Bulgarian Telegraph Agency (BTA), 97-03-05

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

EMBASSY OF BULGARIA - WASHINGTON D.C.

BTA - BULGARIAN TELEGRAPH AGENCY

5 March, 1997

CONTENTS

[01] BULGARIA CONCERNED OVER ALBANIAN CRISIS

[02] PRESIDENT STOYANOV MEETS OUTSTANDING US ECONOMIST

[03] COUNCIL OF MINISTERS DECISIONS

[04] CABINET'S ECONOMIC TEAM MEETS I.M.F. OFFICIALS

[05] TRADE LIBERALIZATION TALKS WITH RUSSIA FORTHCOMING

[06] DUTCH PROGRAMME FOR COOPERATION WITH BULGARIA

[07] BULGARIA'S GRAIN, BREAD PROBLEMS

[08] PROTECTION MEASURES TO ACCOMPANY PRICE LIBERALIZATION

[09] ECONOMIC COUNCIL DISCUSSES INTRODUCTION OF CURRENCY BOARD

[01] BULGARIA CONCERNED OVER ALBANIAN CRISIS

The latest events in this country call for urgent measures by the world community and particularly by the European Union and the Organization for Security and Cooperation in Europe, taking into consideration the United States' key role. To settle the critical situation, it is vital to combine the diplomatic efforts with urgent humanitarian aid with the assistance of international financial institutions, the statement goes.

Bulgaria is convinced the only way to resolve the crisis is a peaceful one applying democratic means and respect for the constitutional order in Albania and the standards of international law to which Albania is committed as member of the OSCE and the Council of Europe, the Foreign Ministry Spokesman says further.

Bulgaria calls upon the governments of, and other political factors, in Albania's neighbours to help prevent a further destabilization of the region, the statement says.

[02] PRESIDENT STOYANOV MEETS OUTSTANDING US ECONOMIST

Speaking after a meeting with Bulgarian President Peter Stoyanov Tuesday, Prof. Hanke justified his optimism with two factors which he believes will help Bulgaria overcome the crisis: the consensus among the political forces on the need to introduce a currency board in the country and the sweeping action of the interim administration aimed at curbing the crisis. He is convinced things in Bulgaria will change to the better very soon and very pronouncedly.

Prof. Hanke, considered to be the father of the currency board, has some practical tips referring the introduction of this mechanism in Bulgaria, said Peter Antonov who is in charge of coordinating the work of the economic council with the presidency. The guest believes the effect of the currency board will be felt very quickly here. In his view the best option for this country is the standard currency board, i.e. an ordinary monetary institution that can be managed by the central bank.

Prof. Hanke would not recommend a date for introducing the currency board but believes the best time is after the April early general elections, said the press office of the presidency. He also believes the Bulgarian lev should be bound to the US dollar.

The US economist agreed to be President Stoyanov's honorary advisor for economic affairs.

[03] COUNCIL OF MINISTERS DECISIONS

The Council of Ministers decided on the sale of 55 percent of the shares of one of Bulgaria's largest chemical plants, Orgachim, seated in Rousse (on the Danube), to the Plovdiv-based Chimhlor Holding, the Government's press office said. The deal is of the worth of 9,918,000 US dollars. According to November 30, 1996 figures, the plant's fixed assets amounted to 987,069,000 leva.

The Cabinet approved a Bulgarian-Croatian agreement for cooperation in curbing organized crime, illegal trafficking of drugs and psychotropic substances and terrorism. The agreement envisages exchange of information about members of criminal gangs, the underworld of the two countries, conducting investigations on each of the side's request, cooperation in tracing efforts, etc.

The caretaker cabinet dismissed Svetlana Sharenkova, executive director of the Thirteen Centuries Bulgaria National Donor Fund. An audit found out that the Fund extended illegally 500 million leva in February 1997, the Council of Ministers' press office said. An attempt was made to withdraw the total of three million US dollars of the Fund's accounts in several Bulgarian banks which would have led to the closing of these accounts.

The caretaker cabinet discharged several members of the Supervisory Board of the National Insurance Institute (DZI), including former social minister in the Socialist cabinet Mincho Koralski.

[04] CABINET'S ECONOMIC TEAM MEETS I.M.F. OFFICIALS

The cabinet's press office conveyed a request by Prime Minister Stefan Sofiyanski to journalists to postpone their questions by the week's end when some agreements are expected to be reached.

Issues are yet discussed in principle, said the press office. IMF Resident Representative Franek Rozwadowski said the sides are midway in the talks on the principal items of the agreement.

Participating in the meeting were World Bank representatives who work together with the IMF mission on the stabilization program.

