News from Bulgaria / Apr 10, 96

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

Bulgarian Telegraph Agency Directory

EMBASSY OF BULGARIA - WASHINGTON D.C.

BTA - BULGARIAN TELEGRAPH AGENCY

10 April, 1996

CONTENTS

[01] FOREIGN MINISTRY PRESS RELEASE

The reason for Russian Ambassador in Sofia Aleksandr Avdeyev refusing to accept the note is the manifestation of of anti-Russian feelings on the part of certain political circles in Bulgaria, the Foreign Ministry press release says.

The Union of Democratic Forces (UDF) will ask to be given the full text of the Bulgarian Foreign Ministry's note prompted by President Yeltsin's statement, UDF Spokesperson Nadezhda Mihailova said after today's meeting of the coalition's National Executive Council. In Mihailova's opinion, the UDF MPs should familiarize themselves with the text and that is what they will insist on before the parliamentary Foreign Policy Committee.

[02] PRESIDENT ZHELEV VETOES AGGREGATE INCOME TAX ACT

The President reasons his decision, stating that this legislation abolishes almost all tax reliefs for sole traders and privately practising physicians and dentists that they enjoyed before. According to Zhelev, it is not right to reduce the amount of tax-exempt travel, accommodation and per diem expenses of private businessmen to the level of the tax- exempt amount, established for state employees.

The amounts of taxes and tax reliefs are stipulated in subordinate legislation and not in a separate act as is specified in the Constitution, the President says in his reasoning. Under the Act Amending the Aggregate Income Tax Act, income tax is payable on assets such as expenditure on the construction of buildings, machinery, equipment, automobiles and repairs. According to President Zhelev, the sole traders' investments will be liable to taxation which will ruin them and will have a heavy impact on the country's economy. The tax payers are not treated on an equal footing which harms the interests of a number of citizens, the President states in the reasoning.

Last week Zhelev held separate consultations on the new tax legislation with the leaders of the two largest trade union amalgamations, the Confederation of Independent Trade Unions in Bulgaria (CITUB) and the Podkrepa Confederation of Labour, with MPs of the parliamentary represented opposition forces, the Union of Democratic Forces, the Popular Union and the ethnic Turks' Movement for Rights and Freedoms, with the C.E.O.s of the Bulgarian Chamber of Commerce and Industry and the Bulgarian Industrial Association. The representatives of the trade unions and the opposition expressed their negative attitude towards the new act which, in their view, is a heavy burden on the tax payers and a hindrance to private initiative. During the talks, opposition MPs appealed to President Zhelev to exercise his right and impose a suspensory veto on the act. Representatives of the parliamentary group of the Democratic Left, which holds a majority in Parliament, were not present at the talks with President Zhelev.

In an address broadcast on the national media tonight President Zhelyu Zhelev said that the approved amendments to the Aggregate Income Tax Act and the Local Taxes and Rates Act run counter the interests of the ordinary people and manufacturers. In his view the tax burden is increased at a time when it becomes clear that the electricity and heat power will go dramatically up and that staple goods will mark- up steadily. Under these grave conditions, the Government is blocking the social dialogue by imposing decisions unilaterally and in practice infringes on the citizens' right to fight for their survival, Dr Zhelev said. In his view such policy will bring nothing else but polarization of the society. He said that this policy verges on social genocide.

The regulations of the newly-adopted tax laws will kill the economic enterprise and the ones to suffer most seriously will be the average and small-sized businesses as well as the free-lancers, the President says. Dr Zhelev declared he cannot allow such a blow to be inflicted on the citizens of Bulgaria. The nation would accept new increase of taxes only if it is aware of the purpose of this act, the President said. In his view most of the collected taxes are used not for social purposes, but for payment of interests on the home and foreign debts, for covering the losses of inefficient state-owned enterprises and for saving the banking system.

The Government of the BSP resorted to tax terrorism, Dr Zhelev said. He called on to the incumbents to give up this disastrous policy.

[03] LITHUANIAN PRESIDENT BRAZAUSKAS ARRIVES ON OFFICIAL VISIT

The Bulgarian and Lithuanian heads of state are expected to sign a bilateral agreement on friendship.

Apart from Zhelev, Brazauskas is scheduled to meet National Assembly Chairman Blagovest Sendov and Sofia Mayor Stefan Sofiyanski. The Lithuanian President will address the Bulgarian Parliament.

During Brazauskas' visit, the sides will discuss the siltation and the prospects before the Bulgarian-Lithuanian relations as well as a number of international issues.

Apart from the bilateral agreement on friendship, the sides will also another three agreements: on scientific, technical and economic cooperation, on visa-free travelling and on cooperation in the field of science, education and culture.

Bulgaria and Lithuania established diplomatic relations in 1991. "We turned on a new page in the relations between our two states after a 50-year break," Brazauskas says in an interview in today's "Continent". In November 1991, the two countries signed a long-term agreement on economic, trade, scientific and technical cooperation. This was Bulgaria's first such agreement with a Baltic state and Lithuania's first such treaty with an Eastern European country. Under the agreement, Bulgaria and Lithuania granted a most-favoured trade status to each other. In 1995 the two countries signed an agreement on international passenger and cargo transport. "The document marked the beginning of new political and economic relations between Bulgaria and Lithuania," Bulgarian Transport Minister Stamen Stamenov said during the signing ceremony. "We have to admit that the Bulgarian-Lithuanian cooperation in the past few years was rather slack. There are still untapped opportunities for intensive cooperation," Brazauskas says in the "Continent" interview. He stresses that Lithuania is interested in promoting cooperation with Bulgaria and that he expects this it is the same for Bulgaria. Drafting of the legal framework for the Bulgarian-Lithuanian relations is a major goal of the near future, Brazauskas says. President Brazauskas visit is expected to boost the Bulgarian-Lithuanian relations.

