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News from Bulgaria / Apr 19, 96From: [email protected] (Embassy of Bulgaria)Bulgarian Telegraph Agency DirectoryEMBASSY OF BULGARIA - WASHINGTON D.C.BTA - BULGARIAN TELEGRAPH AGENCY19 April, 1996CONTENTS[01] PRESIDENT ZHELEV MEETS EBRD PRESIDENT JACQUES DE LAROSIERE[02] SEMINAR IN WASHINGTON LAUDS BULGARIAN REFORMS[03] BULGARIAN NATIONALS LIVING ABROAD WILL FREELY CAARY OUT TRNSACTIONS WITH THEIR PROPERTY[04] CONSTITUTIONAL COURT WON'T REVIEW RULING ON Concessions Act[05] COUNCIL OF MINISTERS' DECISIONS[06] SCHOLARS DISCUSS DANUBIAN COUNTRIES' TIES[07] GERMAN INVESTORS INTERESTED IN BULGARIAN ECONOMY[08] MASS PRIVATIZATION LICENSING OF INVESTMENT COMPANIES[09] BUSINESS PRESS ANOTHER US DOLLAR SURGE[10] FOREIGN CURRENCY RESERVE IS 720 MILLION US DOLLARS[11] 49 BULGARIAN COMPANIES WANT TO CONSTRUCT IN BOSNIA AND HERZEGOVINA[12] 145,000 MILLION LEVA INVESTED IN ECONOMY IN 1995[13] BULGARIA CONSIDERS PROJECTS FOR FREE TRADE ZONES[14] ASSOCIATION OF BALKAN CHAMBERS OF COMMERCE[01] PRESIDENT ZHELEV MEETS EBRD PRESIDENT JACQUES DE LAROSIERESofia, April 18 (BTA) - Bulgarian President Zhelyu Zhelev and the President of the European Bank for Reconstruction and Development Jacques de Larosiere today met to discuss openly the economic reform in Bulgaria, the crisis elements and ways to overcome them. President Zhelev reportedly hailed the bank's decision to re-target its activity toward a strict implementation of the rule for 60% private sector financing and 40% financing of infrastructure projects of priority. Dr. Zhelev reiterated his will to support any government that would carry out successfully changes, resulting in the formation of a stable private sector.[02] SEMINAR IN WASHINGTON LAUDS BULGARIAN REFORMSWashington, April 18 The participants in a seminar on "Bulgaria 1996: the Year of Break-through?" lauded Bulgaria for the progress of reforms. The seminar was sponsored by the Bulgarian-American Society and the Bulgarian Embassy in the United States. Nearly 100 representatives of the US administration, the World Bank, the International Monetary Fund, non-governmental organizations, think tanks and leading American companies, including Coca Cola, IBM, Westinghouse and KPMG, attended the forum held at the Hyatt Regency Hotel in Washington, D.C.Addressing the participants, Indiana Congressman Lee Hamilton praised Bulgaria's progress in the political, social and economic area. He pointed, however, that the country had not completed its transition yet and noted that 1996 could become the year of break-through if financial stabilization and advancement of structural adjustment and privatization were achieved. Bulgarioa is a friend and a reliable partner, Mr Hamilton, member of the Foreign Affairs Committee of the House of Representatives of many a year, stressed. He recalled Bulgaria's role in the achievement of peace in the former Yugoslavia and the huge losses suffered as a result of the strict application of UN sanctions. I feel sympathy for Bulgaria's incumbent Government which is trying to cope with problems sidestepped by all its predecessors, William Montgomery, former US ambassador to Bulgaria, currently Special Adviser to the President and the Secretary of State on Bosnia Implementation Issues. In his view, Bulgaria should be treated on an equal footing with countries such as the Czech Republic and Poland. Mr Montgomery backed the initiative for a meeting of Balkan foreign ministers in Sofia and said that with its policy Bulgaria set an example, abandoning "the Balkan approach" to relations with neighbours. Bulgarian Ambassador in Washington Snezhana Botousharova made a brief review of the positive developments in Bulgaria in the last few years and stressed the favourable conditions created for trade and investment. The participants in the seminar discussed problems of privatization, the agrarian reform and the energy sector. [03] BULGARIAN NATIONALS LIVING ABROAD WILL FREELY CAARY OUT TRNSACTIONS WITH THEIR PROPERTYSofia, April 18 (BTA) - The Constitutional Court ruled today that Bulgarian nationals living abroad may carry out transactions with their property in Bulgaria without previously applying for the approval of the Finance Ministry. By 11-1 votes the justices ruled unconstitutional articles of the Transactions in Currency Assets and Exchange Control Act challenged by the opposition, Nikola Pavlov, rapporteur on the case, said. The challenged clauses treat Bulgarian nationals as foreign persons depending on their place of residence and required that such foreign persons-Bulgarian nationals carry out transactions only with the approval of the Finance Ministry.[04] CONSTITUTIONAL COURT WON'T REVIEW RULING ON Concessions ActSofia, April 18 (BTA) - The Constitutional Court today unanimously rejected an appeal by 49 opposition MPs calling on the Court to rescind its ruling on disputed provisions of the Concessions Act and review the case. The MPs' request was described as unacceptable, said the rapporteur on the case, Judge Stanislav Dimitrov. He said the Court's rulings are final and binding on all parties. The Court cannot cancel and amend its own decisions, said Judge Dimitrov. The MPs insisted that the case be reviewed on the grounds that their claim had not been rejected by the required majority. The opposition claimed that several provisions of the Act expanded the state monopoly over entities not mentioned in the Constitution.