current visit, Mr Mitkov also said. The visiting delegation was particuarly interested in the Bulgarian experience of the ongoing reform in the army because of the similar conditions in Ukraine, the Chief of the Bulgarian Defence Ministry Press Centre, Navy Captain Tsvyatko Donchev, told BTA. "We familiarized the guests with the recently adopted Defence and Armed Forces Act, which provides a framework for the reform and specifically regulates contractual enlistment," Mr Pavlov told reporters. "Bulgaria and Ukraine are strategic partners," Mr Shmarov emphasized yesterday after a session of talks with his Bulgarian opposite number. Today he noted that both countries take part in NATO's Partnership for Peace initiative. The two ministers discussed Bulgaria's participation in an exercise codenamed "Peaceful Shield '96," due to take place in Ukraine in June 1996. It, too, will be held in the spirit of Partnership for Peace, they have been quoted as saying by the press. "At the talks we set forth, among other things, our governments' views on NATO's enlargement," Mr Pavlov told journalists today. "Bulgaria must clearly realize the tasks and responsibilities which this entails and has declared its stance in favour of an active dialogue with the European and Euro-Atlantic structures," he said. "Each country is entitled to address its national security problems as it thinks fit," the Ukrainian guest told reporters today.

[09] INTERIOR MINISTER NACHEV: TIGHTENING BORDER CONTROL

Sofia, March 7 (BTA) - The tightening of border control in all directions is one of our tasks this year, Interior Minister Dimiter Nachev said in Lyubimets (Southern Bulgaria) today where he is attending the celebrations of the 45th anniversary of the setting up of the border troops unit in this town. Interior Minister Nachev said that the Government is drafting a package of amendments to legislation regulating the structure and the organization of work in the borderland region. This refers to the operation of the customs houses and all ministries involved in border control. The changes will affect private companies trading in foreign exchange or working in the insurance industry, whose operation is not always legally regulated. National interests should be given priority in the borderland regions, Interior Minister Nachev said. He said that experts of different ministries are drafting proposals to be moved in the Council of Ministers. These include the setting up of a border police and of a unified information system covering all activities in the borderland areas. According to preliminary estimates, the computerization of Bulgaria's 28 border checkpoints will cost some USD 6 million.

[10] BANK REHABILITATION: THE KEY TO A STABLE FOREX MARKET

Sofia, March 7 (Ekaterina Kazassova of BTA) - The leap in the dollar against the lev is largely due to problems of the banking system and the banks' difficulties arising from their bad debt portfolios, Finance Minister Dimiter Kostov told the press today. To overcome the crisis, the management of the banking system must be improved and the depositors' confidence in it must be boosted. "Bank rehabilitation is the key to a stable foreign currency market," Kostov said.

Strengthening by 14 per cent so far this year, the dollar reached a record high level of 85 leva on Wednesday, exceeding by three leva the average dollar-lev exchange rate projected by the Cabinet for 1996. Dealers predict that at this rate the dollar will stride through the 100 leva level by the summer. A recent increase in the base interest rate by 7 percentage points to 49 per cent did not bring the hoped-for stability to the foreign exchange market.

Commenting on statements that the foreign currency crisis was an attack on the Government, Kostov said it could not have been precipitated by political causes if the economic conditions had not been there. He declined to comment the central bank's actions and the second base rate increase in a month. This is just one of the steps the National Bank of Bulgaria (BNB) can take, Kostov said. He disagrees with members of the BNB Governing Board who claim that a temporary doubling of the base rate would stabilize the foreign exchange market. The disadvantages of this step would outweigh the benefits, the finance minister said.

A base rate increase is not the best thing to do, but it is the easiest, the Prime Minister's Economic Adviser, Prof. Ivan Angelov, said recently. He said that if several banks go bankrupt shortly, the rest will tighten discipline which would help overcome the crisis in the banking system. Deputy Minister of Economic Development Dimiter Dimitrov blamed the central bank for the crisis in the banking system on national television on Wednesday. He said the BNB was not interested in its principle functions: maintaining the stability of the lev and of the banking system. Finance Minister Kostov does not think the dramatic strengthening of the dollar against the lev would necessitate updating the budget. In his view, it would be premature to talk of this now.

[11] FOREIGN TRADE REGIME AMENDED

Sofia, March 7 (BTA) - The Cabinet today lifted a ban on scrap metal exports by a decree which amended the foreign trade regime. In 1996 Bulgaria may export 75,000 tonnes of scrap metal to the European Union duty free. A licensing requirement will ensure that the domestic market is not left without supplies, said Minister of Trade and Foreign Economic Cooperation Atanas Paparizov. Licences will be issued by the Industry Ministry after domestic demand has been met, he said.

Healthcare consumables and medicines without local analogues will be imported duty free. The Health Ministry will update the list once every six months.

A ban on maize and sunflower seed exports was also lifted due to strong demand for some Bulgarian hybrids in Greece and EU member states. Only small amounts will be exported which will not cause difficulties in meeting domestic requirements, Paparizov said. Their export is subject to a licensing requirement.

The Cabinet rejected a proposal to lift a ban on sunflower oil exports before its expiry date, April 30. In spite of claims that plants are chock-full of cooking oil, the Cabinet said that lifting the ban might lead to a new cooking oil shortage. The available amounts will replenish the reserve.

The Cabinet adopted two decrees on import-export rules and procedure and the commitments proceeding from Bulgaria's agreements with EFTA and the EU. They reflect agreements reached between Bulgaria and the EU in 1995 to accelerate the reciprocal liberalization of the textiles trade, unilateral tariff cuts on the import of some industrial goods, etc. The decree is retroactive as of January 1, the opening date for the liberalization schemes for 1996.

[12] CENTRAL BANK INCREASES SIZE OF GUARANTEED BANK DEPOSITS

Sofia, March 7 (BTA) - The size of bank deposits guaranteed by the state was increased to 250,000 leva under a decision of the National Bank of Bulgaria (BNB) Governing Board today. This sum is payable to investors in a bankrupt bank irregardless of the original amount of the deposit and the currency in which it has been made. 100 per cent refunding has to date been guaranteed only for deposits to the amount of 50,000 leva, while 100,000 deposits were guaranteed 80%.

An increase of commercial banks' contributions for guaranteeing deposits has not been contemplated as yet, BNB Governor Lyubomir Filipov said today. He described the measure taken today by the central bank as a step preceding the revoking of banking licences. The decision is consistent with the World Bank recommendation to provide higher guarantees for deposits of members of the public to prevent an erosion of the confidence in the banking system, said also the BNB Governor.

In the event of insolvency of a banking institution, deposits above the guaranteed size will be paid in the process of collecting the bank's receivables. Members of the public will be entered in a waiting list together with economic agents, state and financial institutions, the central bank explained.

The BNB Board of Governors has appointed its administrator at the Vitosha Bank for Agricultural Credit. The session adopted measures for stabilizing the bank after over 50% of its shares were placed under the control of the central bank. The Bank for Agricultural Credit will start working with clients on Monday, March 11.

The BNB lifts the restrictions imposed on the Post Bank and Balkanbank. The two institutions have deposited the minimum required capital under the bank capital adequacy regulations. The Board of Governors of the BNB sanctioned shareholders of the Bulgarian Post Bank - the Bank Consolidation Company, the Bulgarian Telecommunications Company, Bulgarian Posts, the State Insurance Institute and the State Savings Bank, to increase their shares.