News from Bulgaria / Jan 18, 96

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

Bulgarian Telegraph Agency Directory

EMBASSY OF BULGARIA - WASHINGTON D.C.

BTA - BULGARIAN TELEGRAPH AGENCY

BULLETIN OF NEWS FROM BULGARIA

CONTENTS

[01] BULGARIA, CROATIA SIGN A FRIENDSHIP AND COOPERATION TREATY

The signing of the accord, which the heads of state hailed as the first of its kind between the two countries, took place after political talks at the Croatian President's Office, attended by the official delegations.

The Bulgarian Head of State described the treaty as a solid basis for full-fledged development of relations between the two countries and peoples. He expressed a hope that while spelling out only a general political framework for cooperation at this point, the treaty will soon be followed by more specific steps.

Zhelev briefly referred to the similar past of the two Balkan peoples, before discussing the significance of the present time to the future of the Balkan region. He emphasized the importance for Bulgaria of the Dayton peace accords, hoping for their speedy implementation, the normalization of the situation, and for an end to the notion of the Balkans being an explosive and backward region.

In turn, Croatian President Franjo Tudjman said that by signing the intergovernment treaty, Bulgaria and Croatia reaffirmed their traditional friendship. He expressed a conviction the treaty will encourage an even more fruitful cooperation in all fields. Tudjman also referred to the friendly ties between Croats ad Bulgarians in the past, emphasizing history should not create illusions and lead to attempts to establish unacceptable state entities in the region. According to President Tudjman, relations between Bulgaria and Croatia can serve as an example to other peoples in the Balkans.

Tudjman tonight gave a dinner for his Bulgarian counterpart. Zhelev's schedule is expected to be very busy tomorrow. It includes meetings with Prime Minister Zlatko Matesa, addresses to the Croatian Parliament and to the palace of Europe in Zagreb. The Bulgarian President will also meet with members of the society for Bulgarian- Croatian friendship and take part in a promotional event for his book "A Relativistic Theory of the Individual" at Zagreb University.

[02] BULGARIAN FOREIGN MINISTRY DOES NOT INTEND TO DISCUSS A PHANTOM SERB MINORITY ISSUE

The Bulgarian side, however, reportedly brought to the fore the fact that irresponsible circles in Serbia claim a Serb minority exists in Bulgaria. It was further mentioned that there are likewise circles with extreme claims in Bulgaria, seeking retailoring of the borders in connection with the condition of the Bulgarian minority in the Western Outlands (territory in eastern Serbia annexed under the 1918 Treaty of Neuilly).

"The Bulgarian Foreign Ministry states categorically that the existence of a Serb minority in Bulgaria is a fabrication seeking to create tension. We do not intend to involve ourselves in a controversy on such nonexistent issues. We think in principle of bringing to the fore the question about the Bulgarian minority in the Western Outlands in the context of bilateral relations, and demand legal guarantees," said this Foreign Ministry Spokesman. The Bulgarian Foreign Ministry also insist that these issues be settled by the competent ministries of the two countries.

[03] BULGARIAN-RUSSIAN RELATIONS: PROSPECTS

Bulgaria and Russia have embarked upon a period of active and wide-ranging relations, said Ognyan Gurkov, chief of the Eastern Europe and CIS section. We are at the threshold of a new stage of sensible bilateral relations, he added.

Days of Bulgaria in Russia will be opened on March 3 (the day of Bulgaria's liberation from Turkish domination after the Russo-Turkish War, 1878-1879) and will continue till May 24. Business meetings, days of twinned towns and film shows will be held within the framework of the days.

Negotiations are under way for holding the fourth meeting of the commission for economic and sci-technical cooperation in Moscow. The meeting is expected to adopt important decisions in economy, trade and oil and gas deliveries. It will also discuss the Bourgas (a Bulgarian port on the Black Sea) - Alexandroupolis (Greece) pipeline.

Political dialogue is also expected to become more active. Bulgaria and Russia signed an interstate treaty for friendship and cooperation in 1992. Bilateral relations are regulated by more than 40 government agreements and conventions and 17 interdepartmental agreements.

The past few years saw a boost in economic cooperation but according to experts it remains far below its potentials. In the first nine months of 1995 bilateral commercial exchange totalled $1,100 million. According to the latest data, bilateral commercial exchange exceeds the 1991 and 1992 levels.

[04] NO RADICAL CHANGES IN MONETARY POLICY PLANNED FOR 1996

Some of the recommendations are already known: that the difference between the interests on deposits and on loans be reduced, that money supply growth does not exceed the inflation rate and that the foreign exchange policy does not disturb the foreign exchange reserves.

In addition to the members of the Plenary Council, the meeting was also attended by Deputy Prime Minister and Minister of Economic Development Roumen Gechev, Atanas Paparizov, Chairman of the Parliament's Economic Committee and the Government's Economic Advisor Prof. Ivan Angelov also attended the meeting as guests.

The base interest rate will be increased only as a means for bringing a critical situation under control. According to Todor Vulchev, it has been widely agreed that the levels of the base interest rate should not be changed at this stage. Increase of the base interest rate would contribute to a redistribution of the national income and will make it hard for people who have no deposits, Prof. Vulchev explained.

Restrictions on lev liquidity will be applied in preventing the US currency from soaring, as was the case this week. According to the BNB Governor, this approach has proved its efficiency. Refunding is highly restricted and several banks cannot even pay for the foreign currency they have already purchased from the central bank, Todor Vulchev said.

Proposals to introduce crawling peg or floating exchange rates sparked controversy among experts. According to BNB Governor, this issue requires a more detailed discussion. Changes in exchange control regulations may be introduced only under certain conditions, which will not set in before spring, Todor Vulchev said. Then it will be clear that an agreement with the International Monetary Fund can be reached. Foreign exchange will be in higher supply and demand will drop because foreign currency will no longer be needed for power supply. In case of larger foreign exchange returns from exports and investment in spring, the introduction of a crawling peg may be tabled for consideration, the BNB Governor commented.

An introduction of a fixed exchange rate was not discussed. Prof. Ivan Angelov described this possibility as absurd.

The Plenary Council also considered measures to rehabilitate the banking system as a condition for a successful monetary policy. Todor Vulchev emphasized that bank licensing will be highly restricted this year. The applicants will have to meet a number of conditions including the requirement that their taxes have been paid and that the origin of their capital is clear, Vulchev said.

[05] BUSINESS PRESS

In 1995 Bulgaria's arms export fell by about one-third (or more than USD 70 million) from 1994, "Demokratsiya" writes citing Industry Ministry data.

In 1996 the Bulgarian Telecommunications Company (BTC) will invest 2,800 million leva of its own reserves and about 2,000 million leva borrowed from foreign banks, the papers say citing Nikola Marinov, Director of the BTC Planning and Investment Department. It is planned to install 80,000 new telephone lines.

The Plama refinery at Pleven, North Central Bulgaria, which was forced to stop work in November last year due to the shortage of funds, will start operating again at the beginning of February, "Troud" writes citing Reuter. Four banks agreed to float its loans. The refinery's idling loss is about 5,000 million leva.

Honda Civic, car No. One in Japan and the United States last year, was presented in Sofia yesterday, "Standart News" says.

The dailies announce that yesterday the Balkan Airways introduced an automated system for cargo handling, CITA CARGO. Until now freight bookings were made over the phone, "24 Chassa" writes.