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News from Bulgaria / May 15, 96

Bulgarian Telegraph Agency Directory - Previous Article - Next Article

From: Embassy of Bulgaria <>



15 May, 1996




    Sofia, May 14 (BTA) - The future of the structural reform in Bulgaria and the problems in banking topped the agenda of a meeting between Bulgarian President Zhelyu Zhelev and International Monetary Fund Mission Leader for Bulgaria Anne McGuirk. Ms McGuirk stressed the importance of the launch of the structural reform and the passage of a law on bank failures that will get the reform in banking going. She described the financial and economic situation in the country as particularly difficult, said Presidential economic adviser Kiril Velev. The shrinking foreign exchange reserves shrinks the confidence of the public and foreign partners, Ms McGuirk is further quoted as saying. President Zhelev promised to soon issue a decree on the promulgation of the law on commercial bank bankruptcies. Answering a question of the BTA, the presidential economic adviser said the negotiation between Bulgaria and the IMF on the standby agreement were not discussed at the meeting today. Ms McGuirk would not comments on her talks with the President.


    The papers write that at present the forex market is quiet, following last week's record-high rally of the US dollar, which cleared the 200 leva mark. Today's quotations are between 112 and 115 leva for one US dollar. The selling rate will go down towards the buying one unless there are many customers on the market, "24 Chassa" writes. According to this paper's forecast, the market will remain quiet throughout the day. The lev/dollar exchange rate will level off at some 106 leva for a US dollar. The official exchange rate of the National Bank of Bulgaria for today is 106.480 leva/US dollar 1.

    The surge of the US dollar exploded the country's housing market, "Douma" writes referring to dealers of immovable property. Companies which trade in leva stopped selling and other raised their prices up to 300-400 US dollars for one sq.m. Yesterday representatives of construction companies complained that the state racketeers private contractors, "24 Chassa" writes. They have to provide the supply systems of the new buildings themselves and this additionally raises the cost of the projects. "The state twists our arms and we do the same to our customers," Kiril Mladenov, chief of the KTM 90 construction company, is quoted as saying. Expenditures on sewerage facilities, telephones, central heating and electricity supply equal the price of seven flats, constructors say.

    The annual fees for private schools in Sofia are between 600 and 2,500 US dollars, "Standart News" writes. The amounts increased with an average of 200 US dollars. More than half of the private schools are with intensive foreign language teaching. The rest are specialized in the learning of the basis of law and management. The annual fees for private kindergartens are 500 to 2,000 US dollars.


    Parliament today passed at second reading cabinet-sponsored amendments to the law on privatization of state-owned and municipal companies. The MPs adopted a privatization schedule for 1996 envisaging the launch of 414 privatization procedures and signing of 467 privatization deals, and approved the government's report on the 1995 performance in the field of privatization. Denationalization this year is expected to bring nearly 21 million leva in proceeds. This was an extraordinary parliament sitting held at the request of Prime Minister Zhan Videnov who urged last week for the speedy passage of laws that are essential for the structural reform. The government believes that the amendments will facilitate and step up vouchers and cash privatization. The amendments were also called for by difficulties that emerged from the implementation of the law in its original form, as it was passed in April 1992. Furthermore, they make the law consistent with the newly passed law on concessions. The amendments concern mostly employee and management buy-outs, and the preferences they enjoy in the purchase of shares. The amendment provides that employees can pay in installments for the shares they have acquired in their company only when at least half of the staff is participating in the process and the balance sheet value of the company is 150 million leva at the most. For companies worth over 150 million leva employees shall pay in installments for the shares they have acquired only after the government has issued a permit to that effect. This was one of the most controversial points during the debates on the amendment. Alexander Bozhkov MP of the opposition Union of Democratic Forces said this provision will place the staff of big enterprises into a position in which they will have to beg from the government. Under the amended law, the creditors of a company going private will have to inform the prospective buyers of their receivables from this company no later than six months after the decision for launching a privatization procedure is gazetted. Those failing to so do lose the right to claim their receivables. The report on the implementation of the 1995 privatization schedule shows that decisions were taken for the denationalization of 551 units 192 companies and 395 separate parts. The number of units that have actually gone private still compares unfavourably to the number of privatization decisions. Privatization deals in 1995 totalled 309, a mere 53% of the target figure. The above includes 104 whole enterprises (34%) and 205 separate parts (66%). The report identifies a rise of employee and management buy-outs. The majority of privatization deals in 1995 were signed with Bulgarian investors (305 making up 98.7%). There were only four deals with foreign investors (1.3). Foreign investment under 1995 deals amounted to 293,700,000 leva (7% of 1995 total investment). The opposition criticized the failure of the competent authorities to meet the 1995 privatization targets, the low amount of foreign investment and the suspension of a number of privatization procedures. Cash privatization is practically blocked, privatization in Bulgaria has ground to a halt, said Bozhkov, who is deputy chairman of the parliamentary economic committee. The opposition MPs further said the 1996 privatization programme is unfeasible. Bozhkov said the government has failed to say what its priority is: cash or voucher privatization.