[04] AGRICULTURAL LANDS PROTECTION ACT ADOPTED

Before first-reading discussions of the bill were opened, the Parliamentary Committee on Agriculture and Forests came up with the stand that the bill is very important to pass. Its adoption will regulate adequately the matter at hand, taking into account the changes in Bulgaria after the fall of totalitarian regime in late 1989 and the existing legislation, the Committee's members said.

The act regulates the rights and obligations of the agricultural land owners and users and of the state and municipalities as far as land protection from erosion, swamping, pollution, salination and others are concerned. Land owners and users are obliged to maintain the reproductive potential of the soils.

Under the new act the money for restoring the agricultural lands fertility will be provided by a special fund and by these who have caused land pollution or damage. Non-adherence to the respective provisions in the act will be penalized.

According to the Agricultural Lands Protection Act, the change of former land use to a new use, that does not involve agricultural activities, will be possible only by permission of the Agricultural Land Commission with the Agriculture Ministry and after payment of taxes.

The act provides that construction on agricultural land (from 1st to 6th grade) is allowed only after the removal of the humus-accumulated horizon. The horizon is used for reclamation of areas or improvement of low-productive lands.

The act specifies the cases in which lands, owned by natural and juristic persons, may be alienated for state or municipal needs.

[05] TWO OPPOSITION CANDIATES FOR THE PRESIDENCY SIGN AGREEMENT

After the signing of the agreement the opposition leaders: Anastasia Moser and Stefan Savov (co-chairmen of the Popular Union), Ahmed Dogan (Leader of the ethnic Turks' Movement for Rights and Freedoms) and Ivan Kostov (Chairman of the UDF Coordination Council) congratulated the two contenders and wished them success.

On March 29, 1996 the opposition UDF, Popular Union and ethnic Turks' Movement for Rights and Freedoms (MRF) signed an agreement on holding preliminary elections to nominate a single candidate of the opposition for the presidential race. Under the agreement this candidate who is defeated in the open primaries should withdraw and not run in the presidential elections proper. The MRF leadership said it will appeal to its members and supporters to vote their conscience in the pre-elections.

The open primaries are scheduled for June 1, 1996. Today the two contenders for the opposition nomination, Stoyanov and Zhelev, pledged to show tolerance and honesty during the election campaign.

After the signing of the agreement, Zhelev held talks with Moser and Savov on issues related to the mechanisms of the pre-elections.

The preliminary elections represent a risk for the whole democratic community, but at the same time they are a political experiment of great importance for the opposition, Ivan Kostov said. Last week the press quoted Alexander Pramatarski, one of the chiefs of the Pobeda Foundation which will sponsor the preliminary elections, as saying that the procedure will cost some 1 million US dollars. Last week the papers cited Anastasia Moser who said that the US Republican Institute had promised to finance the Popular Union election campaign by 350,000 US dollars.

[06] NEW DONATIONS UNDER U.S. HUMANITARIAN AID

[07] BUSINESS PRESS

Accused that the depreciation of the Bulgarian lev since early 1996 has run ahead of inflation, the BNB Governor says the opposite trend is observable over a longer period - the past 12 months. For the past three weeks, the BNB has bought more foreign exchange than it has sold, says Filipov. And yet this is no consolation since the reserves are thinning away while there are sizable payments to be made, the interviewee also says.

The stabilization of banks will take radical measures, according to the BNB Governor. He believes it is important to boost major banks such as Bulbank and the State Savings Bank. But the rehabilitation of the banking sector will take a lot of money. According to Filipov, the major problems stem from the bad debts of loss-making enterprises. To avoid what Filipov describes as pouring water into the sand, no money should be extended to loss-makers and financial controls should be stiffened.

The BNB is currently considering measures as regards losing banks. Some 70% of the bad debts are due to state-owned banks, according to Filipov. He believes that stringent measures pertaining to the capital adequacy should be taken only after an agency for collecting bad debts is set up. "The ailing part of the banking system should be isolated to make sure it does not infect the rest," Filipov says. He also says the bankruptcy of a big bank is possible but too costly. "Bank failures should not come to kill companies and investors," says the banker.

The central government's budget deficit increased by 2,300 million leva in March reaching 24,800 million leva, or 46.8 per cent of the 1996 target, the press says, citing information of the Finance Ministry. To March 31, revenue amounted to 41,300 million leva, which is 16.5 per cent of the 1996 target. Budget expenditure grew by 20,200 million leva in March to 66,100 million leva, or 21.5 per cent of its projected volume.

The central bank took over the management of the Vitosha Bank for Agricultural Credit, the press says. A decision to this effect was voted at yesterday's extraordinary general shareholders' meeting. Participants in the meeting also voted a resolution to introduce a two-tier management in the bank. The text that the bank's main line of business is servicing the agriculture sector was deleted from the bank's articles of association.

[08] EXPERTS DISCUSS SITUATION OF KOZLODOUI N-PLANT'S POWER UNIT ONE