B u l g a r i a 2001
PROGRAM of the Government of the Republic of Bulgaria 1997 - 2001
CONTENTS
I. Future for Bulgaria.
II. The Institutional Building of Democratic Bulgaria
III. Regional Development and Territorial Organization of Bulgaria.
Urbanization and Construction.
IV. Order and Security for the Bulgarian Citizens.
V. Bulgaria and the World. Integration and Security.
VI. Financial and Economic Reform in Bulgaria:
1.Financial Stabilization;
2.Structural Reform;
3.Industrial Policy;
4.Trade Policy. Foreign investments;
5.Revival of the Bulgarian Agriculture;
6.Bulgarian Tourist Industry;
7.Bulgarian Infrastructure:
7.1. Modernization of the Bulgarian Energy;
7.2. Posts and Telecommunications;
7.3. Transport System.
VII. Preservation of the Bulgarian Nature.
VIII. Social Policy and the Health of the Bulgarians:
1.Social Policy;
2.Health Care.
IX. The Young People of Bulgaria.
X. Bulgarian Education and the Christian Virtues.
XI. Bulgarian Culture.
XII. The Bulgarian Spirit.
The reform-minded Government has become now a fact of life just as the reform-minded
majority itself has. After
many years of imitation of reforms, impudent plundering of the state, and
de-capitalization of the Bulgarian
economy, there is at least a chance Bulgaria to take the right way and get back to normal
life in the broadest
sense of the word. We are aware that the activities we are undertaking today will be
having impact for decays
ahead. We, the Ministers of the Government of the Republic of Bulgaria, take that high
responsibility before all the
Bulgarians, before ourselves and our children.
Why are we doing this? First of all, because the responsibility for Bulgaria should be
taken clearly and
explicitly by somebody. To a great extent both the evasion of the responsibility and the
open unwillingness to
take up an unambiguous position are at the root of the current crisis from which the
country has just started to
recover. We are representatives of a responsible political force and we know that the
political power we have is
most of all an obligation. We are determined to fulfill our commitments.
Secondly, we know how we can lead the country out of the crisis. We know what has to be
done in Bulgaria,
we know how to do this, and we are aware how difficult it will be to do this. In that
respect, the downfall of our
opponents during the last few years had at least one positive, although tragic, aspect: it
deprived the majority of
the Bulgarians of their illusions. They understood that there is only one way--the way of
the reforms. They know
that the difficulties we are going through today are not engendered by them, but these are
outcome of
the lack of reforms. They know that the reforms can only be strong-minded and drastic.
The most important reason that is inspiring our courage along the bumpy road is the youth
of Bulgaria, and their
support which we are constantly feeling. Our most precious capital is the energy of the
young people and
their willingness to work for their country, their unprejudiced minds and openness to the
world and the modern
civilization.
The ultimate goal of our program is Bulgaria to enter the new millennium as a civilized
European country. We
know how difficult this will be; we know that the confidence we have received is unique
and that it will not be given
to us over again. That is why we are determined not to ruin the chance given to us by the
Bulgarian people
through their votes.
This goal underlies the present program. It not only determines our intentions, but it
also is a documentary
evidence of our commitment before the Bulgarian people--to achieve particular goals in
particular spheres.
To achieve before the end of the first year of ruling a positive economic growth on the
basis of
financial and economic stabilization, and to create favorable conditions for the
development of the
private initiative;
To privatize the state-owned enterprises so that each of them can have a responsible
manager; to
restructure or close down the loss-making enterprises so that they can stop accumulating
losses
on behalf of all the Bulgarians;
To completely restore the private ownership over the land and to breathe new life into the
Bulgarian agriculture;
To work out an up-to-date industrial, trade, investment, and infrastructure policies;
To establish such a social policy which will make every Bulgarian citizen feel safe for
his/her
present days and his/her future;
To provide order and safety for the citizens; to overcome the organized crime and the
Mafia;
To decisively stand up for the European political and civilization orientation of the
country; to
prepare within the timing of our mandate Bulgaria's membership to the European Union;
To make all the efforts for possible membership of Bulgaria to NATO until the end of the
four-year
period of administration;
To keep the Bulgarian youth in Bulgaria through providing them with opportunity for
creative
fulfillment and a chance for a better future;
To prevent further pollution of the Bulgarian nature;
To preserve the good educational and cultural traditions, simultaneously creating
favorable
conditions for active exchange with the leading countries and artists;
To restore the significance of the universal and especially the Christian values as the
basis of the
public moral.
The only possible future for Bulgaria is placed within the boundaries of the European
Union; it is a future built upon
the foundations of the European values, knowledge and skills. All our activities will be
founded on our will to
change Bulgaria and to leave to our children an European and self-confident country.
II. INSTITUTIONAL BUILDING OF DEMOCRATIC BULGARIA
The Government of the Republic of Bulgaria will be working with the clear consciousness
that there is no
democracy without authoritative institutions and that the road to the democratization of
the society goes through
democratization of the institutions and enhancing of their effectiveness. The working
institutions however cannot
be an end in itself, as they are a means, an instrument for making life of the ordinary
people easier. The state and
its institutions exist for the sake of the people, and not vice versa.
Hence, our goals in the sphere of the administrative and institutional reform are utmost
clear:
To raise the prestige of the state institutions, strictly following the principal of
division of power;
To reform the relationships in the society and the state institutions so that the state
will be free of all
extrinsic functions. It should create optimal conditions for the free citizens to develop
their initiative and
energy. It should create optimum conditions for the free citizens to develop their
initiative and energy. This
will also be the road to reducing the possibilities for corruption in the state apparatus.
To bring up a new administrative and information culture will be an indispensable part of
the reform of
the state administration which is connected with the new information technologies as well.
Without such a
culture it will be impossible to achieve the necessary transparency of the institutions
which is an obligatory
criteria for the contemporary administration.
In order to achieve these goals, we are going to undertake the following specific
measures:
We are going to carry out a complete reform in the state administration. This will be a
reform in both the
contents of the information flows among the institutions and their carriers, the
documentation exchange
technologies. During all the time we should be aware that in less than a three-year period
we are entering a
new millennium which in many aspects (for instance, in respect of information
technologies) has already
arrived.
Since the information culture is possible only when there is structured information, one
of the priorities of
the administrative reform will be to set up an integrated information system for public
administration.
There is no rational explanation as to why one or another citizen should be fighting with
the administration in
order to be given access to information. There is no rational explanation as to why just
any man in the
world, including a Bulgarian, should be able to access the information system of the White
House from his
home computer, while s/he is unable to access the information system of the Council of
Ministers of the
Republic of Bulgaria.
We are going to improve the structure of the Council of Ministers as a part of the overall
administrative reform.
The Government will submit to the National Assembly a number of important laws. The
following laws are of
crucial importance for the administrative reform:
Law on the Civil Service;
Law on the Positions and the Qualifications in the Administration;
Law on the State Secret;
Amendments to the Labor Code regarding the civil service.
Simultaneously with the approval of the new laws, a precise harmonizing of our legislation
with that of the
European Union will be carried out and strictly applied, including the future laws for
more effective fight against
the organized crime, corruption, tax concealing and other.
We will be expecting a more dynamic and profound parliamentary control over the government
in the
Parliament. For us, this control is a part of the dialogue between the powers.
The staffing of the administration is an important aspect of the administrative reform.
Today, the work in the
state administration is not among the most attractive jobs-- from income, as well as the
social status point of
view. We will be aiming at optimum in number, efficient and well paid administration of
capable and qualified
people who have clear and transparent motives to work in that sphere. This will also be an
important part of our
fight against corruption.
