News from Bulgaria / Feb 12, 96

From: [email protected] (Embassy of Bulgaria)

Bulgarian Telegraph Agency Directory

EMBASSY OF THE REPUBLIC OF BULGARIA - WASHINGTON D.C.

BTA - BULGARIAN TELEGRAPH AGENCY

12 February, 1996

CONTENTS

[01] ZHAN VIDENOV: "FOREIGN INVESTORS INTERESTED IN INFRASTRUCTURE MEGA-PROJECTS

Sofia, February 9 (BTA) - Foreign investors are showing interest in Bulgaria's infrastructure mega-projects, Prime Minister Zhan Videnov told a news conference at the Council of Ministers today. In connection with the confirmed constitutionality of the Concessions Act, he said that a dialogue is conducted with big Western business. Without naming names, he stressed that the foreigners are targeting strategic projects. The head of government described the Concessions Act as a guarantee of civilized relations between the State and civil society, between foreign and local economic agents. It ensures harmonization of Bulgarian with European legislation and is a tangible step towards this country's integration into the European structures. "Foreign investors ought to be happy with this newly written 'grammar' of their negotiations with the State," Mr Videnov noted. The Concessions Act brings chaos to an end and reinstates statehood, the Prime Minister emphasized. The new legal framework will halt the last few years' vicious practice of exploiting natural resources for a song, he added. The transformation of the effective contracts into concessions will achieve a modern utilization of Bulgaria's geopolitical advantages. The national wealth will be inventoried and development monitored, as Mr Videnov put it.

The Council of Ministers' Concessions Division has received so far some 220 applications for granting of rights under the Concessions Act. All companies which missed the January 20 deadline to declare their wish for transformation of their contracts into concessions have thus forfeited their rights, it was confirmed at the news conference. Still, they can feel free to start new negotiations, said Prime Minister Videnov, who will personally supervise the implementation of the Concessions Act. He believes that most such cases will be settled by brief confirmation contracts. On February 7 the Constitutional Court rejected a petition filed by a group of opposition MPs challenging the constitutionality of the Concessions Act. The petitioners argued that the Act provides for granting of concessions for items of property and activities unspecified as concessible in the Constitution: civilian airorts, stations for generation of electric power for public consumption exceeding 50 megawatts, the electricity transmission and distribution networks, and telecommunications services. The Court determined that the under the Constitution, an express statute may provide for the concessibility of further itmes of state and municipal property.

[02] VIDENOV: "GOVERNMENT WILL NOT RUSH STANCE ON MINORITIES CONVENTION

Sofia, February 9 (BTA) - The Bulgarian Government is not ready with its final position on the Council of Europe's Framework Convention for the Protection of National Minorities, Prime Minister Zhan Videnov told reporters today. In his view, instead of providing answers to a number of questions concerning the application of the Convention, the one year which has passed since its adoption has raised quite a few new questions. "It is difficult to frame a responsible government and national position in such a situation," the Prime Minister noted. In his opinion, almost all European countries take the same view of the matter. "I do not think that the Bulgarian Government should rush the legal formalization of the attitute of the Bulgarian State to this subject which is indeed exceedingly important," Mr Videnov said. Of the 34 Council of Europe member countries, 25 have so far ratified the Framework Convention which was adopted on November 10, 1994.

[03] BULGARIA NEVER STOCKPILED CHEMICAL AND BIOLOGICAL WEAPONS

Sofia, February 9 (BTA) - "There have not been stockpiles of chemical and biological weapons on the territory of Bulgaria in the past 50 years," reads a Government declaration, dated February 1, 1996, which was released to the media at a regular news briefing of the Foreign Ministry today. The declaration was requested by the 28 member-countries of the Australia Group, Bulgaria applied to be admitted to. The Australia Group is one of the four multilateral nonproliferation regimes regulating the export of weapons and the world trade with chemical and biological agents. Bulgaria is a member of the Nuclear Suppliers Group and the Zanger Committee.