    "My three-day visit has been very useful and open," Hashim Utkan, Deputy Director of Regional Bureau Europe of the United Nations High Commissioner for Refugees, today said in an interview for "Douma". Utkan had meetings with officials from President's Office, the Government and Parliament. "My impression of these meetings is encouraging, as I understand that despite economic difficulties of the transition, many people are thinking of refugees. Compared to other countries I've been to, the emphasis here is on the real issues, and we were not told you do not have the time, or cannot afford the luxury of dealing with marginal problems," says Utkan, whose visit was in connection with a law on refugees under preparation. In April 1992 Parliament ratified the 1951 Geneva Convention and the 1967 New York protocol on the status of refugees, which took effect in Bulgaria in August 1993. A Sofia office of the UN High Commissioner for Refugees opened in early 1992. The end of that year saw the establishment of a governmental National Bureau for Territorial Asylum and Refugees, which has four facilities to accommodate refugees. Utkan was impressed with the openness with which refugee problems were treated in this country, and the fact political forces agreed on refugee issues. No political force is seeking to reap political benefits, he said. The guest informed that all officials he talked with expressed concern about the financial aspects of refugee issues. Utkan said fears that more refugees will flee to Central and Eastern Europe, with Western Europe becoming more restrictive, looked unjustified. "The total number of refugees who asked for asylum in Bulgaria is 1,300, one-third of whom are Afghanistanis willing but unable to return home. So we cannot speak of a big influx," the official believes.


    Belgrade, May 14 (BTA correspondent L. Mitakev) - Bulgarian Education, Science and Technology Minister Ilcho Dimitrov, who is paying a visit here, today held talks with Yugoslav Prime Minister Radoje Kontic. "I specified our expectations about equal education rights for Bulgarians, as stated in the Yugoslav Constitution and enjoyed by other minority groups," Dimitrov told BTA after the meeting. "I emphasized the Bulgarian Government's idea that the improvement of the situation of Bulgarians is one factor for improving the general climate of relations between the two countries," Dimitrov said, stressing the constructive atmosphere of the meeting. Prime Minister Kontic admitted certain problems in exercising constitutionally-guaranteed rights, which he linked to the country's general economic condition. He recommended that Bulgarians' rights be addressed on the ministerial level. Later today, Dimitrov met with representatives of the Bulgarian community in Bosilegrad. He familiarized them with the intergovernmental programme for cooperation in education and science. For the first time, the programme regulates issues such as providing textbooks and teaching aids from Bulgaria, training courses for Bulgarian language teachers, admission to Bulgarian colleges, radio programmes in Bulgarian, direct cooperation with Bulgarian cultural and educational institutions. etc. Dimitrov also said he felt hopeful about the future of the Bulgarian minority after his talks.


    At an extraordinary sitting today Parliament passed government- sponsored amendments to the Banks and Lending Act, regulating the failure of commercial banks. Prime Minister Zhan Videnov said last Friday this law is vital for the launch of the structural reform. The Union of Democratic Forces, which is this country's major opposition force, refused to participate in the debates. The amendments to the law, due to take effect on the day of their promulgation, provide for forcible measures that the central bank can take whenever a commercial bank is faced with insolvency or the rules and procedures for declaring a bank bankrupt, are being violated. The central bank is the only institution authorized to ask the court to launch a bankruptcy procedure. A new chapter in the law gives a definition of "danger of insolvency". Danger of insolvency exists whenever the capital adequacy of a commercial bank is under the accepted minimum or the bank is likely to suspend payment of its liabilities because of the condition of its assets. Bankruptcy procedures are launched when the commercial bank is no longer solvent. The amended law further regulates the powers of trustees in bankruptcy appointed by the central bank in commercial banks facing insolvency. The banking sector in Bulgaria was plunged in a grave crisis by the sizable amount of bad loans. Many banks - state and commercial ones alike - have liquidity problems and have lost the confidence of the public. The rehabilitation of the banking sector is one of the conditions which Bulgaria should meet if it is to get financing from the international financial institutions. It is also one of the priorities in the government's structural reform plans.