EU AID

Sofia, March 4 (BTA) - The EU has granted urgent social assistance to the amount of 20 million Ecu to Bulgaria, the payments of which are due in March 1997, Head of Delegation of the European Commission Thomas O'Sullivan, told a special news conference Tuesday. This EU initiative is carried out on the proposal of EU External Relations Commissioner Hans van den Broek.

The aid will be distributed as follows: 15 million Ecu for 500,000 low income households, accounting for 20 percent of all Bulgarian families; 4 million Ecu for 63,000 residents of 572 social institutions; and one million Ecu for operating expenses, Ambassador O'Sullivan said.

One pensioner will be given 2.4 Ecu monthly, a family of two pensioners - 3.6 Ecu and a household of two parents and one child - 5.2 Ecu. The payments are expected to be handed out through municipal welfare offices. Meanwhile EU representatives will keep in touch with the Ministry of Labour and Social Affairs which is in charge of the distribution of the assistance.

Ambassador O'Sullivan said that the possibility to extend more funds is being discussed and voiced the hope that the EU example will be followed by other donors.

Right after reaching an agreement with the International Monetary Fund, Bulgaria may start negotiations with an EU mission on a loan to support Bulgaria's balance of payments, Thomas O'Sullivan said. The exact amount will be specified at a meeting of G-24 which is being prepared now, he added.

Bulgaria has already been given 15 million Ecu to purchase coal, 40 million Ecu to assist its economy and 7 million Ecu for loans to the private sector, Ambassador O'Sullivan stated. Medicines and medical preparations are about to be sent to the hospitals of this country too, he said.

The possibility to extend one million Ecu to sociallyoriented non- governmental organizations under PHARE is being examined.

At a meeting with Minister of Trade and Foreign Economic Cooperation Daniela Bobeva Tuesday, Ambassador Thomas O'Sullivan promised consultancy aid for the privatization of the Bulgartabac company and assistance in the construction of the centre for the stimulation of exports.

Minister Bobeva familiarized Mr O'Sullivan with the possibilities offered by the PHARE program to promote trade and with the problems the caretaker cabinet encounters in preparing the denationalization of commercial partnerships, said the Trade Ministry's Spokesperson.

Thomas O'Sullivan promised assistance in building up the structures of the centre for the stimulation of exports, recruiting experts and establishing contacts with foreign partners.

[05] TRADE LIBERALIZATION TALKS WITH RUSSIA FORTHCOMING

Bulgaria first asked Russia for preferential tariff treatment back in 1995 and raised the issue on several occasions, the latest being a November 1996 bilateral meeting. Such treatment is available to Slovenia, Croatia, Macedonia, Turkey and other countries in the region. Instead, Russia renewed its proposal for a free trade area, saying it was the only way to cut tariffs on Bulgarian exports.

High tariffs on Bulgarian exports are a major problem of trade with Russia. In 1994 Bulgaria had a trade deficit of 629 million dollars, which rose to 834 million dollars in 1995. Trade experts put it down to the unfavourable position of Bulgarian companies on the Russian market. Nevertheless, Russia is Bulgaria's first trading partner with a 19 per cent share in the country's trade.

Agreements are expected to be drawn up during Lobov's visit to be signed by the joint committee. Russian gas supply to Bulgaria will be on the agenda. During his previous visit in November, Lobov said Bulgaria's revenues from gas transiting would amount to 6,000 million dollars over 30 years.

The agenda of the talks may also include a loan for the completion of Bulgaria's second nuclear power plant on the Danube, at Belene, moth-balled several years ago. Russian Ambassador Leonid Kerestedjiants said recently Russia was ready to extend a 450-million- dollar loan to this end.

The sides will discuss the repayment of Russia's debt of 100 million dollars to Bulgaria, on which agreement was reached in 1995. The main obstacle so far has been the lack of agreement between Bulbank, Bulgaria's foreign trade bank and Russia's Vneshekonombank. The intergovernmental agreement envisages supplies of military equipment and metallurgical plant, but Ambassador Kerestedjiants said supplies to metallurgy may give way to equipment for Sofia's underground.

Oleg Lobov may discuss the finalizing of the sale of industrial truck maker Balkancar Holding to Elit, a private Russian group recently named as the likeliest buyer by the Privatization Agency.

[06] DUTCH PROGRAMME FOR COOPERATION WITH BULGARIA

The Dutch Programme for Cooperation with the Countries of Central and Eastern Europe disposes of an aggregate 60 million guilders. The 5 million guilders allocated for Bulgaria this year will be spent on cooperation projects in energy and the environment, agriculture, transport and industry.

