Bulgarian Telegraph Agency (BTA), 96-11-13

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From: Embassy of Bulgaria <[email protected]>

EMBASSY OF BULGARIA - WASHINGTON D.C.

BTA - BULGARIAN TELEGRAPH AGENCY

13 November, 1996

CONTENTS

[01] BULGARIA, E.U. SIGN ENVIRONMENTAL ACCORD

[02] BULGARIA AND EUROPE' INFORMATION TECHNOLOGY PROGRAMMES

[03] CHINESE GOVERNMENT DELEGATION IN SOFIA

[04] RULING SOCIALISTS VOTE CONFIDENCE IN PM VIDENOV, SCHEDULE CONGRESS FOR DECEMBER

[05] OPPOSITION SEEKS TO PROVOKE EARLY GENERAL ELECTIONS

[06] I.M.F.'S MICHAEL DEPPLER: THE CURRENCY BOARD IS A WAY TO DEAL WITH INFLATION

[01] BULGARIA, E.U. SIGN ENVIRONMENTAL ACCORD

For a fifth year already, a PHARE team has been working at the Bulgarian Environment Ministry. It manages environmental projects financed by the EU under operation PHARE. The Environment Ministry has to date utilized a total of Ecu 29.7 million provided under financial memoranda for 1990, 1991-92, 1993 and 1994. No funds were provided for environmental projects under the 1995 and 1996 memoranda, said the Bulgarian Environment Minister. The PHARE funds allocated to the Environment Sector went mostly for technical assistance, consultancy and delivery of equipment for air, water and radiation monitoring.

[02] BULGARIA AND EUROPE' INFORMATION TECHNOLOGY PROGRAMMES

The COPERNICUS Programme will finance the establishment of an Innovation Technological Centre in 1997. It will involve the Ministry of Industry, the Bulgarian Academy of Sciences, the Bulgarian Industrial Association, the Agency for Economic Coordination & Development. The primary function of the Centre will be to create the necessary infrastructure for circulation of the EU and PHARE Programmes to Bulgarian small- and medium-sized enterprises and to various technological centres in this country.

Bulgaria's active participation in a number of EU's information technology programmes is one way of the country's integration in the European and world infotech processes, concluded the participants in the Information Society Forum.

Bulgaria is coordinator for telecommunications in the PHARE regional programme for posts and telecommunications covering the countries of Central and Eastern Europe. Joining it in 1992, Bulgaria is involved in five projects: regulation and standardization of posts (Ecu 445,000; implemented together with Hungary, Albania, Poland, Slovakia and the Czech Republic); market analysis and profile of post services users (Ecu 487,991; Estonia, Lithuania, Romania, Slovenia); restructuring of parcel posts and international delivery services (Ecu 198,000; Albania, Estonia, Latvia, Lithuania, Romania, Slovakia and Slovenia); alternative models for providing telephone servicing of scarcely populated centres (Ecu 600,000; Slovenia, Albania, Lithuania, Poland, Romania, Hungary); and a system for determining income and expenses involved in telephone services (Ecu 700,000; Hungary, Albania, Latvia, Lithuania, Poland, Romania, Slovenia, the Czech Republic).

[03] CHINESE GOVERNMENT DELEGATION IN SOFIA

The sides exchanges information on the investment opportunities and decided to draw up lists of prospective investors. The Bulgarian list will include major Bulgarian companies such as Madara of Shoumen, which has already exported to China over 1,000 heavy-duty trucks, Bioinvest, a major supplier of equipment for the Chinese food processing industry, the Himko chemical plant, the Pharmachim and Aroma pharmaceuticals and cosmetics plants, Balkancarpodem, Vinimpex and a toy manufacturer, among other.

The Chinese delegation brought forth specific cooperation projects at a meeting held at the Bulgarian Industry Ministry, said Deputy Industry Minister Stanislav Dimitrov. The guests proposed that joint production of small-size farming equipment, household appliances, ready-to-wear clothes, toys and cosmetics, be launched on the territory of Bulgaria. It is the first time China has proposed to invest in Bulgaria, said Dimitrov.

It emerged during the talks that the major obstacle for Chinese investment in Bulgaria is the high investment requirement for getting preferential treatment. Both Trade Minister Paparizov and Industry Minister Dachev agreed that the 5 million dollar threshold is too high. Representatives of the two ministries said that a motion for amending the foreign investment law, and more specifically for reducing the threshold, will be introduced at Parliament soon.

