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News from Bulgaria / May 7, 96

From: (Embassy of Bulgaria)

Bulgarian Telegraph Agency Directory



7 May, 1996


  • [01] BULGARIA - NATO







  • [01] BULGARIA - NATO

    The NATO Headquarters in Brussels today hosted the first discussion between Bulgaria and the Alliance in the framework of the enhanced dialogue on a possible NATO expansion, the Bulgarian delegation said in a fax to BTA. The delegation was led by Georgi Dimitrov, Head of the International Organization department of the Foreign Ministry. NATO's International Staff was represented by Gephardt von Moeltke, Assistant Secretary General for Political Affairs.

    The sides exchanged opinions on a wide range of issues raised by Bulgaria. They focused on NATO's role and the expansion of the Alliance in the context of European security architecture, institutional interaction, the parallel expansion of the European Union and the Western European Union, and the future of the North Atlantic Cooperation Council and Partnership for Peace. The participants considered specific aspects of the expansion, in view of ensuring security and stability throughout Europe. The Bulgarian side discussed Government initiatives for enhancing regional stability, security and cooperation. The talks will continue in June.


    Sofia, May 6 (Alexander Kirov of BTA) - After the drastic depreciation of the Bulgarian lev against the US dollar and the currency crisis last week, when the dollar skyrocketed to an exchange rate of 100- 110 leva, the forex market is expected to calm down this week, a Post Bank dealer told BTA. In his opinion, the reason for the crisis is the disintegration of the market as a result of the financial policy pursued by the National Bank of Bulgaria (BNB). In late April BNB increased the base interest rate by 18 percent and it reached a record-high level of 67 percent. In this situation bank loans became non-performing debts, which practically means that there are no lenders and debtors on the money market, the dealer said.

    A review of the official exchange rates of the US dollar from January 1 to May 6, 1996 shows that the lev's depreciation is 50.57 percent. From April 15 to May 6 alone it depreciated by 25.94 percent. The official exchange rate for May 6 is 99.99 leva/US dollar 1. In the last two working days the dollar's quotations were over 100 leva both on the interbank and the cash market. "What happened was projected long ago - the exchange rate of the lev against the US dollar had to reach its real level," Andrei Prumov, CEO of the Adlon Diskont Ltd. financial house said on national television on May 3, 1996. In his opinion, with the base interest rate moving higher and the margin between market interest rates for Bulgarian leva and US dollars becoming wider, the dollar will continue to climb up, which is perfectly normal. " Under the circumstances the balance point of the dollar would be 100-110 leva and it will steady at this level if BNB does not change the interest rate again," Andrei Prumov said. "Otherwise - if the base interest rate rises to 120 percent for instance - no wonder if the exchange rate of the US dollar soars, exceeding 200 leva," he said.

    "If the new dollar-lev balance point becomes 100 leva, inflation will be much higher than that projected by the Government in the macroeconomic framework of the budget," Prof. Todor Vulchev, former BNB governor, said in an interview on national radio. In his words, this will boost import prices and imported goods sales will shrink. "On the other hand, the higher exchange rate of the dollar is a prerequisite for increasing exports which will improve the country's balance of payments," Prof. Vulchev stated. To him, under the present circumstances the central bank and the Government should adopt a decision for an acceptable exchange rate of the dollar, using adequate financial instruments to maintain it. "Changing the base interest rate or market interventions are not suitable instruments because of BNB's diminished foreign exchange reserves," Prof. Vulchev said. In his view, the only way out is to conclude arrangements with big state-owned and private banks which have ample hard currency supplies and to negotiate loans with the World Bank and the International Monetary Fund.


    "In my view we will have enough money to make the foreign debt payments," Finance Minister Dimiter Kostov says in an interview for the "Capital" weekly. According to him, there is no danger that the Government declares a moratorium on the payments. The foreign exchage reserve is not the country's only source of convertible currency, Kostov stated.

    In 1996 Bulgaria has to pay some 1,200 million US dollars' worth principals and interests on its foreign debt, amounting to 9,445 million US dollars by the end of 1995. The external debt equalled 12,472 million US dollars in 1993 and 10,363 million US dollars in 1994. In January- March 1996 Bulgaria paid some 390 million US dollars on the foreign debt. The amount due for the whole 1996 breaks down as follows: 156 million US dollars in April-June, 510 million US dollars in the third quarter and 168 million US dollars in the last quarter. "Considering the current exchange and interest rates, I expect a larger inflow of hard currency, as from 1995," Kostov states.