[04] NATO DELEGATION TO VISIT BULGARIA

Sofia, February 9 (BTA) - A delegation of NATO experts will visit Bulgaria on February 14, said Georgi Dimitrov, Head of International Organisations Department with the Foreign Ministry. The delegation will study the prospects for the Bulgarian party to provide a field hospital and civilian staff for Bosnia and Herzegovina, as well as the conditions offered by the Academy of Military Medicine for medical treatment of the multinational peace keeping forces in former Yugoslavia.

[05] BULGARIA, IRELAND: ECONOMIC COOPERATION

Dublin, February 9 (BTA) - Deputy Prime Minister and Minister of Economic Cooperation Roumen Gechev, who is on an official visit to the Republic of Ireland, met with Minister for Employment and Enterprise Richard Bruton today.

The sides focused on the implementation and prospects of economic reforms in Bulgaria and the prospects of Bulgarian-Irish economic cooperation.

Gechev said that Bulgaria highly appreciates Ireland's presence in the Bulgarian economy, evidence of which is the award conferred to the Bulgarian-Irish enterprise Bimak Inc. There are good prospects for cooperation between the two countries, the Bulgarian guest said.

It was noted that Ireland, which assumes the presidency of the European Union in July 1996, could be a very useful and promising partner for Bulgaria and that its political support and the development of Bulgarian-Irish economic cooperation could accelerate Bulgaria's integration with the EU.

Later today Roumen Gechev had a meeting with Minister for European Affairs Gay Mitchel and acquainted him with the policy of the Bulgarian Government aimed at the country's admission to full membership in EU. Paying special attention to the harmonization of the Bulgarian legislation with that of Europe, Gechev observed that the Schengen agreement restrictions hinder economic contacts of Bulgarian businessmen with partners in Europe.

The operation and safety of the Bulgarian nuclear power plant at Kozlodoui were also discussed. Gechev said that at the third Environment for Europe ministerial conference Bulgaria had presented convincing evidence of the N-plant's normal and safe operation.

The sides considered the possibilities for joint action in the combat against drug trafficking and exchange of experience in training of the respective personnel.

Some aspects of European security and NATO membership in particular were also discussed at the meeting.

[06] 1996 NATIONAL BUDGET: COMPROMISE BETWEEN NEED AND REALITY

Sofia, February 9 (Ekaterina Kazassova of BTA) - Parliament passed the 1996 National Budget Act at a regular sitting today. The macroeconomic framework of the budget passed 135/45 (with 5 abstentions) last night.

The Act sets revenues at 250,149,600,000 leva and expenditures at 308,462,400,000 leva. Parliament voted for a budget deficit of 58,312,800,000 leva, to be financed with an issue of government securities worth 184,448,700,000 leva.

The bulk of revenues (212,236,400,000 leva) should come from taxes, of which 83,000 million leva in VAT. Revenues from gas imports in return for Bulgaria's share in the Yamburg gas field in Russia are put at over 8,000 million leva.

The government allocated some 46,500 million leva to defence and security. Spending on interest payments was set at 121,800 million leva, the main part of which will be interest on internal debts (88,600 million leva). The government allocated 33,000 million leva to foreign debt interest payments.

The estimates were based on an up to 20% growth in consumer prices, and an average annual exchange rate of 80 leva to the dollar. GDP target growth in 1996 was set at 3%.

According to economists in Parliament, the main risks have to do with the state of the banking system and possible unplanned spending on its stabilization. The national budget is an acceptable compromise between social needs and the means available for meeting them, and reflects the actual state of the economy, members of the parliamentary Budgetary and Finance Committee said. It is not geared to the demands of a single public organization.

Critics of the budget charged revenue targets were not based on existing laws alone, but were also made contingent on the passage of new laws. The government deliberately projected lower revenues, MPs of the opposition Union of Democratic Forces (UDF) and Popular Union claimed. With inflation set at 20%, revenues are expected to grow only 15% from 1995. This is a way to ensure the government meets its revenue targets, they said. Vassil Mihailov of the UDF described the budget as wishful thinking. According to him, the smaller allocations for land reform prove that the ruling Democratic Left does not want to return the land to its former owners.