III. REGIONAL DEVELOPMENT AND TERRITORIAL ORGANIZATION OF BULGARIA.
URBANIZATION AND CONSTRUCTION.
The rebirth of the centralized management of the country and the use of a narrow branch
approach during the last
years still deepened the regional disproportion. The number of municipalities and regions
which have reached a
critical level of poverty, unemployment, depopulation, ecological failures, social and
ethnic tension have
increased.
In order to achieve a considerable change in that sphere:
We will engage ourselves with the implementation of a policy of balanced and sustainable
regional
development with a view to gradual bridging over the critical disproportion and offering
to the population
actual possibilities for overcoming the crisis and future social and economic prosperity;
We are going to apply a differentiated regional approach in the structural reform and the
implementation of
the economic, social and ecological policies, accounting for the differences in the
separate regions;
We are going to support the strengthening and the development of the local self-governance
as a basis for
the actual democratization of the society, relying on our traditions and the experience of
the European
countries.
The new policy in the regional development requires:
Normative insurance--development of general and specific laws;
Institutional insurance--establishment of inter-institutional council and regional
agencies;
Resource insurance--establishment of national and regional funds financed by international
programs,
municipalities' revenues and other;
Project development through European programs with the view to adaptation to the European
requirements
for sustainable development of the separate regions;
Inter-institutional coordination in the building of a national technical infrastructure
and the development of
European infrastructure corridors along the Bulgarian territory.
The delay should be overcome and that is why already this year:
We will prepare the Law on Regional Development;
We will establish an inter-institutional council for regional development;
We will provide coordination among the funds with regional influence;
We will start implementation of an European Union Program for Regional Development of the
Republic of
Bulgaria (1997-1999);
We will activate the implementation of the PHARE-INTERREG 9402 Program for cross border
cooperation
between Bulgaria and Greece;
We will establish an inter-institutional coordination of the activities for the
establishment of a national
infrastructure--transport corridors, bridge on the river Danube, border check points, oil
pipelines, and other.
The regional and urban planning will be a priority for the government:
We will prepare the Law on the Territorial Organization;
We will submit to the National Assembly the Law on the General Urban Planning of Sofia;
We will call a National Commission for Sustainable Development;
We will give methodological support to the municipalities in the sphere of regional and
urban planning;
We will undertake effective measures for fighting against the illegal construction.
The local self-governance will have to reach the level of the contemporary requirements
and to provide the free
development of the municipalities through:
Improvement of the regional division of the country through optimizing the size and the
number of the
administrative-territorial units;
Organizational, functional and staff strengthening of the local authorities;
Provision of an actual financial and economic independence of the municipalities;
Setting the national legislation in the field of the administrative-territorial reform in
accordance with the
European legislation.
In order to achieve these goals, we will prepare until the end of 1997 the normative base
for the financial and
economic independence of the municipalities and for the actual local self-governance. We
will prepare and submit
to the National Assembly;
Law on Local Finance;
Law on Local Duties and Taxes;
Law on the Amendment and Addition to the Laws on the State and Municipal Ownership, as
well as
regulations for their application;
Law on the Amendment and Addition to the Law on the Administrative-Territorial
Organization of the
Republic of Bulgaria.
During the last years, the urbanization during the last years have been left behind,
usually pointing out
economical reasons. In order to revive the importance and significance of this activity:
We will improve the normative regulation for integrated management of the engineering
infrastructure and
the particular public utilities;
We will increase the share of the municipal ownership over these utilities;
We will establish economic regulators and mechanisms for support to the municipalities in
the financing of
the urbanization activities.
Our activities in as early as 1997 in the sphere of the urbanization will be directed
towards:
Restructuring of the Water and Sewerage Companies into state-municipal companies;
Implementation of pilot projects for reducing the losses of water for the consumers;
Development of a national policy for the hard waste;
Reconstruction measures in the regions hit hard by active landslide processes and
introduction of a new
landslide control and stabilization system;
Establishing a legal status for the homeless and assisting in giving shelter to them.
As soon as 1997, the following will be carried out:
Broad public discussion of a new policy in the housing sector;
Preparation for the establishment of a National Association for Housing construction;
Pilot study on new forms of crediting.
Construction and construction enterprise during the last years have passed to a great
extent in private hands.
At the same time, the main part of the assets in that sphere are still owned by the state.
In order to do away with
that absurdity, it is necessary that a structural reform in planning, construction and
production of construction
materials be carried out through:
Liquidation of all the loss-making state-owned enterprises;
Complete privatization of the construction companies;
Optimum privatization of the construction materials enterprises;
Abolishing the legal, administrative and economic obstacles to the private construction
enterprises.
In accordance with the recommendations of the European experts the government will
endeavor to accelerate the
construction of up-to-date information systems for the land, the real estate property and
the population
and to create conditions for coordination and interaction between the separate sector
information systems.
We will pay special attention to the quick development of the cadastre information system
which under the new
conditions of sacred private property, free economic enterprise and market economy
acquires a significant value
in the following aspects:
Property protection, guarantying the welfare of the owner and the society;
Quality and speedy service and support to the real estate market and the economic
enterprise;
Rapid improvement of the taxation effect and the fight against the economic crime;
Support to all the national and local management bodies with speedy and quality
territorial, fund and
property information;
Establishing of a new normative order in the sphere of information, distribution of the
rights and obligations
between the municipalities and the state.
IV. ORDER AND SECURITY FOR THE BULGARIAN CITIZENS
The crime and especially the organized crime have become threatening. Common crime is
connected with
organized crime. There is a Mafia in Bulgaria which has penetrated in all the spheres of
the state authority. The
racket and new forms of crime disturb the everyday life of the common citizens and
everyone is honestly engaged
in economic activity. The corruption is all over. It has even grabbed over the bodies
which are legally authorized to
fight against it. At the same time, the judicial system is working quite clumsy and
ineffectively. Lawsuits are being
postponed not only with months, but even with years. It takes years to impose a penalty
after the crime was
committed. It is not a rare case to see crime deeds not punished. All that undermines the
pillars of authority and
kills people's credit in the judicial system. The civil society we have built has the
right to have the protection of a
strong state authority with a fair and consistent with the law jurisdiction.
One of the main priorities of the government if to establish order and security. To this
end it is necessary;
To accomplish the reform in the judicial system and to create the necessary legislation of
procedure which
determines it;
To improve decisively the work of all the judicially protective bodies and to conduct an
irreconcilable war
against crime and especially against organized crime and corruption;
To set up new penal provisions, empowered to impose punishment on the offenders;
To establish close relations among the Ministry of Justice, the Ministry of the Interior
and the judicial system.
The government will submit the necessary drafts of laws for overall and efficient
improvement of the work of the
authorities which are responsible for the order and the security of the citizens. The
Ministry of the Interior will
overcome the existing obstacles and will continue firmly, in compliance with the
Constitutions and the other laws,
to be after crime and corruption.
The fight against crime and corruption requires most of all the implementation of a number
of economic
measures:
Accelerated privatization of the state property. Under the conditions of market economy,
the state property
creates conditions for organized crime and corruption. The state may preserve its right of
ownership only
on strategic units in the economy, which are connected with the national security. It is
in a complete
conformity with the market principle for regulation of the economic activity. However, in
that connection it is
absolutely necessary that the privatization is done transparently with legitimate funds
for purchasing the
particular units, and this to be done in short terms;
Shortening to the necessary minimum the permission regimes for some activities. Overcoming
the existing
bureaucratic barriers which favor corruption;
Simplifying the numerous and complicated administrative procedures and reducing the number
of the
administrative apparatus.