    The Confederation of Independent Trade Unions (CITUB, one of the two most influential trade union amalgamations in the nation) does not accept the Government's approach in planned closures or rehabilitation of money-losing state-run companies, CITUB leader Krustyu Petkov said today, meeting with Deputy Prime Minister Doncho Konakchiev, the CITUB Press Office reported. The CITUB is ready to negotiate with the Government on impending bankruptcies and the impact of the forex and financial crisis on the nation. The amalgamation, however, will not negotiate with the present team, which plunged industry and the financial sector into a deep crisis, the Press Office said. At a meeting of the National Council for Tripartite Cooperation (NCTC, of employers, trade unions and the Government) tomorrow, the CITUB will submit a memorandum on the issue, and announce its terms for negotiation about the list of companies subject to restructuring. A plenum of the ruling Bulgarian Socialist Party (BSP) last Sunday decided to close down about 60 companies, giving Prime Minister Zhan Videnov the political support to urgently launch structural reforms. After meeting with Videnov, Konstantin Trenchev, leader of the other major amalgamation, the Podkrepa Labour Confederation, said the Prime Minister assured that the list will be ready for tomorrow's NCTC meeting. The NCTC's third union member, the Union of Free Trade Unions in Bulgaria, has not re- registered, after its biggest member, the General Amalgamation of Branch Trade Unions, left the organization last year. The CITUB will hand the Government a draft income protection package, the Press Office said. Tomorrow the amalgamation begins consultations in the companies concerned. At tomorrow's meeting, Podkrepa will insist firmly and categorically that the staff to be laid off be compensated under special programmes, e.g. with IMF support, Trenchev told a news briefing today. At the briefing Trenchev and other Podkrepa officials sharply criticized a memo by Deputy Prime Minister Konakchiev and Labour and Social Affairs Minister Mincho Koralski, of which he learnt at his meeting with the Prime Minister. The memo addresses ways to cushion the social impact of reforms. The proposed alternative employment measures provide practically no security, says senior Podkrepa official Oleg Choulev. The Ministry of Labour and Social Affairs and the Forestry Committee today signed a programme to open 3,200 five-month jobs in forestry. The Videnov Government should clearly state its intentions to 29,000 people to be made redundant, senior officials of the two big amalgamations, which signed a joint action agreement a year ago, urged at news briefings yesterday and today. Prime Minister Videnov is convinced that if an agreement is reached with the IMF, 25,000 laid-off employees will receive compensations, Trenchev told the media today. Podkrepa calls for employee involvement in liquidation and rehabilitation, respect for collective contracts of employment, care for company assets and for preventing present managers from taking charge of liquidation, Trenchev said. Trenchev also said he familiarized the Prime Minister with evidence of corruption in "quite a few spheres" and of torpedoing negotiations conducted by the Privatization Agency and the Centre for Mass Privatization. There is still a hope that things will take the right turn; otherwise there will be a scandal- "the documents are in the folder," the trade union leader said. Zhan Videnov admitted noone outside the BSP had been in the Government's way since the start of last year, the Podkrepa leader said. The Prime Minister agreed with Trenchev's view the structural reform could have been launched a year ago, the official said. The participants in the meeting shared "the understanding that the complexity and length of the reform call for a continuous constructive dialogue," the Government Press Office said. Many CITUB and Podkrepa organizations nationwide have staged joint protests against the planned layoffs, trade unionists told the press. Separate federations have sent protest addresses to state institutions. Local activists told the media they had no information about the economic condition of their companies. The last few days saw protest rallies in Sofia and other cities. Working people have no idea of their future in case they are laid off, trade unionists said.


    The Union of Democratic Forces (UDF) will not move a no- confidence vote in the Cabinet but will work for provoking early parliamentary elections, it became known today after the session of the top leadership of Bulgaria's largest opposition force. The session discussed whether to move a no-confidence vote. Opinions were divided and the issue was not put to the vote, a participant in the session said. This evening the UDF came out with a declaration on National Television stating that it would step up its actions to topple the Cabinet by early parliamentary elections. The UDF accused the Socialist Cabinet headed by Zhan Videnov, which has been ruling this country for 17 months with the support of the parliamentary majority, of the grave crisis in this country threatening the very survival of the people, the disastrous state of production, the alarming depreciation of the national currency and the dwindling foreign exchange reserve. Early parliamentary elections are the only way to save Bulgaria, the UDF says in its declaration. The UDF is planning to hold political consultations with opposition parties, coalitions and the trade unions seeking their assistance in achieving this goal. The UDF will insist on setting up commissions of inquiry to investigate the grain crisis, non- purchased agricultural products, the exhausted foreign exchange reserve, etc. The UDF will also demand that the Prime Minister set forth in Parliament the Cabinet's intentions for liquidating loss makers and for updating the national budget. The Popular Union (the parliamentary coalition of the Democratic Party /DP/ and the Bulgarian Agrarian National Union /BANU/) is also against the moving of a no-confidence vote now, DP deputy leader Evgeni Milchev said at a news conference today. He said such a step would be rash and would lead to nothing. "The idea launched by some circles in Parliament for a national salvation cabinet is totally unacceptable both to us and to the other representatives of the opposition," said BANU leader Anastasia Moser. Ms Moser explained there were no points of contact between the Policy of the Popular Union and the Bulgarian Socialist Party.


    Prime Minister Zhan Videnov will pay and official visit to China from May 20 through 23 at the invitation of Li Peng, Premier of the State Council of the People's Republic of China, the press office of the Council of Ministers said. From May 24 through 26 Videnov will pay an official visit to Vietnam at the invitation of Prime Minister Gen Vo Van Kiet.
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