The opposition also said the budget targets were obsolete as early as the second reading, after failing to take into account a recent 8% rise of the base interest rate to 42%. Addressing Parliament on behalf of the UDF, Mouravey Radev MP called the budget "the most anti- social in six years." Radev charged the government and the parliamentary majority with attempting to make Parliment an extension to the Council of Ministers, protesting the MPs' failure to pass laws concerning budget revenues. The 1996 national budget was not designed to support structural reform, but to cement the existing inefficient economic structures, by pouring money into money-losing companies, settling bad corporate debts, and depriving local government of all independence, he said. Radev predicted the government's revenue goals could be met, while its spending targets would prove unfeasible. The UDF voted against this budget, believing that it was still-born, Radev said.

According to Ventsislav Dimitrov of the Popular Union, the budget will need to be updated in a few months. Dimitrov in his statement accused the Finance Minister of knowing in advance the budget was unrealistic. The opposition also protested that the majority turned down all motions by the former during the debates.

This is the first time in five years the national budget passes at the start of a calendar year. According to MPs of the Democratic Left, the suggested anti-inflationary model of funding the budget will ensure real progress in the economy.

The Budget Act will probably have to be revised on account of the new base interest rate, said Chairman of the Budget and Finance Committee, MP Kiril Zhelev of the BSP at a news conference given minutes after the 1996 National Budget Act was passed by the National Assembly today. The introduction of the new base interest rate was prompted by the current state of the economy and will create great difficulties for the utilization of the national budget, Mr Zhelev said.

The size of the budget deficit will have to be considered in relation to Bulgaria's total indebtedness, Kiril Zhelev said. In his view the executive and the BNB should work out a middle-term strategy for servicing the country's obligations. After talks with the Finance Ministry, the suggestion that the BNB purchases the unsold state securities was not included in the Budget Bill.

Financing the deficit by means of state securities is a market method, however the Finance Ministry will have to make these securities more attractive to potential investors, Deputy Chairman of the Budgetary and Finance Committee MP Ventsislav Dimitrov of the Popular Union said.

According to Kiril Zhelev it is possible to sign a fourth stand-by agreement with the IMF and the national budget will not be an obstacle for that. One of IMF's conditions is that the deficit does not exceed 3.5 - 5 per cent, but despite all efforts this could not be achieved in the Budget Act, it became clear from Mr Zhelev's statement.

There will be no other stand-by agreement this year, Ventsislav Dimitrov predicted. In his view the debt instruments (the Brady bonds) must find practical application in the cash privatization.

[07] BULGARIAN BANKERS INITIATED INTO BRITISH BANKING

Sofia, February 10 (BTA) - Bulgarian top bankers arrived in London on February 4 on a one-week visit organized by the British Association for Central and Eastern Europe and the City Network company for East-West trade. The Bulgarian group includes representatives of the Bulgarian National Bank (the central bank), Balkanbank, The Economic Bank, United Bulgarian Bank, Bulgarian Posts Bank, Express Bank and other banks. The Bulgarian bankers are acquainting themselves with the British banking law, the functioning of the Bank of England, bank regulations and bank supervision and the operation of one of the world's largest stock exchanges - the London Stock Exchange.

The Bulgarian bankers discussed lending, deposits, exchange rates, money laundering and restructuring of bankrupt companies with representatives of leading consultancy firms like Cooper & Lybrand and Ernst and Young which are showing lasting interest in Bulgaria. They acquainted themselves with the experience gained in the privatization of the Rotshild and Son consultancy grouping and had meetings at the European Bank for Reconstruction and Development.