In power generation, there are plans to prepare programmes for energy- saving and environment-friendly technologies and to improve energy efficiency.

In agriculture, the emphasis will be placed on inter-company cooperation in vegetable growing and milk production.

In transport, the Netherlands is planning to assist the remodelling of Sofia Airport and specifically the building of a new passenger terminal for international services and the accompanying facilities.

In industry, Holland will help the modernization of Bulgarian industrial companies, transfer technologies and intensify contacts in telecommunications if private Dutch companies show interest in this sector.

[07] BULGARIA'S GRAIN, BREAD PROBLEMS

The US dollar rose 3.5-fold from January 1 till late February. Over the same period flour prices hiked 6-fold. In early 1996 flour bought at 50,000 to 60,000 leva a tonne, to go up to 255,000 leva at the latest session on commodity exchanges, brokers said Tuesday.

At the two February trading sessions all foods except wheat and flour, went down. For the first time this year, wheat of the new harvest was offered - at USD 82 per tonne. At the same time grain of the national reserves sells at USD 85. The releasing of the national reserves, plus the delivery of Polish wheat negotiated by Bulgarian President Peter Stoyanov is expected to normalize the market at least for a brief period. During his visit to Poland last Wednesday and Thursday Stoyanov promised the suppliers that Bulgaria will return the same amount of wheat of the new harvest this coming July and August.

Trains with Polish wheat will leave for Bulgaria every day and a ship with more grain will sail from the Polish port of Gdynia. At its Tuesday sitting the caretaker government decided that the Bulgarian side will provide the transport for the Polish wheat. Announcing the decision, the government press office also said the wheat will be distributed by Agriculture Minister Roumen Hristov.

Another 1,700 tonnes of wheat arrived here as humanitarian aid from Greece and an Indian ship is expected to call at the Bulgarian Black Sea port of Varna on March 11 or 12 with 31,200 tonnes of Australian grain under a deal between the Sofia Mill and the Dominion Grain company.

Late last week Russian Ambassador to Bulgaria Leonid Kerestidjiants said in Pleven, Northern Bulgaria, that his country is ready to supply about 150, 000 tonnes of bread wheat. A request to that effect was made by the former government of Socialist prime minister Zhan Videnov through the Russian diplomatic mission in Sofia. Caretaker Prime Minister Stefan Sofiyanski said the issue will be considered next week when a delegation of high- ranking officials from Moscow is expected to arrive here for a visit.

The chief of the State Shipping Inspectorate, Nikolai Simeonov was the first to sound an alarm about a looming grain crisis. In a September 1995 statement he said the grain that had actually been exported from the country is much more than the official figures. While Agriculture Ministry figures set the export of Bulgarian grain of the 1994-95 harvest at 594,000 tonnes from January 1 till late August 1995, the cargo schedule of the Varna port shows that at least 639,140 tonnes has left the country.

Interviewed by the "24 Chassa" daily Tuesday, former prime minister Videnov said that over 250,000 tonnes of grain of the old harvest were exported in early 1995 absolutely legally. He believes the grain catastrophe is attributable to the record low grain yields in 1996. Videnov is sure that firms affiliated with the Multigroup economic conglomerate are the major exporters of Bulgarian grain while exports by companies of the Orion circle, to which Videnov himself is widely believed to be closely linked, accounted for less than 2% of the total export.

[08] PROTECTION MEASURES TO ACCOMPANY PRICE LIBERALIZATION

Attending were Deputy Prime Minister and Minister of Industry Alexander Bozhkov and trade union leaders of the chemical and mining industry, metallurgy and the light industry.

Alexander Bozhkov reportedly said the winding up of lossmaking enterprises will be preceded by a dialogue and allocation of funds for the launch of small private businesses by the victims of liquidations. He vowed there will be no political purges of managerial staff except in cases of incompetence.

[09] ECONOMIC COUNCIL DISCUSSES INTRODUCTION OF CURRENCY BOARD

Announcing the results of the sitting of the Economic Council Tuesday with the participation of Prof. Hanke, Georgi Petrov of the Economic Council said the US economist believes the currency board can be introduced before the April early general elections only if there is a legal groundwork for it. The US economist also believes an institution other than the central bank may be appointed to supervise the implementation of the requirements. All participants in the meeting received a folder containing practical tips on the currency board mechanism which they will be expected to discuss at the next sitting of the Council.

Prof. Hanke told journalists the introduction of a currency board is the best option for overcoming the crisis in Bulgaria and its effect will be felt very quickly. He believes the very process of binding the domestic currency to a foreign currency is most likely to bring fresh foreign investments.

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