Bulgarian Telegraph Agency (BTA), 97-03-11

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

EMBASSY OF BULGARIA - WASHINGTON D.C.

BTA - BULGARIAN TELEGRAPH AGENCY

11 March, 1997

CONTENTS

[01] JEFFREY SACHS: BULGARIA SHOULD REDUCE FOREIGN DEBT BURDEN

[02] BULGARIA, RUSSIA DISCUSS TRADE, ECONOMIC PROBLEMS

[03] COUNCIL OF MINISTERS' DECISIONS

[04] AMENDMENTS TO FOREIGN TRADE REGULATIONS

[05] LAW ENFORCERS CORNER SHADY BUSINESSES

[06] FARM EXHIBITION AGRA'97

[07] FEBRUARY INFLATION: 200%-PLUS, OFFICIAL STATISTICS SHOW

[08] BULGARIAN COMPOSES FIRST "ETHNIC" OPERA

[01] JEFFREY SACHS: BULGARIA SHOULD REDUCE FOREIGN DEBT BURDEN

During his visit to Bulgaria Prof. Sachs met representatives of the IMF, President Stoyanov and Prime Minister Sofiyanski. On Tuesday he is starting a series of intensive talks with a group of Bulgarian experts in Washington on ways for overcoming the crisis.

The Bulgarian government should focus its efforts on stabilizing the forex market and foreign exchange rate, overcoming the crisis in banking and solving the external debt problem, said Prof. Sachs.

He believes that having a stable forex market in Bulgaria is realistic and achievable but the foreign exchange rate should not be fixed for more than a year or 18 months at the most after which a flexible exchange rate should be reintroduced. Formulating conditions "forever" and having an "automatic- pilot" government is unrealistic, and it is exactly what Prof. Sachs does not accept in IMF's approach.

The currency board mechanism has its assets and shortcomings, said the guest adding that introducing a currency board is not a must because all successful stabilization programmes are based on the principles of the currency board. He believes the IMF has made some proposals that are inapplicable in Bulgaria while failing to bring forth some good ideas. He is optimistic that after finalizing the agreements with the international financial institutions Bulgaria will make the best option because it is a critical moment and there is no time for mistakes.

Prof. Sachs' projections are that a certain stabilization could be achieved in 1997 but Bulgaria will remain at a low level for years to come. Once again he voiced his optimism for the successful solution of the crisis. He said in conclusion President Stoyanov should not hesitate to contact him on any issue voeced readiness to help free of charge.

[02] BULGARIA, RUSSIA DISCUSS TRADE, ECONOMIC PROBLEMS

The delegations include representatives of ministries, major enterprises and banks. On Tuesday Lobov is scheduled to meet an expanded Bulgarian business delegation. The two countries delegations are discussing the overall targets of cooperation in the future, which will then be specified at expert level, journalists were told by the government press office.

Bilateral problems are being settled. One of the tasks of the upcoming session of the mixed committee is to strike off problems that can be addressed at a lower level, said Bozhkov. The two delegations agreed Monday to try to settle as soon as possible Russia's USD 100 million debt to Bulgaria as was agreed in 1996, said the Bulgarian Industry Minister. Speaking to journalists, Bozhkov described the bilateral talks as friendly, clear and concrete. A key issue at the Monday sitting was the project for building a BourgasAlexandroupolis pipeline to transit Russian gas, he said.

"As for the liberalization of bilateral trade, I hope we have found the formula meeting the demands of both sides," Bozhkov commented. The two delegations agreed the implementation of Russia's proposal for opening a free trade zone should start with a scheme that Russia applies in its trade with Poland and Slovakia: compiling lists of goods that will be traded at gradually relaxed regime, and then expanding these lists, said Bozhkov. The customs rates remain an open problem and there will be more negotiations, Bozhkov said.

Earlier agreements for upgrading operations and nuclear fuel supplies for the Kozlodoui N-Plant on the Danube, are being implemented at expert level. The Bulgarian interim administration has not yet come out with an official stand on whether to resume the construction of a second N-plant, in Belene. Russia has offered its assistance in completing its construction.