A main priority will be to strengthen Bulgaria's positions as a consistent constitutional
state. It should be taken out
of the system of the organized crime and to become its irreconcilable enemy. A sharp
boundary between the
crime and the legal activities will be established through the submitted by the government
draft laws.
We will create complete unity of action between the authorities and the activities uniting
prevention,
disclosure and punishment. Independent of the operational self-dependence of every one of
the units of the
judicial system, they will be in an information unity.
In order to accomplish the reform in the judicial system, the National Assembly should
approve the laws which we
will submit on the Amendment and Addition to the Civil Procedure Code and the Criminal
Procedure Code, for the
introduction of three-instance legal procedure. The existing up till now system of two
court instances and
public prosecution, which in practice has become a new court instance, creates insecurity
in the judicature and to
a great extent is an obstacle to law-consistent and fair court decision. Until now, the
Supreme Court has been
using an extraordinary method of appeal even in the suits regarding the judgment of the
land commissions.
Today, every citizen of Bulgaria can submit her/his complaints only to the highest
judicial instance in Sofia.
The introduction of appeal and annulment instances will make it possible that two
instances collect evidences on
the suits, and a third instance judge only particular infringements, thus putting an end
to the trial. This change will
bring the jurisdiction closer to the parties in the suit.
The decentralized system will make it more effective. With the Law on the Supreme
Administrative Court we will
put the administrative jurisdiction as a pillar to the people's security against possible
misuse on behalf of
the executive authority on a firm basis.
Draft Law on the Amendment and the Addition to the Criminal Code will increase the
punishments for particular
deeds which recently have been more broadly spread. The Law will give a clear definition
for racket and will
provide high sanctions for it. Under the conditions of our present economy it is more than
a blackmailing which
is treated as a crime in the Criminal Code. The Law will give definition for a Mafia
organization which does
not mean only an organization for a committed crime. This Law will do away with the so
called "continued crime".
This measure, together with the Draft Law on the Amendment to the Criminal Procedure Code,
is aiming at
optimizing the criminal procedure, which will bring to sharp reduction of the spread of
time between
committing of crime and imposing of penalty.
We will take best advantage of the European legislation and the legislation of the USA,
which have a lot
experience in that field. Criminalization of deeds with high degree of social danger lies
ahead. It is necessary that
a criminal punishment for big amounts of unpaid taxes is introduced.
The accumulation of enormous wealth for several years by illegal means gave the grounds to
the caretaker
Ministry of he Interior to undertake urgent actions. Their results met the approval of the
society. We will also
submit a draft law envisaging a practical way for determining the origin of such property
and the possibility
for its confiscation in favor of the society.
Bulgaria is in the center of the traffic of drugs. The government will undertake all the
necessary measures not only
for legislative improvement of the fight against it, but also for effective activities,
which will make Bulgaria
unattractive to the traffic of drugs. We will also introduce heavy punishments for
procuring and trade with
people.
We will review the administrative and the penalty regulations in connection with the
rights to possess weapons
and ammunition. We will considerably raise the punishment for their illegal possession.
The Ministry of the Interior will enforce its irreconcilability towards the criminality in
all of its forms of existence.
The restructuring of the new bodies will give prerequisites for more effective
safeguarding of the public order and
for the fight against the criminals. Boarder Police and National Gendarmery will be
established in
accordance with the police practice in the developed democracies and the traditions of the
Bulgarian
state administration.
The Boarder Police will have an important role for restricting the crime in the boundary
zones. The National
Gendarmery will support effectively the National Police in preserving the public order in
the country. In this
situation, the police will be able to drive their efforts mainly towards operational
collecting of information for heavy
criminal and economic crimes.
A new unit, "Court Police", will be established under the umbrella of the
National Police, which will have the
functions to preserve the order in the court buildings, the escorting of the arrested, and
when necessary, for guard
of threatened magistrates. This unit will be under the functional management of the
Ministry of the Interior, but its
tasks will be given by the Ministry of Justice.
We will create favorable conditions for integration with the international structures for
fight against cross
border criminality. The Ministry of the Interior will work in close conformity with the
accepted by the Constitution
and the legislation rights of the citizens.
The government will pay the needed attention to the active protection of the intellectual
and the industrial
property, and the author rights. Bulgaria's engagements to the respective international
conventions will be
firmly followed. We will do all the necessary so that the problem with the so called
"pirate disks" be solved.
Bulgaria's position as an associated member to the European union and its pursuit of full
membership require
drawing our legislation still closer to the legislation of the member counties of the
European Union. We
put a special accent on the restructuring the Ministry of Justice into a Ministry of
Justice and Legislative
Euro-integration. Every draft law will be revised by experts so that to be put into
accordance with the main
principals of the European legislation. This will put an end to the existing formal
attitude to this issue. We will take
all the advantages of the programs of the European Union in order to achieve quick and
complete judicial
integration.
V. BULGARIA AND THE WORLD. INTEGRATION AND SECURITY
Bulgaria's foreign policy is called upon to secure favorable international conditions for
changing Bulgaria into a
country with a modern market economy and developed democracy. This presupposes optimum
combination of
the advantages of our geographical situation and natural resources with the leading
tendencies of the
contemporary world. The modern nationally responsible foreign policy will play a central
role in establishing
reliable outside security guarantees and stimulating real reforms at minimum expenses.
During the past seven years, the Bulgarian society painfully and slowly has been reaching
consensus on foreign
policy and national security. This consensus has been reached at the presidential
elections and it has been
confirmed at the parliamentary elections. The new public contract in the sphere of the
foreign relations and the
national security cannot be any longer violated by the efforts of a particular political
force. It has three dimensions:
The foreign policy and the national security policy are closely connected with the
domestic policy, with
the model of the reform;
Europe is the key word as a civilization identity and political future for us and our
children;
The successful foreign policy is possible only on the basis of our own efforts and will
for change.
Within the limits of our mandate, we will continue the initiatives of President Petar
Stoyanov and the caretaker
government in the field of the foreign policy and the national security in the following
aspects:
Accelerated preparation for NATO membership;
Particular steps for membership to the European Union;
Balanced regional policy;
Consistent protection of the rights of our compatriots abroad in accordance with the
international
regulations;
Broadening the relationships with the countries from Western Europe, USA and Canada, which
has
to stimulate their trade and investment interest in Bulgaria;
Development of equal in rights and mutually beneficial relationships with Russia, Ukraine
and the rest
of the Newly Independent States, which has to enrich our possibilities for joining the
European Union and
NATO;
Broadening the relationships with partners from the Middle and Far East, Latin America and
Africa,
which has to encourage the economic interest in Bulgaria and to develop the potential for
beneficial
presence of the Bulgarian business circles in these countries;
Effective Bulgarian participation in the activities of the international organizations
with the purpose
of strengthening the role of the country in the decision making process regarding problems
of global
importance and the strengthening the position of the national interests on the
international arena;
Optimizing the structure and the organizational principals of the diplomatic service in
accordance
with the new foreign policy priorities and potential of Bulgaria.
Our strategic goal is Bulgaria to join the European Union and NATO. The full membership to
the European
Union and NATO is a sovereign and explicit choice, based on a broad public consensus, and
it is not an
expression of a political situation or a result of outside pressure.
We will be working for stronger integration in the Euro-Atlantic structures which has to
lead Bulgaria to a full
membership to NATO. We will be implementing and constantly updating the National Program
of the Republic of
Bulgaria for Preparation and Membership to the North Atlantic Treaty Organization. The
specific tasks in that
aspect are:
Effective participation in the enhanced individual dialogue with NATO regarding the
broadening of the
organization, as well as within the boundaries of the currently under establishment
Euro-Atlantic
Partnership Council and the Partnership for Peace.