The Chinese delegation also met Foreign Minister Georgi Pirinski and was received by incumbent President Zhelyu Zhelev and President elect Peter Stoyanov. Stoyanov, whose inauguration is due in late January, was invited to visit China. His press office said it is the first invitation to a Bulgarian Head of State to visit China after 1989.

[04] RULING SOCIALISTS VOTE CONFIDENCE IN PM VIDENOV, SCHEDULE CONGRESS FOR DECEMBER

The plenum authorized the Cabinet to show initiative and begin technical work for a possible adoption or rejection of the idea of a currency board in this country, the Prime Minister said. Today's vote brings us closer to early parliamentary elections, former Socialist leader Alexander Lilov and deputy Socialist leader Yanaki Stoilov, who today resigned the post, told the media. The two were among 19 Socialists who called for a new Government and a new policy several days before the plenum. Two more senior Socialists who signed the appeal, Nikolay Kamov and Filip Bokov, also tendered resignations today.

At a press conference after the plenum Zhan Videnov declared that possible changes in the Government would depend on the decisions of the congress and immediately follow the forum. Before the congress the Prime Minister will submit a draft programme for financial stabilization, structural reforms and encouraging economic growth in the second half of the BSP term in office (through 1998).

"This mandate is difficult but very important for me, and I am thankful to the BSP leadership and the MPs from the Left," Videnov's said following today's vote. In his words, the mandate will allow a full mobilization of forces in the next two months in the name of resolving the nation's most pressing problems. Videnov also said he would seek to strengthen and expand popular support for the government's measures on the basis of a debate involving political forces and the public. At the same time he observed that today's slim margin of support "makes one wonder about the extent of understanding and support for the coming difficult steps and decisions."

BSP deputy leader Georgi Purvanov described the discussion at the plenum as "heated but profound and fruitful". This was a discussion which not only underscored the differences but also showed some common ground to be sought and extended in the coming weeks and months, Purvanov said.

"Today we missed a good chance to begin the process of forming a new Cabinet and strengthen government," Yanaki Stoilov, so far BSP deputy leader, told a BTA reporter. He said the plenum's decisions may accelerate political developments and move back the date of parliamentary elections, "as it will be more difficult for the BSP and the Left to take the political initiative."

A similar view was expressed by former Socialist leader Alexander Lilov, who said the Left is losing the political initiative and "today's vote brings us closer to early parliamentary elections". Asked what he thought will happen in Parliament after the plenum, Lilov said he expected "the opposition to begin implementing its new tactics in the near future".

[05] OPPOSITION SEEKS TO PROVOKE EARLY GENERAL ELECTIONS

The UDF leaders, however, did not provide a concrete answer as to when they intend to propose a vote of no confidence in the Government. At the same time, the officials stressed that they will move the vote of no confidence when they are certain of their success. The UDF assesses the political situation as very dynamic; this is why its leaders were given broad powers today.

The UDF senior leadership gave powers to UDF Leader Ivan Kostov and the Union's Floor Leader Yordan Sokolov to hold consultations with all parliamentary groups and individual MPs about parliamentary decisions on "Bulgaria's membership in NATO, amendments to the regulations of and replacements in the governing bodies of the National Bank, the State Savings Bank (whose funds are 100% guaranteed by the state), on a nationally responsible position before the international financial institutions and on early dissolution of Parliament". Kostov did not rule out talks with Socialist MPs. "We shall hold negotiations with everybody who is concerned about this country's national interests, who is not willing to sell Bulgaria in the name of the survival of a false party," Kostov said. To achieve its goals, the opposition will seek cooperation with extraparliamentary political forces, public organizations and the trade unions. Furthermore, it is planning to sign an agreement aimed at precipitating early general elections, like the agreement on the nomination of a single candidate for the presidential elections.

Despite the prolonged debates today, the UDF did not take an official stand on the recommendation of the International Monetary Fund for introduction of a currency board in Bulgaria. The matter has yet to be discussed by the Political Board of the united opposition and at meetings of UDF representatives with officials of the G-7 countries.

"The Socialist party cannot make it with or without a currency board, while we can, with or without it," Kostov said commenting his statement yesterday that the opposition offers an alternative both to the Socialist government and to the currency board. Kostov believes the Socialists cannot handle the situation because they don't have people's confidence.