[05] COUNCIL OF MINISTERS' DECISIONSSofia, April 18 (BTA) - The Council of Ministers today approved the introduction of two national accounting standards: investment company accounting reports and accounting of privatization deals. They set requirements to the contents and presentation of investment companies' accounting reports and detail requirements for privatization fund reports.The Cabinet heard a report on a draft programme for the development of agriculture and the food industry. The draft document deals with measures for the speeding of the land reform, social policy in the rural regions, the meeting of domestic requirements, and preparations for the successful integration of Bulgarian agriculture in the European structures. The final version of the programme will be ready in early May, the Council of Minister's press office said. The Cabinet today approved a draft decision to hold a joint drill involving Bulgarian and Greek staff officers. They will exercise rescue operations in a flood. The drill will be held in Greece from May 13 through 15 and in the southern Bulgarian municipality of Sandanski on May 16. The Cabinet today approved an agreement on cooperation and mutual assistance in customs operations with the Russian government. Signed in Sofia on May 19, 1995, it envisages mutual assistance in the enforcement of customs legislation and the prevention and investigation of customs violations. The Cabinet today decided to propose to Parliament to ratify a Bulgarian-Russian intergovernmental agreement on merchant shipping. It creates prerequisites for the effective regulation of shipments by sea between the two countries. The Cabinet today approved an agreement on mutual assistance in criminal matters and an extradition agreement between Bulgaria and Azerbaijan. The Cabinet approved a draft agreement on economic, scientific and technological cooperation in agriculture and the food industry between Bulgaria and Belarus. The Council of Ministers approved a Bulgarian-Chinese draft agreement on cooperation in patent rights. The Cabinet approved a draft agreement on cooperation in education, science and culture between Bulgaria and Ireland. The cabinet ministers heard a report on the participation of a Bulgarian delegation in the upcoming meetings of the International Investment Bank (IIB) and the International Bank for Economic Cooperation (IBEC) in Moscow from April 23 to 26. Bulgaria owes the IIB Ecu 460.3 million and the IBEC Ecu 158 million. The mechanism of gradually reducing Bulgaria's debt until its final settlement will be discussed at the meetings. The Cabinet approved a draft declaration on the signing of an agreement on information safety with the Western European Union. Bulgaria became a WEU associated member on May 9, 1994. Its status allows it to receive classified information. The Cabinet today approved a report on Bulgaria's participation in the Ninth session of the U.N. conference on trade and development (UNCTAD). The forum will take place in April 27 through May 11 in Midrad, the Republic of South Africa. The conference will discuss the promotion of economic growth and sustainable development in the context of the liberalized world economy. Bulgaria has been an active participant in UNCTAD activities since the forum was set up in 1964. During its talks with the Russian representatives at the forthcoming conference, the Bulgarian delegation will raise the issue of this country's inclusion in the Russian system of preferential customs. The Cabinet discussed a draft project on easing of trade relations with Turkey. Preliminary talks to this effect are to begin very soon. Bulgaria will propose that talks on the setting up of a free trade zone between this country and Turkey start some time later. The Cabinet approved a report on the participation of a Bulgarian delegation in the third session of the Bulgarian-Argentinian intergovernmental commission. The session is scheduled to take place on April 25 and 26 in Buenos Aires, after a nearly two-year break. The officials will discuss way to intensify trade and economic relations between Bulgaria and Argentine. The Cabinet heard a report on the participation of a Bulgarian delegation in a meeting of foreign ministers of Black Sea Economic Cooperation member states. The meeting will take place on April 27 in Bucharest. Bulgaria will be represented by Foreign Minister Georgi Pirinski. The Cabinet discussed a bill amending the Profit Tax Act. The Cabinet will propose to Parliament that it discuss ways for providing tax reliefs to Bulgarian and foreign investors which participate with more than 66 per cent in the privatization of enterprises and which reinvest some 10 per cent of their profits in the enterprises which they have acquired. [06] SCHOLARS DISCUSS DANUBIAN COUNTRIES' TIESSofia, April 18 (BTA) - A two-day international conference on "The Danube - Bridge of Cultural Interaction" opened at the St Kliment Ohridski University of Sofia today. The forum is organized by the St Kliment Ohridski University and the Institute of Ethnography with the Bulgarian Academy of Sciences with the financial assistance of the Open Society Foundation. Scholars from Bulgaria, Croatia, France, Germany, Hungary, Romania, Russia and Yugoslavia are discussing the historical ties and cultural relations among the countries on the two banks of the Danube in the last two centuries.