Russian investors are interested in the privatization of major Bulgarian enterprises including Balkancar and the Neftochim oil refinery, "Daily News" was told by Privatization Agency chief Vesselin Blagoev. He was particularly happy with the launch of a large-scale joint project in tourism but would not give details about the project.

"It is Bulgaria's right to decide whether to apply for NATO membership or not. We do not reduce the problem to specific countries: we believe NATO expansion is undesirable in general, and not only for Russia but for the world and for European security," Oleg Lobov said after meeting the Bulgarian Foreign Minister, asked by journalists to comment NATO's possible expansion eastward.

Europe should be united, with Russia also involved, said the Russian Deputy Prime Minister. He believes that some solutions to the problem will be reached and the Helsinki meeting of the Russian and US Presidents. "We hope Bulgarian politicians and leaders understand Russia's concern over the current processes for NATO's expansion. We would like them to support ways of reducing the risk of confrontation and boosting European security through the setting up of a new European security system to make sure confrontation will be avoided," Lobov said.

The Russiab Deputy Prime Minister stressed achievements of Bulgarian- Russian cooperation in the field of construction and assessed in positive terms the prospects for joint businesses in the gas industry and nuclear power production.

"Mr Lobov has come with very clear and concrete Russian projects and we are glad to see this," Foreign Minister Stalev pointed out. He was satisfied with the talks held at the Foreign Ministry, describing them as pragmatic and realistic, and said he expects concrete results. The talks will be finalized after the April 19 early general elections in Bulgaria but even now the projects under discussion have taken clearer shapes, said he.

The interim administration revoked the decision of the former Socialist government for granting concessions for the gas pipelines and Bulgarian and Russian experts will draft an agreement and options for contracts between the Russian Gasprom and Bulgaria, Prime Minister Sofiyanski said after meeting Lobov.

The gas project is the most important among the issues that are being discussed. It requires Russian investment to the amount of USD 600 million. The project is very profitable for Bulgaria because Russia will pay in hard currency to have its gas transited via Bulgaria, Lobov believes. Speaking to journalists after the meeting with Sofiyanski, he said taking a decision on the issue will guarantee adequate energy resources for Bulgaria.

It is in Russia's best interest to have the Bulgarian oil refineries working at full capacity, Lobov affirmed. The sides will continue working on the Bourgas-Alexandroupolis project but the open problems there are more than points of agreement. He also said Russian investors are interested in privatization deals in the Bulgarian petrochemical industry.

Reaching agreements in the field of military-technical cooperation depends on many factors, including political ones, Lobov said. He hopes Bulgaria and Russia will have a mutually beneficial cooperation in this field for many years to come, a cooperation not directed against any third side and aimed essentially at improving the defence capabilities of the two nations.

[03] COUNCIL OF MINISTERS' DECISIONS

The Council of Ministers approved on Monday eight proposals of the Minister of Agriculture and Food Processing for the mass privatization of parts of state-owned companies. Among these are two meat-processing plants and three wineries.

A National Council on the working conditions was set up on Monday as a consultative body with the Council of Ministers. The Council is chaired by Minister of Labour and Social Affairs Ivan Neikov. The Council will make suggestions for the drafting of a national policy on ensuring safe working conditions in Bulgaria. Committees on the working conditions must be formed in all enterprises and commercial partnerships by April 15 this year.

[04] AMENDMENTS TO FOREIGN TRADE REGULATIONS

The ministers lifted the ban on the export of fuels from Bulgarian airports and ports for refuelling of ships and aircraft of the international transport. The ban was introduced by the Cabinet three weeks ago when the country was experiencing a severe fuel shortage.

No duties will be charged on the import of 50,000 tonnes of brewing barley, 1,000 tonnes of maize seed, 50 tonnes of millet for seeding, 5 tonnes of vegetable seed and 10,000 tonnes of malt.

Until the end of the year temporary duty free import will also be provided for insulin substance, input material and auxiliary substances for the animal growing, as well as for tractors.