Accelerated application of the NATO standards and these of the member countries in the
security and
defense policy. To put the national policy, structure and procedures in the sphere of the
security and
defense in accordance with the NATO standards and requirements, accounting for the
national actualities
as well;
Application of measures for improvement of the operational compatibility of the army
forces of the
Republic of Bulgaria with those of NATO and the member countries. Achieving possibility
for effective
operational interaction in the framework of joint multinational operations under the
command of NATO;
Participation, in compliance with the constitutional procedures, together with the NATO
member countries
and with the countries with recognized applications for membership, in operations for
preserving the
peace with the mandate of the United Nations, the Organization for Security and
Cooperation in Europe ,
the West European Union, and in cooperation with the European Union;
Signing or updating the mutual agreements for military, military-technical and
military-industrial
cooperation with the member countries of NATO, as well as with other countries with
recognized
applications for membership to NATO;
Working out and implementing a strategy for popularization of our application for
membership to
NATO among the political circles and the society in the member countries of the Alliance
through
coordination among the efforts of the Bulgarian state institutions, the civil society
structures and the
Bulgarian communities abroad.
It is necessary that an accelerated preparation for European Union membership starts. This
includes
preparation and implementation of a national program-strategy for membership negotiations,
as well as
some particular measures:
Recognition of the highest European standards in the development of the democratic
processes in
Bulgaria;
Acceleration of the process of putting the Bulgarian legislation in accordance with the
European legislation,
and establishing adequate administrative structures for its introduction as implementation
and control;
Putting the Bulgarian trade policy in compliance with that of the European Union;
Preparation of the Bulgarian economy to meet the challenges of the European market;
Full value participation in the profound political dialogue in the European Union,
including with a particular
Bulgarian input to the formulation of an actually uniform policy of the European Union and
the associated
countries in the sphere of the foreign relations and security;
Initiating and successful implementation of negotiations for receiving a relieved visa
regime or abolishment
of visa regimes for Bulgarian citizens for the European Union and the European Free Trade
Association
member counties;
Profound pro-European educational and information campaign addressed to the whole society,
which will
transparently and to the point reflect the difficulties, responsibilities and obligations
of the country in the
preparation process for full membership.
The national program-strategy will define the main objectives of the membership
negotiations, as well as the
organization and coordination mechanisms for their achievement. It will identify the
gradual measures which
should be undertaken in particular spheres in order to meet the political and economic
criteria for membership,
pointing out the responsible institutions.
In order to implement successfully the preparation for membership, we will undertake the
following measure:
Strict implementation of our obligations along the European agreement for association, and
putting into
practice its potential opportunities;
Making use of the new orientation of the PHARE program, directed towards cooperation for
institutional
building and investment financing;
Participation in new programs of the European Union with special attention to us,
connected with scientific
studies, technological developments and staff training.
The efficient preparation for the implementation of the membership criteria will help
Bulgaria preserve her
chances for starting negotiations for membership simultaneously with the rest of the
associated countries from
Central and Eastern Europe, and it will also add to the accelerated pace of our future
negotiations for full
membership to the European Union. The government is well aware that Bulgaria's integration
in the European
Union and NATO will be a difficult and continuous process, which requires optimum
mobilization of the efforts of
the whole society. The integration process is the road which Bulgaria has to go through
during the next years.
This road can be gone through only with a lot of credit, unity and labor.
The Bulgarian government will lead a balanced regional policy without features of sharp
thought, which policy
will confirm the European standards of relations between the countries and will suit well
in our accelerated
integration in the EU and NATO. The government envisages the future modern regional
infrastructure and
economic integration in the South Eastern Europe as especially important factors for the
security and the
good neighbor relations, which will finally lead to reducing the importance of the state
boundaries.
We will apply a broader approach to the regional security and stability which will
comprise the following main
components:
Regional policy as an instrument of the contemporary preventive diplomacy. Bulgaria will
give its
contribution for the development of actually working mechanisms for prevention of
"local" tensions, crisis
and conflicts in South Eastern Europe and adjacent regions;
Development, implementation and actualization of bilateral and multilateral regional
measures for
strengthening the credit and the security (MSCS) in the military sphere, including through
enforced
demilitarization of the boundary regions;
Development and implementation of bilateral and regional non-military MSCS within and out
of the context
of the regional initiatives, including through the preparation of the Information Behavior
Code of the
governments of the countries form the region;
Development, with the expert assistance of the NATO and EU member countries, of regional
programs for
fight against organized crime and international terrorism;
Mobilizing outside- and inside the regions sources for financing of huge infrastructure
units;
Completion of the regional components of the trans-continental transport and communication
channels;
Construction of strategic oil- and gas pipelines from Asia through Europe passing through
Bulgaria with the
purpose of diversification of the energy resources and suppliers for the country, and in
accordance with the
strategic task for prevention of possible one-sided energy-economic dependence of
Bulgaria.
The foreign policy priorities of Bulgaria will be implemented under close interrelation
and principal
unanimous decision of the President of the Republic, the National Assembly and the Council
of
Ministers. The steps in the foreign policy will be formulated under the conditions of
transparency and at
optimum cooperation with the structures of the civil society. The government will look for
appropriate
forms to inform the citizens of Bulgaria for their rights and obligations, which will
result from the
European and Euro-Atlantic integration.
The military aspects of the national security will be a constant priority of the
government's policy. We will work
out a national policy Conception of the Republic of Bulgaria, in which the framework
factors will be the future
membership to NATO and the preparation for it, as well as the Military Doctrine of the
Republic of Bulgaria,
which will be based on the main concepts of the Strategic Concept for NATO and the
military doctrines and
conceptions of the member countries.
The development of the Bulgarian army goes through a deep structural reform and
optimization of the staff in
respect to the efficient fulfillment of its tasks. This reform is connected with putting
the army into compliance with
the norms and the standards of NATO and it is in a direct dependence from the finical and
economic abilities of
the country.
The civil control will be developing and receiving recognition as a main principle of
democratic governance in
the system of the Ministry of Defense through:
Publicity of the budget of the Ministry;
Optimum distribution and firm control on the spending of the financial resources;
Turning the budget of the Ministry of Defense in a main mechanism for civil control and
structural
reform and optimizing the staff of the Bulgarian army in accordance with it;
Optimizing the ratio between administrative servicemen and service men on the basis of the
experience in
the civil and democratic control in the NATO armies;
Clear defining the rights and obligations of the Minister of Defense on the joint
management of the Bulgarian
army and the civil control on it.
An important element of the program of the Ministry of Defense is that the training of the
staff should take in
consideration Bulgarian membership to NATO and the implementation of military educational
policy.
Application of a new approach in the career development, structural and staffing policy,
directed toward
stimulation of the professional development and the career development of the servicemen
is due.
Restructuring of the economic activity of the Ministry of Defense and putting it in
conformity with the market
economy is due. The military-economic block will be functioning in accordance with the
principals of the free
market, divestiture of economic structures and implementation of the national program for
NATO membership:
The military repair and production activity will cover the maintenance of the armaments
and equipment of
the Bulgarian army in accordance with the signed agreements and the money committed in the
budget of
the Ministry of Defense, spare parts production and realization of high-tech projects both
for the needs of
the Bulgarian army and the needs of other countries. Restructuring of the main military
repair enterprises is
envisaged.