[07] GERMAN INVESTORS INTERESTED IN BULGARIAN ECONOMYSofia, April 18 (BTA) - German investors are interested in projects including the partial privatization of the Bulgarian Telecommunications Company and joint businesses on a concession basis in the chemical plant in Devnya, Northeastern Bulgaria, and the thermal power plant in Varna, on the Black Sea, Bulgarian Minister of Trade and Foreign Economic Cooperation Atanas Paparizov told a news conference here today. Paparizov participated in a meeting of the trade ministers of Central and Eastern Europe held in Leipzig on April 11-13 and attended the opening of the traditional Leipzig international fair.Meeting the Bulgarian Trade Minister, German Minister of Economy Guenter Rexrodt reportedly conveyed the complaints of German companies that in spite of the favourable foreign investment legislation in Bulgaria, starting a business in this country is impeded by red tape and the frequent change of partners as a result of CEO replacements. The German Minister of Economy briefed Paparizov on the opportunities Bulgarian companies have to participate in German projects for reconstruction of Bosnia and Hercegovina. This information will be available to interested Bulgarian companies. The Bulgarian Trade Ministers said he has invited Ludolf von Wartemberg, who heads the Union of German Industrialists, to visit Bulgaria on May 1 through 5. Paparizov hopes to negotiate during this visit contracts for supplies to Bosnia and Hercegovina by Bulgarian companies. The Minister Presidents of Saxony and Brandenburg, too, are expected to visit Bulgaria, Paparizov said. [08] MASS PRIVATIZATION LICENSING OF INVESTMENT COMPANIESSofia, April 18 (BTA) - Tomorrow the Securities and Stock Exchanges Commission begins to receive applications for the registration of privatization funds which will take part in mass privatization. Applications can be also filed by investment brokers and investment companies. The current number of potential applicants is 93. It is not yet clear how many will be approved by the Commission. As in other countries in Central and Eastern Europe, privatization funds are expected to play a key role in the implementation of Bulgaria's mass privatization programme. They will be exchanging vouchers for shares in the companies auctioned. Under Bulgarian law, the institutions can also hold government securities, corporate bonds and shares. They can buy an up to 34% interest in a company, which would make them instrumental in structural adjustment.Privatization funds are one of two major ways to acquire shares. The other is a personal application to participate in an auction. According to sources of the Mass Privatization Centre, privatization funds are not pyramids. They do not raise real money from people- they concentrate vouchers which can be only used for purchasing shares in 1,063 companies on mass privatization lists. The privatization funds are shaped as closed-end joint-stock companies. They cannot repurchase their shares from investors for five years, but can sell them to other persons, no earlier than six months after the last auction. Shares can be bought back upon the expiry of five years. They can be traded on the stock market. A fund needs to comply with a number of requirements to get a licence. In the first place, it needs to have at least 70 million leva in capital. Funds that fail to get a licence should return the vouchers to their owners. Some funds have been negotiating with potential foreign investors. So far, interest has been displayed in the Trakiya and United Capital funds. Bulgarian economic realities show it is unfeasible to expect quick dividends from mass privatization, says Bozhidar Danov, President of the Bulgarian Industrial Association which co-founded United Capital. According to him, some funds have made unjustified commitments. The goal is to ensure a steady real income to shareholders and a good price in case they sell their shares, he says. [09] BUSINESS PRESS ANOTHER US DOLLAR SURGEThe dailies report a new rise of the U.S. currency which gained more than one lev and exchanged for about 82.50 leva on the interbank foreign exchange market yesterday. This is the first case of US dollar appreciation in April which is quite unusual and illogical, a dealer from a major Sofia bank in quoted as saying in "Continent".According to experts, quoted by the daily, the continuing retreat of the Bulgarian lev is due to the lack of major participants on the forex market which resulted in lower liquidity. There are only a couple of banks and the same number of financial houses on the market, "Douma" writes. "Standart News" quotes a dealer as saying that the big energy importers are still purchasing US dollars, but the banks are short of foreign currency. Another reason is found in the passivity of the National Bank of Bulgaria (BNB, the central bank). Foreign currency experts predict that after another slight rise today the US dollar will stop edging up. "Under the Government's programme the exchange rates of 1 US dollar for about 82-85 leva was planned for as late as the end of the year... This reportedly "monitored depreciation of the Bulgarian lev" on part of the BNB and the Government may get them into serious trouble," reads a signed commentary in "Continent". The author says that "the BNB cannot constantly interfere on