News from Bulgaria / Apr 17, 96

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

Bulgarian Telegraph Agency Directory

EMBASSY OF BULGARIA - WASHINGTON D.C.

BTA - BULGARIAN TELEGRAPH AGENCY

17 April, 1996

CONTENTS

[01] E.B.R.D. ANNUAL MEETING ITALIAN P.M. DINI PROJECTS GROWING INTEREST IN BULGARIA

Sofia, April 16 (BTA) - By 12 at noon yesterday 2,524 guests, including businessmen, bankers and 542 delegates have registered to participate in the annual meeting of the European Bank for Reconstruction and Development (EBRD), Italian Prime Minister Lamberto Dini, Chairman of the EBRD Board of Governors told a news conference. In his view the great number of participants is a plus for Bulgaria and the other states in the region. The fact that businessmen are also participating, manifests the bank's continued support and strategy, Mr Dini said.

Bulgaria has good potential for developing its industry and joint ventures operating on foreign capital, Mr Dini told reporters. In his view, the direct investments, which this country received over the past few years are indicative of these great potentials. "So, you should take a positive view of the future," Mr Dini said.

The disturbed balance in favour of state sector projects in the bank's activity in Bulgaria should not be interpreted as violation of the EBRD's statutes, the Chairman of EBRD Board of Directors believes. The bank's principles are to prioritize projects in the private sector against the state sector in relation 60 to 40. From now on greater attention is to be paid to the private sector, making use of all its potentials, Mr Dini said. In his view, however, it would be a great mistake if the EBRD refuses to finance projects in the state sector because Bulgaria will be deprived of significant funds. He explained that the 60-40 ratio in favour of the private sector does not apply to the individual countries but to the European Bank as a whole. The Italian Prime Minister summarized in conclusion that his talks and meetings in Sofia have given him grounds to believe that in Bulgaria the interest in the private sector is growing.

[02] EBRD REPORTS ECU 7 MLN PROFIT FOR 1995

Sofia, April 16 (BTA) - European Bank for Reconstruction and Development (EBRD) Vice President Bart le Blanc today reported on the financial performance of the bank in 1995. Last year the EBRD approved 134 projects in countries of Central and Eastern Europe of which 110 - worth a total of Ecu 2,000 million - were implemented, said Mr Blanc. Investment in the private sector made up 71% of all investment. The EBRD regulations envisage that private sector financing account for 60% of all investment (against 40% in the public sector).

One of the priorities for the EBRD policy is increasing its reserves. In 1994 the bank set aside Ecu 23.9 million as reserves that went up to 75,400 million last year, according to the report of this financial institutions. The 1995 net profit was Ecu 7.5 million, way above the 1 million profit the preceding year. The bank's assets are worth a total of Ecu 8,728 million. The proceeds from banking operations made up 36% of the 1995 proceeds, 16% up the 1994 figure.

[03] ON THE EVE OF PHASED PRIVATIZATION OF BULGARIAN TELECOMMUNICATIONS

The development of telecommunications is considered a priority by the Bulgarian Government along with transport and power engineering, Lyubomir Kolarov, Chairman of the Committee of Posts and Telecommunications (CPT), said at the opening of a seminar on: "Telecommunications in Europe" here today. The seminar sponsored by Motorola and Siemens is held within the framework of the 5th annual meeting of the European Bank for Reconstruction and Development (EBRD), hosted by Bulgaria. "The development of modern telecommunications is a key factor for Bulgaria's integration into the European structures," Kolarov said.

The strategy for development of telecommunications until 2010, recently adopted by the Government, projects a wider range of telecommunication services, extending and digitalization of the existing network in compliance with international standards, Kolarov stated. Modernization of the existing digital exchanges for automatic dialing, setting up of cable links with neighbouring countries up to European standards and increase of transit traffic are among the priorities of CPT, the Committee's Chairman said.

The first stage of the national digital network will be completed by the end of 1997 and will link Bulgaria with the international communication traffic, Kolarov said. The World Bank financed the project by 30 million US dollars, EBRD by 41.500 million US dollars and the European Investment Bank by 90.500 million US dollars.

CPT intends to liberalize the use of land-based communication facilities and the access to communication satellites under licence, Kolarov said. He stated that the companies servicing the sector and 30 percent of the Bulgarian Telecommunications Company will be privatized in the nearest future.

Clell Hairrall, Director of the Telecommunications Sector at the EBRD, said that 20,000-150,000 million US dollars are needed to develop communications in Eastern Europe. According to Hairrall, the funds may be provided only by the private sector.