The scientific and construction activities will focus on the modernization of the existing
models and the
creation of new products and systems which meet the tactic-technical specifications of
NATO;
The supply and trade activities will be built totally on the principals of market economy
and will cover the
foreign and domestic trade spheres in the sale and supply of armament, military and other
equipment. The
main activity will focus on the organization of bids for goods and services. The excess
armaments,
equipment, and other property of the Bulgarian army will be sold in and outside the
country
The main standards of NATO will be introduced in the sphere of the standard,
meteorological, patent and
codification activity, and a new codification system will be established.
Financial and Social policy of the Ministry of Defense will be directed toward:
Implementation of active policy on reasonable economic approach for all activities,
connected with
financial expenditures; maintaining the social status of the administrative servicemen,
the service men and
their families; fight against the misuse and corruption at every level; updating the
expense and
consumption norms and implementation of a particular housing program;
Considerable possibilities for increasing the incomes for the Ministry of Defense may be
provided through
cash privatization of production enterprises, enterprise and repair units
Review of the national legislation aiming at removing the eventual legislative obstacles
for the efficient
membership to the military-political unions and the development of cooperation on the
preparation for such
membership.
In the sphere of the legislature, draft laws on the Amendment and Addition to the Law on
Defense and
Military Force and other draft laws and regulation acts connected with it will be prepared
in order to ensure the
implementation of the Program.
VI. FINANCIAL AND ECONOMIC REFORM IN BULGARIA
1. FINANCIAL STABILIZATION
In 1996 the Bulgarian economy entered a deep foreign currency and banking crisis which led
to unprecedented
financial stabilization and dramatic decline in the economic life. The economic program
approved in mid 1996
which was supported by an agreement with the IMF failed mostly due to the attempt to
bypass the commitments
undertaken with respect to the structural reform in the state owned sector.
The depth of the financial crisis reflected upon the economic performance in 1996 and more
specifically :
real Gross Domestic Product (GDP) declined by approximately 9%;
foreign trade contracted by about 12%;
the Lev depreciated 6.9 times (from Lev 71 per USD at end 1995 to Lev 487 per USD at end
1996);
annual average inflation increased twice (from 62% in 1995 to 121% to 1996).
The intensive currency substitution, the outflow of foreign currency from the country and
the run on the
commercial banks, which neared hysterics after 15 banks were put under conservatorship,
caused the collapse
of the official foreign currency reserve (excluding gold) from USD 1.2 billion to USD 0.5
billion. The financial
destabilization led to a budgetary crisis and the budget deficit again leaped to 11% of
GDP despite the very high
primary surplus (excluding transfers from the Central Bank) of over 8% of GDP.
By end 1996 and the beginning of 1997 the economic crisis accelerated into a
near-catastrophe. In less than two
months, i.e. by mid-February, the national currency depreciated 6.2 times, the exchange
rate reached Lev 3000
per USD, and the economy stood on the verge of total dollarization. As a consequence from
the depreciation of
the national currency and the massive run from it, inflation surged and the standards of
living fell dramatically :
inflation jumped by 43.8% in January and by 243% in February which is the highest monthly
rate since the
beginning of the transition in Bulgaria. The wages in the budgetary sector fell below USD
10 per month, while
pensions fell much further - to below USD 5 per month.
The resolution of the political crisis and the actions on the part of the Caretaker
Government made it possible for
the exchange rate calm down to about Lev 1500 per USD and to create conditions for the
gradual recovery of
economic activities and realistic income levels.
The above indicators outline the extremely difficult starting conditions for the
formulation and implementation of a
middle-term government program. The selection of a stabilization program including the
currency board as a
money issuing institution was predetermined by the currency substitution, the financial
destabilization and the
collapse in the confidence toward the institutions.
The introduction of a currency board means that the government commits itself to an
economic policy
incorporating the following main elements:
fiscal policy that does not require borrowing from the Central Bank on the part of the
state budget;
reforms in the financial and the banking sectors that will restore the confidence in the
banking system and
will guarantee its stability;
reform in the real sector that will ensure the adherence to strict budgetary constraints
on the part of all
economic agents in the state-owned and private sectors;
reform in the health care and the budgetary sphere (education, army, etc.);
other structural reforms including acceleration of the land reform, price and trade
liberalization and
especially agriculture, as well as removing the obstacles to market development and
foreign investment.
The fiscal strategy should be viewed in the broader context of the goals of economic
growth and financial
stabilization in the conditions of a monetary policy based on the currency board
institution. From this standpoint,
the role of the fiscal policy is brought down to the following:
termination of inflationary budget financing;
coordination of the goals of financial stabilization and structural reforms;
efficient allocation of the scarce financial resources;
provision of an adequate social safety net.
The goals of the fiscal policy in 1997 are as follows :
prepare a state budget that eliminates the need of financing from the Central Bank. This
goal requires a
primary surplus in the consolidated government budget of 4.5% of GDP in 1997;
impose restrictions on the issue of new domestic Lev debt and reduce the burden of
interest payments on
the budget.
The achievement of the budgetary goals depends on the revenues from privatization and on
foreign financing, the
latter being subject to meeting the criteria under the agreement with the IMF. During the
year, significant budgetary
and administrative measures will be introduced in order to reduce and ensure control of
expenditures, as well as
adjust their structure. The stabilization of the revenues in the budget shall be achieved
through specific measures
to improve tax collection.
The middle-term fiscal strategy is directed toward guaranteeing the financial stability of
the economy and
creating conditions for high economic activity.
The main task facing the budget is to ensure normal debt service which requires a primary
surplus in the
range of 4.5-5% of GDP during the first two years of the period in question. This limits
the capacity of the
budget to direct resources to the main budgetary systems. The latter's normal functioning
shall be ensured
by the following : restructure and optimize state expenditures including discontinuation
of unessential items
and transfer of certain activities from the state to the private sector, reduce the staff
in the budgetary sector
and improve its efficiency.
The tax system improvement toward implementing the main tax principles of the market
economy shall be
subordinated to the most efficient possible mobilization of domestic resources.
The main goal of the tax policy shall be to widen the tax basis together with reduction -
following careful
estimation - of the tax rates.
Increased tax collection shall be based on the strengthening of the tax and customs
administration.
The revenues from privatization and the fiscal restrictions will enable the implementation
of a program for
the slow reduction of government debt. This will, in turn, create possibilities for the
gradual redirection of
lending resources to the production sphere. The delay of the structural reform in the real
and financial
sectors, as well as the extremely low financial discipline in the whole economy led to the
accumulation of a
disproportionate government debt. In order to discontinue the trend of domestic government
debt
expansion, the policy pursued shall be that of reducing the budget deficit even in the
current as well as in
future years. The current practice of transforming losses and deficits incurred by the
real sector into
government debt shall be permanently discontinued.
In order to ensure the unimpeded domestic debt service under the currency board (i.e. no
possibility of its
refinancing from the Central Bank), a special fiscal reserve will be employed, the funds
of which shall
guarantee the liquidity of the budget even under unexpected collapses in the budget cash
flows.
The optimal government debt management shall rest on the understanding that government
securities are
not solely for fiscal purposes but contribute to the development of the money and capital
markets and for
the stabilization of the financial system as a whole. Our efforts shall be directed toward
the following :
bring the debt maturity structure to a normal status;
further liberalize the access of foreign investors to the domestic government securities
market;
bring the conditions and functional form of the new government debt issues in accordance
with
international standards;
smoothen out the imbalances in the schedule of maturity of government securities and
restore the
calendar principle in the government's securities issue policy;
encourage smaller non-bank investors to invest in government securities by diversifying
the available
government debt instruments;
create prerequisites for the development of secondary government securities markets by
introducing
amendments to the current legal framework and improving the financial infrastructure;
participate in international capital markets with appropriate bond issues with short-term
and
middle-term maturities, following careful analysis and precision in the preparation of the
respective
strategy.