the home forex market, putting into circulation unlimited quantities of US dollars in support of the Bulgarian currently, simply because its reserves are quite limited and because it must keep them for payments on the foreign debt." [10] FOREIGN CURRENCY RESERVE IS 720 MILLION US DOLLARSThe foreign currency reserve has shrunk to 720 million US dollars, "24 Chassa" and "Pari" say, quoting the BNB. This is 550 million US dollars down from the end of 1995 when the reserve was 1,270 million US dollars. According to experts, the state reserve will still be sufficient for the country to pay its this year's obligations on the foreign debt, provided it makes no other expenses. "24 Chassa" quotes bankers as saying that unless Bulgaria signs another agreement with the International Monetary Fund (IMF) and the World Bank, it will have to seek new sources of foreign currency. A number of financial organisations have offered their services, but their interest rates are unacceptably high, Finance Minister is quoted as saying in the daily.[11] 49 BULGARIAN COMPANIES WANT TO CONSTRUCT IN BOSNIA AND HERZEGOVINA49 Bulgarian construction companies and material manufacturers have been included in the information system of the European Commission for the forthcoming auctions on the restoration of Bosnia and Herzegovina, "Troud" reports, quoting Deputy Minister of Regional Development and Construction Lyuben Petrov after the conference of donor countries in Brussels late last week. Carl Bildt, the international community's representative in charge of the civilian reconstruction of Bosnia and Hercegovina, said that together with those from Austria, the Bulgarian companies are among the most active applicants.[12] 145,000 MILLION LEVA INVESTED IN ECONOMY IN 1995Last year the Bulgarian companies invested nearly 145,000 million leva in fixed assets, "Troud" says, quoting figures of the Ministry of Economic Development. Private enterprizes invested nearly 64,000 million leva, which is 44 per cent of all investments and the state- financed companies made investments of 81,000 million leva. The largest funds were spent on construction and assembly works and for purchasing machines and equipment: about 63,000 million leva for each of those. Industry, which accounts for more than 50 per cent of all investments ranks first. Equal investments of about 11,000 million leva were made in transport, trade and services.[13] BULGARIA CONSIDERS PROJECTS FOR FREE TRADE ZONESSofia, April 18 (BTA) - A Polish delegation will visit this country after May 15 with which representatives of the Bulgarian Government will start negotiations on the setting up of a free trade zone between the two countries, Trade and Foreign Economic Cooperation Minister Atanas Paparizov told a news conference today. At the meeting of the trade ministers of the countries of central and eastern Europe, held in Leipzig from April 11 through 13, Paparizov held talks with his counterparts of the former socialist countries and arranged meetings to discuss free trade zones.Free trade zone negotiations will start with Romania next week. Preliminary talks are expected to be held with Hungary soon. Similar projects are to be drafted with the Baltic countries. Experts of Bulgaria and Slovakia will meet in May and June to discuss a free trade zone between the two countries. "I expect the respective agreement to be signed with my Slovak counterpart during his visit to the Plovdiv Autumn Fair," Paparizov said. Today the Government approved the proposal by the Trade and Foreign Economic Cooperation Minister for setting up a coordinating group with the Trade Ministry in charge of the drafting of all agreements. Apart from trade ministry experts, the coordinating group will also include experts of the Finance Ministry, the Agricultural and Food Processing Industry, the Ministry of Economic Development, the Industry Ministry and the Foreign Ministry. [14] ASSOCIATION OF BALKAN CHAMBERS OF COMMERCESofia, April 18 (BTA) - The Association of Balkan Chambers of Commerce will discuss at its general meeting early next week specific demands for assistance from the governments of the Balkan countries.The delegates will demand from their governments liberalization of trade in the Balkans, stepped up construction of Balkan infrastructure, signing of government-sponsored interbank agreements and setting up a Balkan banking association, journalists were told today by Bozhidar Bozhinov, head of the Bulgarian Chamber of Commerce and Industry. The Association will held its fourth general meeting in Sofia on April 22- 23. A round-table discussion on "Liberalization of Trade in the Balkans" is also organized to be attended by Bulgarian cabinet ministers and representatives of different economic institutions. Attending the round-table discussion will be the Chairs of the European chamber of commerce and of the Federation of German Chambers of Commerce. The Bulgarian Chamber of Commerce and Industry will submit for discussion and approval by the forum an agreement on settlement of disputes between Association members. The Association was set up in 1994 in Romania on the initiative of the Bulgarian Chamber of Commerce and Industry. According to Bozhinov, it is the only working economic organization in the Balkans. The Association's statutes describes it as a non-political non-profit NGO.
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