[05] LAW ENFORCERS CORNER SHADY BUSINESSES

The meetings are in the context of the Interior Ministry's intentions to try to discriminate between the legal and the illicit activities of the so called "wrestler" companies. In popular speak, "wrestler" has acquired the extended new meaning of "mobster" or "thug" after some of the new private security firms and insurance companies, employing mostly former athletes and policemen, branched out into racketeering.

"The insurance companies have until the end of this week to pay all their delinquent taxes so as to be legitimated in the eyes of the public," Mr Bonev also said.

"As we focus on tracking down the illicit earnings of these companies, we will make life difficult for them. We have already done something to this end by curbing the insurance activities of these companies in border areas. Their illicit activities will be placed under strict control, and the companies are aware of that," the Interior Minister said on National Television last Thursday evening.

For some time now, the local media have been lifting ever more boldly the veil of anonymity from these companies, some of which are looking themselves for ways to clear and boost their public image.

"The Security Insurance Company (SIC) is signing a 'new social contract' with the authorities," the independent weekly "168 Chassa" wrote, commenting on a sweeping long-term charity campaign which that company unveiled February 19. SIC recently made donations to hospitals and soup kitchens and expressed willingness to sponsor the tank brigade stationed in the Sofia suburb of Gorna Banya as the Bulgarian Army lacks enough money to keep conscripts properly fed. SIC is Bulgaria's largest private insurer. Certain local sources identify it as a "wrestler" company and trace its origins to the criminal underworld.

"Now that the banking system in Bulgaria has collapsed, companies of this type concentrate the actually existing national capital, and no sensible government would go to war with them," was the opinion of the weekly. "Their connections with the BSP, the former State Security, the mafia and other sinister organizations will be forgotten, the projection of a publicly acceptable image of the wrestler structures will become the first step towards a 'new social contract' with the racketeers." According to "168 Chassa": "The charity campaign is a front for a carefully planned publicity stunt. This is also proved by steps as a consistent openness of SIC's business affairs, the prompt payment of taxes, and the purging of a number of persons with a long criminal record from its above-ground structures." The new image-making campaign is very professional. It is probably the only possible option for the company which, as frequently alleged, racketeers its customers. "But as long as the police continues to catch SIC office chiefs red-handed in the act of extortion, as was the case on February 28 in Sofia, the feeling of a stage-managed campaign endures," the author of the article writes.

[06] FARM EXHIBITION AGRA'97

The sixth edition of Agra was opened by Vice President Todor Kavaldjiev. The ceremony was also attended by deputy ministers and representatives of the diplomatic missions here.

[07] FEBRUARY INFLATION: 200%-PLUS, OFFICIAL STATISTICS SHOW

For January 1997, the official statistics put inflation at 43.5 per cent, but the Confederation of Independent Trade Unions in Bulgaria (CITUB), one of the two most influential labour amalgamations in the country, claimed the actual rate was over 83.5 per cent.

The per-capita cost of living as to February 22 was 169,386 leva, Roumyana Kraleva of the CITUB Institute for Social and Trade Union Studies told a news conference Monday. Of it 79,547 leva went for food. The question remains how many Bulgarians have this kind of money, Kraleva added.

According to official statistics foods rose most dramatically in February (277.3 per cent) ahead of nonfoods (267.5 per cent) and services (70.9 per cent). Prices in eateries rose 179 per cent.

Annual inflation for 1996 was 310.8%. Foods alone appreciated 306 per cent, and non-foods 326 per cent.

So far the NSI has been calculating the inflation rate on the basis of a basket of 1,175 consumer goods and services. Parallel computation of the cost of living will be introduced this week, taking into account a tangibly lower number of goods and services, NSI sources said. The Government will be able to use the new inflation figure for indexation of welfare payments. NSI experts say this must be done because the current hyperinflation has impoverished 90 per cent of Bulgarians who have to spend almost all their money on food.

[08] BULGARIAN COMPOSES FIRST "ETHNIC" OPERA

In April the author will present her unique work live at an international festival in Norway. She has also planned a visit to the United States. The CD will be on sale in Europe and Australia.

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