The banking system suffered a severe blow in the spring of 1996. Fifteen banks were put
under conservatorship,
after which bankruptcy procedures were initiated. The banking system shall be
rehabilitated prior to the
introduction of the currency board. Weak and non-liquid banks shall not be admitted to the
currency board
system.
The stability of the banking system shall be the main goal and shall be based on the
following principles and
measures :
State banks shall be supported in terms of maintaining adequate solvency and liquidity
only in the context of
fundamental changes in their management : either by management contracts or by
privatization, both
before and after the introduction of the currency board. The management contracts will be
concluded with
reputable foreign financial institutions and will be coordinated with the IMF, as well as
aim to prepare the
banks for privatization by increasing their debt collection and reducing the size of the
banks.
Rehabilitation of the banking system through the adoption and full implementation of
international legal and
bank supervision standards, and creation of a permanent deposit guarantee scheme. To this
end, it is
envisaged by the end of 1997 to introduce a self-financing scheme that will provide the
depositors' security
in accordance with the directives of the European Union.
Parallel with the laws governing the introduction of a currency board, review of all
banking supervision
regulations issued by the Central Bank, as well as regulations on the capital adequacy,
classification of
loans, open currency positions and liquidity. As a result of this review, revised
regulations that take into
account international practice and the currency board institution will be approved.
Development of achievable performance indicators regarding the capital adequacy of all
banks. The
banking supervision's key goal will continue to be the provision of conditions for all
banks to work toward
these targets. Changes to the capital adequacy regulation shall be introduced in order to
reach international
standards.
Increase the confidence in the banking system through accelerated privatization of large
state-owned
banks. We intend to attract stable and reputable foreign investors whose presence in the
Bulgarian banking
sector represents a condition for increasing the level of management and the quality of
financial services
offered. We shall renew banking regulations to the same end - the creation of a favorable
investment
environment in the banking sector.
2. STRUCTURAL REFORM
The unsatisfactory progress of the structural reform in Bulgaria so far is due to several
factors as follows :
lack of political will on the part of the state to retire from the management of the
enterprises;
refusal to close loss-making enterprises and to undertake the social risk of rising
unemployment;
lack of reform in the social sector;
retaining of state monopolies in key activities such as energy, import of natural gas,
fuel production, raw
materials, etc., as well attempts at hidden privatization of monopolistic activities
without subsequent
structural changes;
the interests of dubious economic groups to preserve the winning scheme for them - losses
for the
state-owned enterprises, profits for the private companies thriving off them;
weak and constantly changing legal framework of the privatization process;
unstable political situation repelling foreign investors;
unreliable banking and lending system that does not allow the normal financing of
privatization deals and
investment projects.
A complete change of approach toward the economy is needed, as well as decisive steps to
develop a modern
social market economy based on the following :
private ownership,
free competition,
free entrepreneurship,
unimpeded inflow of international investments,
European integration,
as well as a state administration whose task is to guarantee the protection of these
rights and freedoms of the
economic agents within the scope of the law.
We shall carry out a speedy, complete and irreversible privatization of enterprises by
employing all
possibilities for the purpose, namely:
sale of enterprise shares to Bulgarian and foreign buyers under full transparency and
competition;
sale of enterprise shares to employees under alleviated conditions;
sale of parts of enterprises and small enterprises through auctions and bids;
sale of enterprise shares on the stock market;
sale of the control packages of large structurally important enterprises to strategic
investors with the aid of
leading international consultants and agents;
offer enterprise shares against vouchers in the second wave of mass privatization;
partial or complete privatization of the large infrastructure and production monopolies
after their
restructuring.
In order to accelerate the privatization process it is necessary to make serious changes
in the procedures and the
legal base but at the same time a complete turnaround in the approach toward privatization
on the part of the
government bodies directly or indirectly responsible for the process is also needed. In
order to achieve our main
goal - to privatize all industrial and commercial enterprises, as well as a large part of
the infrastructure
by end 1998, we shall carry out the following :
remove the obstacles in the legal base by simplifying and coordinating the procedures for
the preparation
and completion of privatization deals;
introduce structural changes in the bodies carrying out the privatization process in order
to optimize the
cooperation between them;
make the required staff changes in all levels of the privatization bodies in order not to
block the process
through the indifference or biased interests of government clerks;
clearly spell out the possibilities for employing mediators in privatization deals, as
well as employ highly
qualified and motivated consultants who will complete a large part of the privatization
deals on their own;
encourage the quick sale of residual shares of partially privatized enterprises so as to
enable the state to
completely retire from the enterprises with predominantly private participation;
attract strategic investors for the structurally important enterprises by means of an
active targeted
marketing strategy;
prepare and carry out a program on the registration of state-owned shares and other
securities, their public
sale and trade on the stock market;
prepare and carry out the second wave of mass privatization by amending the legal base and
the
procedures in such a way so as to avoid the weaknesses, errors and the unfavorable
outcomes of the first
wave. Simultaneously, we shall rouse the interest and enhance the opportunities for the
Bulgarian citizens
to participate in the voucher privatization;
at the very beginning of our government, we shall approve a decision to privatize all
state-owned
enterprises by reducing the list of those that will remain predominantly state-owned to a
minimum.
We receive a heavy inheritance. An enormous number of the enterprises in the state-owned
sector generate
losses daily. The accumulated debt of these enterprises and the open or hidden subsidizing
of many of them is
actually falling on the individual Bulgarian. The reduction of the losses in the
state-owned sector is one of
the main elements of the structural reform during the preparation and completion of the
privatization
process.
In 1996, 2,130 public enterprises out of 5,890 (excluding agriculture) incurred losses.
The total gross loss of the
non-profitable enterprises in 1996 amounted to Lev 123.4 billion. Less than 1/5 of the
loss-makers account for
90% of the losses.
One of the main tasks of the Government will be to discontinue the evil practice of
accumulating losses by
state-owned enterprises, which directly harms the Bulgarian tax-payer. The reduction and
termination of
losses in the public sector shall represent one of the priorities of the structural
reform. The streamlined
restructuring of the Bulgarian industry will accelerate the formation of market relations.
The Government commits itself to eliminating 30% of the losses in the public sector in
1997 (based on the end
1996 financial statements). Throughout the mandate of this Government, by 2001, 90% of the
losses in the
state-owned sector of the economy shall be eliminated. The possibilities for generating
new losses shall be
precluded.
Besides privatization, the Government shall undertake some other decisive measures to
reduce the losses in the
public sector, as follows :
The process of liquidation of enterprises and businesses incurring constant losses from
their
main activity shall be accelerated. The line ministries shall set up appropriate
structures to handle the
liquidation and financial rehabilitation of the loss-makers. The most widely used option
shall be the
possibility for voluntary closure of loss-making enterprises as stated in Chapter 17 of
the Trade Act. The
Government shall propose such amendments to the Trade Act, The Law on Concessions, and the
Privatization Law so as to accelerate the process of voluntary closure of state
enterprises. We shall
propose amendments to Part IV of the Trade Act in order to accelerate and optimize the
forceful initiation of
bankruptcy procedures on loss-making state-owned enterprises.
With respect to the enterprises whose business is profitable but are nevertheless
loss-makers due to their
super-indebtedness, the Government shall set up a special program for quick
debt-for-equity swaps. The
structures under the line ministries dealing with the liquidation and financial
rehabilitation of the
loss-making enterprises will represent the main agents in the debt rescheduling and
reduction and
debt-for-equity swaps against shares from the state-owned enterprises. One of the
Government's goals
shall be to establish a transparent debt market which will facilitate the speedy
restructuring of
state-ownership in Bulgaria.