[04] P.M. VIDENOV CONFERS WITH IMF OFFICIAL

Sofia, April 16 (BTA) - The annual meeting of the European Bank for Reconstruction and Development (EBRD) offered the Bulgarian government an opportunity to specify its intentions prior to the launch of negotiations with the International Monetary Fund (IMF), Michael Depler of the IMF said at a meeting with Bulgarian Prime Minister Zhan Videnov today, quoted in a press release of the Bulgarian government. Mr Depler reportedly stressed the readiness of the IMF to cooperate with the Bulgarian government to help this country support its financial system by year's end. The meetings held within the EBRD annual meeting contributed to the coordination of efforts of the IMF and the World Bank.

According to the cabinet's press release, the two financial institutions received a positive signal about the government's determination to implement the structural reform in this country. The Prime Minister briefed the IMF official on the short-term tasks facing the government, seeking stabilization of the financial system and economic rehabilitation of the country.

[05] PRESIDENT ZHELEV GIVES RECEPTION FOR EBRD

Sofia, April 16 (BTA) - The European Bank for Reconstruction and Development (EBRD) has made a considerable contribution to Bulgaria's transition to market economy, said President Zhelyu today at a special reception for the EBRD Governors attending the annual meeting of the EBRD in Sofia. The reception was attended by Bulgarian bankers and financiers. In his address Dr Zhelev said that Bulgaria needs EBRD support now when its reform has lost momentum and depth. Foreign investment is insufficient, private business is slow in finding its feets and the privatization rate is the slowest in all of Europe, the President said. He expressed the hope that the meeting in Sofia would be a turning point in cooperation between the EBRD and Bulgaria.

"I am convinced that promising Bulgarian investment, joint production and small and medium-size business development projects will receive the support of the EBRD," President Zhelev said. He stressed the importance of infrastructure projects in power engineering, transport and telecommunications. The implementation of such projects in the Balkans would influence Balkan policies because they would generate stability not only of regional but of all- European importance as well, President Zhelev also said.

[06] OPPOSITION CRITICIZES PM VIDENOV'S ADDRESS

Sofia, April 16 (BTA) - The largest opposition force - the Union of Democratic Forces (UDF) criticized today Prime Minister Zhan Videnov's address at the Annual Meeting of the European Bank for Reconstruction and Development (EBRD) which opened here on Monday. At their meeting with the EBRD Governors the Bulgarian Government representatives failed to explain how Bulgaria was going to pay its foreign debt, UDF deputy leader Alexander Bozhkov, former chief of the Privatization Agency, told journalists today. In his address to the EBRD Annual Meeting Prime Minister Videnov launched ideas presenting them as proposals by the Government without these being part of Bulgarian legislation, Bozhkov said at a news conference after a session of the National Executive Board (the top leadership) of the UDF.

Bozhkov said that the exemption of newly established or newly privatized companies from profits tax announced by the Prime Minister was not provided for in the Government-sponsored Profits Tax Bill voted on first reading by Parliament and the Government does not have the right to make proposals between the two readings. According to Bozhkov, Zhan Videnov's proposal will be introduced on behalf of left-wing MPs "through Parliament's back door". Alexander Bozhkov described the Prime Minister's proposal as ill-judged and said that throughout the world exemption from profits tax was considered a sign of the weakness of the state. According to Bozhkov, it would be better for companies to pay lower taxes and to have guarantees that their level will not change.

[07] ENCOURAGING MEASURES FOR FOREIGN INVESTMENTS

Sofia, April 16 (Alexander Kirov of BTA) - The encouraging measures of the Bulgarian Government and the tax incentives for direct foreign investment announced by Prime Minister Zhan Videnov at the opening of the Annual Meeting of the European Bank for Reconstruction and Development (EBRD) may establish greater possibilities for the setting up of joint ventures, EBRD President Jacques de Larosiere said at a news conference winding up the 5th Annual Meeting of the EBRD here today. Mr Larosiere said he hoped that the necessary contacts for setting up joint ventures were established during the EBRD meeting in Sofia. Mr Larosiere added that under these circumstances the EBRD would be able to increase its share in private sector projects. Private sector funding will remain one of the pillars of the EBRD, Mr Larosiere said. Opportunities for investment in the region (central and eastern Europe) are considerable and are constantly growing, the EBRD President said. A number of seminars acquainting the participants with these opportunities were held over the past four days.

The doubling of EBRD capital to ECU 20 billion shows the continuing commitment of the international community to the processes of transition in central and eastern Europe, the EBRD President said. According to him, this would make it possible to invest new additional resources in these countries. Thus the EBRD will be able to meet the challenges of the coming years, Mr Larosiere said.