    The fourth stand-by agreement with the International Monetary Fund (IMF) will be formally signed in July or September, the Finance Minister says in the interview. An IMF mission arrives in Sofia today. In the course of two weeks it will discuss with the Government the signing of the new arrangement. IMF Mission Leader for Bulgaria Anne McGuirk is expected to come to Bulgaria by the middle of the week. The IMF experts will hold talks with officials of the National Bank of Bulgaria, the Bank Consolidation Company and a number of ministries. The fourth stand-by arrangement will be of the worth of at least 150 million US dollars which are to be extended within one calendar year, Minister Kostov says.

    Apart from the money from the stand-by agreement with IMF, Bulgaria stakes on a loan by the World Bank, Kostov states. Under the initial version of the lending agreement with the bank the loan should amount to 150 million US dollars. "Japan voiced readiness for joint financing by some 50 million US dollars. We also can take credits from unutilized loans by the World Bank," according to Kostov.

    "Bulgaria will sign agreements with the World Bank and IMF by the middle of 1996. Our partners are satisfied with the Government program," Deputy Prime Minister and Minister of Economic Development Roumen Gechev said upon his return from New York, where he conferred with representatives of the two financial institutions. In case the negotiations of the Bulgarian Government with the two institutions fail Bulgaria can receive the necessary 350 million US dollars from other lenders, Gechev stated. According to him, however, this will be used as a last resort, because such loans are extended only against state guarantees and need ratification by Parliament.


    Plovdiv, May 6 (BTA correspondent) - This morning Deputy Prime Minister and Minister of Economic Development Roumen Gechev opened the Spring'96 Fair in Plovdiv (Southern Bulgaria) for consumer goods and machinery and technologies for their production. "Bulgaria is the only Eastern European country which reported a trade surplus of 500 million US dollars by the end of 1995," Gechev said. According to him, Bulgaria implements successfully the economic reform.

    Minister of Trade and Foreign Economic Cooperation Atanas Paparizov said that foreign trade is a decisive factor for Bulgaria's economic development, given that the country is in a period of transition to market economy. "The integration of the Bulgarian economy into the European market and the implementation of the Europe agreement are of particular importance for the Republic of Bulgaria," Paparizov stated. He said he is sure the Spring'96 Fair will promote the realization of the priorities set by the Government in the field of foreign trade.

    Attending are exhibitors from 44 countries. Greece, Italy, Germany, Turkey and the Czech Republic are the countries with the most company displays. Three industry exhibitions within the framework of Spring'96 were also opened today: on packing and packing facilities, on textile and textile machines and on canning and food industry.

    In the afternoon the Bulgarian Minister of Trade met his Cyprian counterpart Kiriakos Christophis. They were unanimous that trade and tourism offer ample space for cooperation between the two countries. The sides considered opportunities for providing mutual trade preferences, for opening free trade zones and exchange of fair exhibition areas. Cyprus' experience in tourism - an industry which brings the country over 2,000 million US dollars each year - can be most beneficial for Bulgaria, said experts of the Bulgarian Trade Ministry who attended the talks. The two trade ministers are due to meet again today to reach specific agreements. Tomorrow Kiriakos Christophis is scheduled to meet Bulgarian Industry Minister Kliment Vouchev and Deputy Prime Minister Doncho Konakchiev.


    Sofia, May 6 (BTA) - A military parade of representative units was staged at the Narodno Subraniye Square to mark the Day of the Bulgarian Army, May 6. President Zhelyu Zhelev took the salute, greeting commissioned and non-commissioned officers and soldiers.

    "There are no infamous pages in the Bulgarian military history," President Zhelev stressed in his address. He recalled that Bulgaria has lost almost all the wars it waged this century as a result of the improvidence and short-sightedness of Bulgarian politicians and statesmen. "How long will we go on siding with losers, how long will we choose the company of those doomed to failure, of dictatorial and totalitarian regimes, the company of aggressors," Zhelev asked. "Today's holiday makes us recall again that the Republic of Bulgaria is the only one of the former socialist countries in Central Europe which has not stated its will for NATO membership clearly and categorically yet," the head of state said. In his opinion, by joining NATO Bulgaria will have much better opportunities to resolve the problems concerning its national security, the Bulgarian army during the transition and the status of Bulgarian officers.