The Government's legislative program shall include amendments to the Trade Act, the
Privatization Law,
The Law on the Financial Rehabilitation of Enterprises, the Law on Concessions, etc., in
order to regulate
the accelerated debt-for-equity swapping.
In the conditions of real markets, the good investment policy represents one of the
conditions for long-term
sustainable growth, modernization of production and the economic and social life as a
whole, for becoming
internationally competitive. This represents investments on the part of individual
economic agents who prefer to
postpone consumption today and invest in a higher future income, to take the risk of
losing their own financial
resources and make maximum efforts for the success of the business they have invested in.
We shall encourage every investment that brings money in the Bulgarian economy, creates
jobs and
brings tax revenues. Due to the almost complete de-capitalization of the economy, foreign
investments meet
these conditions closest and that is why they need to be encouraged. The Government shall
develop a concept
on the rehabilitation of the investment climate as a whole. A package of measures shall be
proposed, aiming to
improve the business conditions in the country, including the following :
Set up a system for open and free access to investment information.
Develop as clear and transparent as possible procedures in privatization, concessions,
state and municipal
orders, etc.
Encourage small and medium sized businesses, the backbone of every economy. It is namely
the
functioning of small and medium enterprises that creates conditions for the development of
the local market
and the growth of market demand and consumption.
Create favorable conditions for directing investments toward unfinished construction in
order to speed up its
commissioning at relatively lower investment costs.
Tax policy that encourages economic growth and reinvestment through adequate treatment of
depreciation
and expenditures for investment.
Available lending resources for investment : we shall ensure equal access to lending
capital for all. We will
create favorable conditions for crediting small and medium sized businesses. The Bank for
Investment and
Development must be set up by the end of 1997.
Some of the more specific measures to improve the investment climate in the country
include the following :
develop national trade registers;
improve the efficiency of the Anti-monopoly Commission;
develop legal regulations on leasing, trade brands, government orders, forceful execution,
electronic trade,
etc.
The state investments in the new conditions will be limited mainly to infrastructure. Due
to the limited budget
resources and domestic credit resources, investments on the part of the state shall be
based mainly on mutual
projects with foreign investors.
The main trends in our four-year investment program are as follows :
Construction of the European infrastructure corridors through the country's territory and
enabling increase
of transit traffic, including the following :
Corridor No.4 - Vidin-Sofia-Kulata and Sofia-Plovdiv-Svilengrad;
Corridor No.8 - Gueshevo-Kyustendil-Plovdiv-Bourgas-Varna;
Corridor No. 9 - Russe-Veliko Turnovo-Dimitrovgrad-Makaza;
Corridor No.7 - Danube Transport Road.
These corridors encompass reconstruction and new construction of roads, electric power
supply for railroads,
new border crossings, etc.
Construction of a modern infrastructure, providing incentives for the economic development
of Bulgaria and
its transformation into an important transport center. These groups of sites include the
following :
new bridge and ferryboat on the Danube;
expansion, rehabilitation and completion of additional construction works at the Sofia and
Bourgas
airports;
construction and rehabilitation of terminals for cargo, containers, combined transport,
etc.;
setting up of new border crossings that would contribute to the opening of the country
toward Europe
and the neighboring countries, etc.
Expansion, completion of additional construction works and new construction of domestic
energy
resources consumption and transit system.
Implementation of new technologies in the field of telecommunications through the
construction of the
following :
digital optical, radio relay and satellite systems;
digital switches;
automation and modernization of postal networks and services.
Development of new incentives for investment activity through the construction of
technological centers,
parks and growth centers.
The development of the capital market is among the fundamental conditions for the
successful restructuring
and market adaptation of the economic system as a whole. At the same time, the lag in the
development of this
sector is very tangible despite the existing legal framework and institutionalized
supervision. The absence of good
corporate securities until now is the main retaining factor which is further enhanced by
the weak development of
the capital market infrastructure.
The government will support the legal framework and will encourage the accelerated
institutionalization of the
capital market by directing its efforts in the following :
Participation in the establishment of an organized capital market (stock exchange) and
completion of the
equipment of the National Depository, taking into account the particular importance of the
two institutions for
the regulation of trade with securities and the protection of the interests of the
participants in the trade.
Introduce the required amendments in the legal and normative regulations so as to simplify
and facilitate the
access of issuers, investors, and agents to the capital market, at the same time observing
the founding
principle for protecting investors.
Public offer of sales of the companies under privatization allowing for wide dispersion of
ownership
throughout different strata of the population. The distribution of the ownership among
numerous investors is
a factor for the formation of public support of free entrepreneurship and for the
stabilization of the
investment environment.
Encourage foreign investments by creating conditions for attracting them in a portfolio
form. To this end, the
foreign investment registration regime will be simplified and we shall observe the
principle for complete
transparency of actions on the part of the capital market participants, as well as the
transactions taking
place in the capital market.
3. INDUSTRIAL POLICY
In the years following World War II Bulgaria was forcefully turned into a highly
industrialized country - with
productions, connected with the processing of agricultural inputs, the traditional for the
country textile, fur and
leather, and tailoring industries pushed to the background. Instead of these, powerful
industries were set up such
as metallurgy, metal cutting, machine building, electronic, and chemical industry, without
sufficient energy base,
expertise and demographic distribution of the population. The employment of a huge amount
of workers in the
new industrial enterprises led to migration, depopulation of the villages and housing
crises in the towns and cities.
The end of CMEA found our country with an industry structure that cannot be efficient
under market conditions. It
was urgent that a thorough review of the main trends of industrial production's future
development be made and
steps taken to restructure the existing capacities, the labor force, and most of all -
ownership. This task turned out
to be beyond the capacity of the governments between 1990 and 1996. The attempt to
"save" the social peace at
the cost of maintaining the enormous inefficient heavy industrial enterprises led to the
their continued open and
hidden subsidizing, feeding the illusion about the price and future of conceptually and
physically outdated
capacities, producing expensive and low quality output at huge costs and for which there
is no market.
The catastrophe such a policy would lead to was inevitable. Today, most of the largest
enterprises are either in
isolation or in liquidation with the sole aim to stop generating losses. This, however, is
merely the beginning of the
solution. With the closure of these enterprises hundreds of thousands of workers will be
left without a job, whole
regions will be deprived of a trade, and enormous tangible assets left without efficient
management.
At the same time, the crisis in agriculture sharply reduced the supply of inputs for the
food processing industry.
No normal market relations were created between agricultural producers and the food
processing facilities. The
production and trade with Bulgarian foodstuffs plummeted which allowed for the free and
often illegal import of
produce from neighboring countries at unrealistically low prices which additionally
blocked the domestic light and
food industries.
After the disintegration of the centralized administrative system, after the adoption of
Decree No.56 and the Trade
Act, an attempt to incorporate the new companies was made. Due to the delay in
privatization, the thriving of
corruption and irresponsibility, as well as the lack of control on the part of the state
owner, the enterprises were
turned into the feudal property of their management bodies. This allowed for the influx of
friendly trade companies
who pumped out the profits and left the losses to the enterprises themselves. This process
got deeper as a result
of the series of thoughtless decisions in the organization and completion of the first
round of mass privatization,
since the selected model permits the acquisition of part of the shares by privatization
funds and individuals but
does not permit trade with the acquired shares for a long time period. Thus, the
pseudo-corporate management
of many enterprises was enhanced and in practice, the state lost control over its own
property. The plunder of
tangible and financial assets of the companies continued which will extremely hinder their
privatization and lead to
inevitable liquidation and bankruptcy of a large number of them.