In 1996 the EBRD will focus on the financial sector, on assisting small and medium-size enterprises and on environment protection, Mr Larosiere said. According to him, high professionalism, flexibility and innovation will remain basic requirements. Strict discipline, transparency and efficiency will remain obligatory for the EBRD, Mr Larosiere said. As regards the countries with which the EBRD is working, the EBRD expects them to show a firm commitment to macroeconomic stability and further strengthening and deepening of the process of reform, he added.

The countries of eastern and central Europe have reached different stages in the reform which necessitates an individual approach to each of them, Mr Larosiere said adding that the EBRD will adopt such individual plans by the end of 1996. And this is one of Bulgaria's great advantages as host of this annual gathering Mr Larosiere said. The EBRD is greatly interested in this country and will present the Bulgarian Government with its studies by mid-1996, Mr Larosiere said.

Representatives of the For the Earth Bulgaria nongovernmental organization disrupted the news conference by scattering protest leaflets against EBRD funding of nuclear plants. EBRD President Larosiere said that the EBRD funds projects only if they comply with strict safety, high professionalism, minimal costs and high efficiency requirements.

[08] RUSSIAN EMBASSY PROTESTS

Sofia, April 16 (BTA) - The Sofia-based Russian Embassy protested against a decision of the Plovdiv, Southern Bulgaria, City Council to dismount a monument to the Soviet army. Widely known as Alyosha, the monument is built on one of the Plovdiv hills. The April 10, 1996, decision of the Plovdiv City Council to dismount the Alyosha monument violates the 1992 Bulgaria-Russian treaty on bilateral relations and the 1993 intergovernmental accords in the field of culture, education and science, said the Press Service of the Russian Embassy.

The decision to dismount Alyosha was taken at a sitting of the Plovdiv City Council last week. 30 of the councilors backed it and 17 voted against. The dismounting is supported by the opposition Union of Democratic Forces, Popular Union and the ethnic Turks' Movement for Rights and Freedoms, who constitute a majority in the City Council after the 1995 local elections. The proponents of this option say the monument stands as a symbol of the Soviet occupation of Bulgaria and has no historical value. The Socialist councilors voted against the decision, arguing that the dismounting of Alyosha violates the culture accords between Bulgaria and Russia as well as international agreements on the preservation of cultural and architectural heritage. The monument is a state property and the municipality has no right to dismount it, said Georgi Chakurov who heads the local State Property Department. The monument was built in 1957 to commemorate the Soviet soldiers who participated in World War II and crossed Bulgaria's territory in 1944, the year when the communists took power to rule until November 10, 1989. The Russian Embassy sent a note to the Bulgarian Foreign Ministry expressing a hope that the competent authorities will take steps to prevent the implementation of the City Council decision.

[09] BUSINESS PRESS DENATIONALIZATION IN BULGARIA: PROJECTIONS AND VIEWS

"24 Chassa" quotes Director of the Mass Privatization Centre Kalin Mitrev as saying that he expects 60 per cent of the privatization vouchers to be sold by the beginning of May. According to Mr Mitrev, 1.9 million or 29 per cent of the eligible Bulgarians have registered to participate in the mass privatization. Of the 8 million-strong Bulgarian population, 6,700,000 adults are eligible to participate in the voucher privatization.

"Standart News" writes that the European Bank for Reconstruction and Development (EBRD) is drafting a project for the sale of shares in Bulgarian companies, which remain unsold after the mass privatization auctions. The new mechanism will be applied to 2- 3 and up to 10 per cent of the shares in the enterprizes and will be developed in cooperation with Bulgarian experts. The same daily quotes Kalin Mitrev as saying that the EBRD will invest ECU 45 million in the post-privatization procedures in Bulgaria. Mr Mitrev believes that with its name the world financial institution will attract some other foreign investors.

"Demokratsiya" quotes foreign delegates at the EBRD's annual meeting in Sofia Olivier Blanchard of the Massachusetts Technological Institute and Andrei Rapachinski of the Columbia University as saying that the denationalization in Bulgaria will hardly be efficient. In their view Bulgaria is 5 years late in launching mass privatization and for that reason it will need another 5 years before the companies go into the hands of "majority shareholders". The same experts believe that if the state preserves certain amount of shares in the privatized companies, it will be forced to continually invest even in losing enterprizes.