[08] PM VIDENOV ANALYZES BULGARIA'S GOALS

Sofia, February 10 (BTA) - A balanced foreign policy is not based on some primitive geometry, on equal distance from all partners. It is based on goodneighbourliness, on the solving of all existing problems and on the seeking of common interests with the broadest possible circle of countries in the region, Prime Minister Zhan Videnov said in an interview on Bulgarian National Television tonight. Yugoslavia is one of these countries, Videnov added. With its stand on the Yugoconflict of the past few years, Bulgaria made a good investment both in all-Balkan relations and in European integration, the Prime Minister said. According to him, this investment will start paying dividends now, in the postwar period.

In the past several difficult years Bulgaria seems to be the only country to have succeeded in preserving goodneighbourly relations with all its neighbours, Videnov said. He expressed his conviction that this country has good reason to expect success in its efforts to win a worthy place in the Balkans and in united Europe.

Asked whether this country's economy is capable of coping simultaneously with problems such as mass privatization, the attraction of foreign investment and the consolidation of the banking system, the prime minister said that these problems cannot be solved one by one. Most of Bulgaria's economic chances lie in the postwar economic growth of the Balkan region.

The prime minister objected against the allegations that the 1996 National Budget Act is antisocial. According to him, it corresponds to the goals laid down in the macroeconomic framework of the Cabinet, which takes the responsibility of utilizing it. The 1996 budget provides for real economic growth, a real decrease in unemployment and a real increase in incomes, Prime Minister Videnov said.

[09] BRITISH COMPANIES SHOW INTEREST IN INVESTMENT AND PRIVATIZATION IN BULGARIA

Sofia, February 11 (BTA) - Leading British companies such as Cooper & Lybrand, I Securities and Rotshild declared their interest in investment AND PRIVATIZATION IN BULGARIA at meetings of their representatives with Deputy Prime Minister and Minister of Economic Development Roumen Gechev. Late last night Gechev returned from a one-week visit to Britain and Ireland.

Foreign companies are showing particular interest in the possible sale of a package of shares of the Bulgarian Telecommunications Company, in large chemical plants such as "Sodi" in Devnya and in the food processing and tobacco industry, Gechev said. British Airspace has filed an official application for participation in the reconstruction of Sofia Airport.

In London Gechev conferred with David Mulford, Minister of State at the Treasury, Ian Lang, Secretary of State for Trade and Industry, and Nicholas Bonsor, Minister of State at the Foreign and Commonwealth Office. Two presentations of Bulgaria were organized at the Chambers of Commerce in London and Birmingham. The Bulgarian delegation visited the representation of Balkancar in Britain, Gechev said.

Gechev's visit to Dublin was the first high level visit by a Bulgarian delegation in the past five years. In Dublin Gechev conferred with Irish Prime Minister John Bruton, with Ireland's Minister for Employment and Enterprise Richard Bruton and with other cabinet members.

At Gechev's meetings with the President of the European Bank for Reconstruction and Development (EBRD), Jacques de Larosiere, and with EBRD Secretary General Antonio Maria Costa it emerged that the EBRD intends to invest USD 100 million in the United Bulgarian Bank and USD 30-40 million in a post-privatization fund in Bulgaria for special credit lines for newly privatized enterprises.

"We raised the issue of the need to open a new credit line for Bulgaria in the form of export guarantees by the British Government," Gechev said. British experts will consider Bulgaria's proposal. Naturally they link the opening of such a credit line with the signing of an agreement with the International Monetary Fund and the World Bank. The credit line will give preference to the export of capital commodities from Britain to Bulgaria - technologies, equipment, machines, special instruments and licences. At the meetings it was pointed out that of the past five years, 1995 was the most successful in bilateral trade which exceeded USD 300 million.

"Ireland will take over the EU presidency on July 1, 1996 and we were assured by the Irish Government that it would do everything possible for stepping up contacts between Bulgaria and the EU," Gechev said. On behalf of Prime Minister Zhan Videnov he invited Irish Prime Minister John Bruton to pay an official visit to Bulgaria which will probably take place in early 1997.