Kostov fears that the currency board option threatens to postpone for an indefinite period of time the conduct of early general elections. "It is exactly what we don't want to happen. It means that an economic decision will change the political processes and trends in Bulgaria. What is more, it will affect adversely their development," said he. The UDF demands changes in the BNB and SSB to make sure the currency board does not include people who have already failed.

The UDF leaders were reluctant to comment the vote of confidence that Prime Minister and BSP leader Zhan Videnov got at a BSP plenum on Tuesday. "BSP split up before the plenum. The question is whether this split will be formalized and acquire tangible political form in the action of politically responsible persons," Kostov said.

[06] I.M.F.'S MICHAEL DEPPLER: THE CURRENCY BOARD IS A WAY TO DEAL WITH INFLATION

"There is a new awareness that Bulgaria needs to rethink about it," Deppler said. Once again, he stressed that "the currency board may well be a good solution, a top solution, to the problems in Bulgaria. It will take a little time for Bulgaria to think through what it means and whether this is something Bulgaria wants to do." "The debates have begun and they are serious and I am very encouraged in that regard. I am leaving town but the IMF is not disappearing," he said further.

Deppler arrived here unexpectedly at the end of last week, shortly after the arrival of the regular IMF mission for Bulgaria led by Anne McGuirk. At the start of his ten-day visit to Sofia, Deppler set forth before the Bulgarian politicians and financiers the IMF's proposal on the introduction of a currency board in Bulgaria. He said that the proposal emerged in the international institution after the IMF/World Bank Annual Meeting a month ago and is the best option under the country's present financial circumstances.

"Talks with the political leaders in the country have been very constructive at all levels," Deppler said. He added that during his talks with Cabinet officials and representatives of the major political parties he was not given a categorical statement as regards the introduction of a currency board. After the end of the plenum of the ruling Bulgarian Socialist Party today, it emerged that Prime Minister Videnov will insist on accepting the IMF's proposal.

The united opposition is yet to come up with a definite stand on the introduction of a currency board. Shortly before his departure, Deppler met with Ivan Kostov, leader of this country's biggest opposition formation - the Union of Democratic Forces, at the latter's request. The IMF official declined to comment on the content of his talks with Kostov.

After his meeting with Deppler yesterday, President Zhelyu Zhelev said that he will initiate active political consultations and a broad public discussion on the problem of the introduction of a currency board in Bulgaria. Before the end of this week, Zhelev is scheduled to meet the Board of Governors of the National Bank of Bulgaria (BNB, the central bank), the National Assembly Budgetary Committee, the Minister of Finance, representatives of the Association of Commercial Banks and individual IMF experts.

"Bulgaria needs as much foreign exchange as possible," Deppler said, asked by a reporter to assess this country's financial and economic situation. "The IMF may help in this regard, but it can help in another respect - the privatization, [which is] an essential step for getting some of the foreign exchange Bulgaria needs," Deppler said. According to him, if Bulgaria and the IMF reach an agreement on the key issues related to the strengthening of the financial discipline and achieving economic stability, Bulgaria can rely on aid from the IMF under a new agreement. The deadline for drafting the document is the year-end or the early 1997, Deppler said.

In an official press statement released later today, the IMF Mission in Sofia said: "We have had very useful discussions over the past ten days with the Government, the BNB, members of Parliament, and the trade unions about the current economic situation and policy options for stabilizing the economy. We believe there is a need for a decisive change in direction for financial policies to establish a new foundation for economic stability and growth. Although we remain open to the consideration of alternative approaches that deal decisively with the fundamental problems of the Bulgarian economy, our discussions focused on the idea of introducing a currency board, which involves the adoption by the BNB of a strict monetary rule. In our view, provided it has broad-based support, such a monetary rule offers the best prospect for restoring confidence, achieving stability , and making the needed break with inflationary policies of the past.

"We are encouraged by the increasing interest shown in this idea and look forward to its gathering broad support through further expert analysis and public discussion. In the meantime, technical work will continue on the practical aspects of what would be involved in introducing a currency board and the supporting policies needed to achieve rapid stabilization. The regular mission will remain in Sofia through Thursday of this week to develop a work plan for more specialized missions that will follow shortly. With this preparatory work, the necessary public support, and agreement on a strong policy package, an arrangement with the Fund around the turn of the year is a realistic objective."

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