    "The question of Bulgaria's NATO membership should not split and confront the nation, on the contrary, it should unite it in the same way it is united by the desire to join the European Union," the President said. "This is not a question to have right and left partisan biases about, it is this country's most serious national problem - providing guarantees for its national security," President Zhelev said in conclusion.

    Before the parade, Patriarch Maksim of the Bulgarian Orthodox Church consecrated the colours at the St George Church, the patron saint of the army.

    Prime Minister Zhan Videnov was in Sliven (Southern Bulgaria) on the occasion. He had a meeting with senior members of the Third Army Headquarters.

    The Christian feast St George's Day was declared the Day of Bravery and the Army in 1880. However, in 1953, by a Council of Ministers decree, the date was fixed as September 23, the day of the September 1923 anti-fascist uprising. After a break of 46 years, in 1993 May 6 was reinstated as the Army Day and the holding of a military parade in Sofia has now become a tradition.


    A delegation of the Agency for Technical and Cultural Cooperation visiting Bulgaria led by Secretary General Jean Louis Rois, today met with Bulgarian Foreign Minister Georgi Pirinski to discuss fields of cooperation and opportunities for the launch of joint projects. Pirinski asked that leading Francophone countries back Bulgaria's efforts to integrate into the European Union structures.

    A memorandum with which the Agency will take specific commitments, is due to be signed tomorrow at the Foreign Ministry. Jean Louis Rois is expected to meet top officials of the Education and Culture Ministries, the Energy Committee, the Technical University, the University of Chemical Technology and the Bulgarian Academy of Sciences. He is also due to meet President Zhelyu Zhelev.

    The Francophone Agency will offer Bulgaria access to new communication technologies, equipment for publishing French-language textbooks and teaching aid, and to funds for small-sized enterprises, BTA was told by the Foreign Ministry. The Agency will also provide financing for CD-ROMs on Bulgarian culture and civilization.

    Bulgaria is also expecting from the Agency support for a project for renewable energy sources. Bulgarian experts will join projects for technical assistance to French-speaking African countries. This country will also have access to a Francophone satellite transmitting education programmes.


    A mission of the International Monetary Fund (IMF) arrived in Bulgaria today, "Continent" writes quoting the IMF representation here. For two weeks the IMF experts and the Bulgarian government will consider opportunities for signing a fourth stand-by agreement. The IMF team is headed by Anne McGuirk, expected here by the end of this week. Singing an agreement with the IMF is the only way to prevent the collapse of the Bulgarian economy, says this daily.

    Bulgaria's external debt amounted to USD 9,445 million in late 1995, according to the central bank annual report quoted today by "24 Chassa" and "Troud". It was 917 million down the 1994 figure after Bulgaria settled its liabilities to Russian commercial banks. Principal repayments exceeded new loans. A total of USD 1,657 million are due to the IMF, the World Bank, the European Union, the European Investment Bank and the European Bank for Reconstruction and Development, "24 Chassa" writes. External debt payments due this year amount to USD 1,200 million, of which USD 500 million have been paid to date, "Troud" says.

    The government will replace 100 of the 1063 companies enlisted for mass privatization, Mass Privatization Centre chief Kalin Mitrev says quoted by "24 Chassa". A decision to that effect is expected to be taken at a Tuesday extraordinary sitting of the cabinet. The registration deadline for mass privatization expires on Wednesday, May 8, recalls "24 Chassa". After 20 May, voucher books - the instrument for participation in mass privatization can be transferred to relatives or privatization funds. The transfer period is one month.

    Bulgaria will continue subsidizing the export of agricultural produce after its accession to the World Trade Organization (WTO), "Troud" quotes Trade Minister Atanas Paparizov as saying after consultations with WTO experts in Geneva. Bulgaria will insist that the official talks on its entry into the WTO be scheduled for early June at the latest.

    A 9% drop in sales of new cars was identified in January-March 1996, "24 Chassa" writes citing figures of the Union of Automobile Importers. Sales over this period totalled 1955, down from the 2155 last year. The market of new cars in January-March 1995 shrank 63% from the 1994 one. The situation this year was more favourable due to the comparatively low inflation and stable exchange rates in January-March, this daily writes quoting experts. Lada was the top-selling car make in the first quarter this year, followed by Ford and Opel.

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