[10] UDF LEADER IVAN KOSTOV MEETS SIMEON II IN GENEVA

Sofia, February 11 (BTA) - During their visit to Switzerland at the invitation of the East-West Forum Foundation, the leader of the Union of Democratic Forces (UDF), Ivan Kostov, and his deputy Vassil Gotsev met exiled Bulgarian monarch Simeon II in Geneva. "We informed ourselves of Simeon II's forthcoming visit to Sofia and set forth the views of the UDF on the political situation in this country and the decisions of the UDF National Coordinating Council on the forthcoming presidential campaign," Kostov said upon his return at Sofia Airport today. According to him, the two sides expressed a number of identical views on the state and the future of Bulgaria.

Speaking of his intentions regarding the forthcoming presidential campaign, Simeon II said that he does not see why he should restrict his choice in the present unprecedented situation in Bulgaria. He did not rule out the possibility of running for president but this would be an extremely difficult step for him, because many emigrants and monarchists identify him with the idea of a constitutional monarchy, the UDF leader said.

"Mr Gotsev and I were not authorized to propose to Simeon II to run as candidate of the opposition," Ivan Kostov told BTA. According to him, the nomination of Simeon II depends on the interpretation of the Constitutional Court of the requirement for presidential candidates to have lived in Bulgaria for the past five years. The situation in Bulgaria will also be decisive as well as the way Simeon II is received during his visit, the UDF leader said. This will determine whether the UDF will approach the Constitutional Court for an interpretation. According to Gotsev, no amendments to the Constitution are necessary to make it possible for Simeon II to run for President.

The talks did not fix the date of Simeon II's visit to Bulgaria.

[11] PM VIDENOV LEAVES FOR YUGOSLAVIA TOMORROW

Sofia, February 11 (BTA) - Prime Minister Zhan Videnov will leave on an official two-day visit to Yugoslavia tomorrow as head of a government delegation.

The schedule of the visit includes talks with Federal Prime Minister Radoje Kontic, Yugoslav President Zaran Lilic and Serbian President Slobodan Milosevic. Apart from Belgrade, Videnov will also visit the Republic of Montenegro, where he will hold official talks with Prime Minister Milo Djukanovic.

The Prime Minister will be accompanied by Deputy Prime Minister and Minister of Agriculture and the Food Processing Industry Svetoslav Shivarov, Minister of Trade and Foreign Economic Cooperation Atanas Paparizov and deputy ministers of foreign affairs, construction, transport and power engineering.

During the visit the two sides are expected to sign several documents. There is a theoretical chance of the signing of an agreement on reciprocal investment protection and promotion, Prime Minister Videnov said last week, speaking of the forthcoming visit. The signing of two transport agreements - on air and land communications, is awaited with interest. The Bulgarian side has also drafted agreements on avoiding double taxation of incomes and property and on scientific and technological cooperation.

Prime Ministers Videnov and Kontic held preliminary talks at the World Economic Forum in Davos. "With Prime Minister Kontic we discussed more intensive contacts between the trade and transport ministries, encouraging contacts between businessmen and, what is most important, the raising of the level of the political representation in the two countries," the Bulgarian prime minister said after the meeting. The Bulgarian Government adopted a decision to open an embassy in Belgrade already two months ago but an ambassador has not been nominated yet.

The Trade Agreement signed between the two countries in December 1995 during the visit of former Bulgarian minister of trade and foreign economic cooperation Kiril Tsochev to Belgrade, laid the groundwork of bilateral business relations. This was the first document regulating the renewal of bilateral economic relations broken off as a result of the Yugoembargo. This document is expected to assist the restoration of traditional trade relations at their prewar level when bilateral commercial exchange exceeded USD 300 million. Now it is within the framework of USD 60-80 million a year, humanitarian deliveries accounting for the bulk of this sum.

This will be the first visit by a Bulgarian prime minister to the FR of Yugoslavia over the past six years. The last prime minister to visit Bulgaria's western neighbour was Andrei Loukanov who paid a working visit to Nis in 1990.