"Standart News" quotes anonymous experts of Navigation Maritime Bulgare in Varna as saying that in five years' time Bulgaria will have no petrol tankers, because most of its tankers are already older than 20 years. According to regulations of the International Maritime Organisation, at the age of 25 all tankers are subject to decommissioning, the daily says. The paper says that Greek and Russian tankers will probably service the Bourgas-Alexandropoulis oil route.

[10] BULGARIA'S TRADE WITH EU

"Troud" quotes Antonio Pitrone, chief of Economic and Trade Development and Encouragement of Investments Department with the European Commission, as saying that Bulgaria ranks last but one among the former Socialist states in the amount of commercial exchange with the European Union in 1995. Poland and the Czech Republic take the first two places and Albania is the only state behind Bulgaria. The figures were cited at a conference on Bulgaria's trade policy, organised by the Centre for the Study of Democracy in Sofia. According to Antonio Pitrone, the EU has already reduced a large number of the customs duties on imported Bulgarian goods and the time has come for Bulgaria to do the same about imported European production.

"Continent" quotes a Saturday statement of Stanislav Daskalov, former foreign minister and expert of the Centre for the Study of Democracy, who during the week-end attended a seminar on Bulgaria's foreign policy in the context of its EU integration. According to Mr Daskalov the Bulgarian exporters to the EU are not treated on equal terms with the other EU-associated states due to the visa restrictions. Mr Daskalov is quoted as saying that although Bulgaria has been making efforts for a long time, it is still treated on unequal terms with the states of the Visegrad Four (Poland, Hungary, the Czech Republic and Slovakia) in "sensitive" sectors like textile exports for the EU.

"Continent" also quotes Antonio Pitrone, who believes that the restrictions on the exports of textile from Bulgaria to the EU will be gradually lifted this year. According to Mr Pitrone, at least 90 per cent of the commodities exchanged between Bulgaria and the EU should receive preferential customs treatment and not less than 50 per cent of the farm goods in particular should be subject to such preferential treatment.

[11] BULGARIA ABLE TO SERVICE EXTERNAL DEBT

Sofia, April 16 (BTA) - "The Bulgarian government will stand by its commitment to repay 100% of Bulgaria's external debt. I am authorized to say categorically that we are able to, and will, service the foreign debt," Deputy Prime Minister and Minister of Economic Development Roumen Gechev said today before his departure for New York.

Gechev will participate in the fourth session of the UN Commission for Sustainable Development to be held in New York on April 18 through May 3. Attending the session will be all UN member states. According to Gechev, most important for Bulgaria will be the meetings with G7 the European Union countries.

[12] E.B.R.D. ISSUES ECU 45M FOR POST-PRIVATIZATION FUND FOR BULGARIA

Sofia, April 16 (BTA) - The European Bank for Reconstruction and Development will issue ECU 45 million for a post-privatization fund in Bulgaria under a memorandum signed today by EBRD Resident Representative Tim O'Neill and Kalin Mitrev, Director of the Centre for Mass Privatization (CMP). The memorandum between the Bulgarian Government and the EBRD is about the setting up of a post- privatization fund supporting small and medium-sized enterprises subject to voucher privatization, the CMP said.

[13] STATEMENT OF BULGARIAN REPRESENTATIVE TO U.N. COMMISSION ON HUMAN RIGHTS

Geneva, April 16 (BTA) - On Monday Vladimir Sotirov, head of the Bulgarian delegation to the 52nd session of the UN Commission on Human Rights, made a statement on violations of human rights and fundamental freedoms around the world, the Bulgarian Foreign Ministry said. Sotirov stressed the need for an effective exercise of all universal human rights and freedoms on a global scale and the role of the Dayton peace accords in the economic reconstruction and protection of human rights in the war-torn countries of former Yugoslavia. Sotirov emphasized the importance of regional initiatives, such as Prime Minister Zhan Videnov's invitation to his counterparts in Southeastern Europe to strengthen regional security, stability and cooperation. The Bulgarian representative said Bulgaria closely followed the human rights situation in its neighbour, former Yugoslavia.

Sotirov elaborated on the strong interest and sensitivity of the Bulgarian public to the protection of the individual rights and freedoms of Bulgarians in Serbia and of the national minorities in Serbia and Montenegro, in the exercise of their constitutional rights to freedom of expression of their ethnic identity, development of their culture, freedom of access to information and education in their mother tongue. He stressed that there were considerable obstacles to the exercise of these rights and freedoms at present. The leader of the Bulgarian delegation underlined this country's efforts to solve these problems through dialogue and reaffirmed its hope that the atmosphere of good will prevailing at the latest high-level contacts with the Yugoslav authorities would help find lasting practical solutions to the existing problems.