At the end of the four-year period of government the entire industrial sector will be in
private hands.
The structure of production will be completely subject to market requirements. The main
share of the production
will fall with the small and medium sized entrepreneurs and owners who will also provide
the better part of the
employment in the labor force. Production will be export-oriented, so that high quality
Bulgarian made products will
fill the niches in the European and world consumer markets. The big enterprises will be
owned by international
corporations who will include out plants in their international networks and will
transform them into part of the
international economic community. As a result of the development of the food and light
industries, of tourism and
services, many of the workers laid off from the closed inefficient enterprises will be
able to return to agriculture
based on their restored property rights. Thus, the demographic balance in the country will
be restore in a natural
manner.
Out industrial policy shall be carried out and be based on the following principles :
Private ownership is the base for the reformation of the Bulgarian industry. Individual,
shareholder
and corporate ownership are simply modifications of private ownership which offer various
possibilities.
Public ownership - state and municipal- will only play a regulating and facilitating role
and will be able to
exist only to the extent that it does not obstruct individual rights.
Social market economy is the economic guarantee for the development of industry, as well
as for
the rights and freedoms of every citizen. It unites the maximum fitness for economic
achievements with
the maximum individual opportunities for personal realization. Social market order is
based on private
property, free competition, the market for means of production, free contracting and
incorporation, equal
chances and optimal social insurance.
The existence and expansion of the middle strata of the population is a basis both for
economic
progress and for social stability. The encouragement of the middle class is the long-term
political
strategy for the efficient functioning of industry and the entire economy, as well as of
democracy as a
whole. The individual producers, entrepreneurs and traders are irreplaceable guarantors of
the civil society.
Competition is the driving force of industry in a market economy and guarantees the
freedom of
economic activity. It is the state's task to guarantee the marginal conditions for
competition and to prevent
possible obstructions to it. This should be done by eliminating or restricting monopolies,
control of mergers
and encouragement of cooperation between small and medium enterprises.
Everyone should be able to start a business. This provides a powerful resource for
enlarging the circle
of competent experts and managers, which will have a positive effect over the entire
dynamics of the
economic and public life and will ensure natural selection under fair competition.
Our actions will ensure the complete and speedy retirement of the state from production
and trade, since
state ownership and the participation of the government in the management of enterprises
leads to inefficiency
and build-up of losses in the economy. Enterprises must be removed from the political
sphere which is managed
by legislative and political leaders, and be transferred to the private sector, where they
will be managed by the
market.
The task of the Government is to organize and carry out the restructuring and
privatization of industrial ownership
in such a way, so as to achieve the following :
complete turnaround in the efficiency with which raw materials and power sources are
utilized, and
encourage the introduction of energy efficient production based on local inputs, and
restructure and even
close down enterprises relying mainly on imported inputs and power sources, producing
output whose
price cannot even cover the cost of imported raw materials and power;
responsible restructuring of the production structure of production and turn to products
based on local
agricultural and raw material production in order to establish a complete technological
and production chain
including a series of small and medium enterprises;
create a new type of employment based on the stability of a large number of jobs in many
small and
medium enterprises, and avoid the risk of sudden increases of unemployment upon the
closure of individual
large enterprises;
de-monopolization of production, by supporting the acquisition of enterprises in an
industry by different
owners and strictly monitor and prevent private monopolies that may replace the state
ones;
decentralization of production by encouraging the establishment and development of
competitive industries
for similar produce in different regions in the country so that industry and consumption
do not depend on a
single producer in the region;
assist small and medium sized producers and entrepreneurs to begin production by setting
up business
incubators;
develop training programs for producers and entrepreneurs and organize technical
assistance for the
profitable and efficient functioning of small and medium enterprises;
develop the system for state and municipal orders and create incentives for maintaining
high quality of
production;
fast and efficient restructuring and sharp reduction of inter-enterprise indebtedness by
building a
transparent debt market.
We will carry out a series of urgent actions even in 1997, by which we shall guarantee the
acceleration and
irreversibility of the reform in the industrial policy, including the following :
introduce clear market principles, rules and mechanisms for managing the state property in
the enterprises
in order to preserve the property and maintain the interest in privatization;
promote the role of management with clear functions, rights and responsibilities before
the state-owned
enterprise directors;
provide new motivation for the members of the management bodies of the state-owned
enterprises in order
to achieve profits, and prepare and carry out the privatization of the enterprises;
immediate replacement of incompetent, compromised or corrupt managers and staff at all
levels of the
state administration;
optimize the procedures for liquidating enterprises in order to complete the speedy and
efficient privatization
of assets; this will also satisfy our creditors and at the same time preserve maximum jobs
in the respective
regions and settlements;
continuing reduction of the state ownership in industry giving priority to the
privatization of entire individual
enterprises and complete retirement of the state from the management;
accelerate the small privatization by simplifying the procedures for sale of parts of
assets and whole small
enterprises, aiming to complete this process for the state privatization bodies within a
year;
encourage employee buyouts given availability of action-oriented privatization projects
and investment plans
with the participation of external investors or through special credits and deferred
payment;
remove legal obstacles to privatization of industrial enterprises related to settlement of
ownership rights,
restitution claims and other unclear administrative procedures, by amending the legal base
and adopting a
new approach to privatization on the part of the state administration;
restructure the military complex and prepare its enterprises for privatization by
attracting foreign partners in
accordance with the country's orientation to joining the North-Atlantic structures.
4. TRADE POLICY. FOREIGN INVESTMENTS
The foreign trade policy of Bulgaria shall be clearly defined, predictable and based on
the following priorities:
To foster competition
To lower trade barriers
To protect consumers
To encourage import
To restrict illegal trade and racketeering
We shall foster clear rules of trade by taking measures to improve credibility of deals as
follows:
enough information about parties (participating companies and their scope of business);
enough information about quality -- to update the system of standards concerning the goods
subject of
deals;
trade contracts up to the legal standards preventing contracted parties from inappropriate
performance;
transparency of prices provided through maximum publicity of the information about foreign
and domestic
markets as well as through fostered development of stock exchanges and markets;
free access to concise customs and statistic data about the domestic market trade flows,
import and
export.
Stability of domestic market and increase in import can be achieved by development of
reliable foreign trade.
The Government shall suspend its peculiar trade related operations and shall focus on
development of trade
policy.
Privatization is planned for companies that are primarily engaged with whole sale trade
and for state-owned
trade unit.
The trade policy shall be implemented in dialogue with the market participants through
Bulgarian Chamber of
Commerce & Industry, Bulgarian Economic Chamber, Union of Private Economic
Enterprises, Salesmen
Association and other non-governmental organizations.
The following legislative work shall be initiated:
To propose Consumers Protection Act which will regulate the mandatory information on all
goods for sale
as well as the quality standards;
To replace the Competition Protection Act with an anti-monopoly act.
Price Law shall be amended to transform the National Price Commission into trade control
body.
To propose amendments to:
Commercial Code;
State and municipal orders act
State standards act
Agreements and Obligations Act
All amendments shall be consistent with the EU legislation.
The amendments of the legislative regulations and administrative procedures shall be aimed
at development of a
normal trade and economic environment. The Securities and Stock Exchange Commission shall
start
operation within few months and by the autumn of 1997 the fist stock exchanges shall be
created as per the Law
on stock exchanges. The whole sale trade shall be thus regulated, and this will facilitate
the market regulation of
prices.
The Government shall support the establishment of non-profit companies that will
facilitate self regulation of the
following sectors:
grain crops
milk and milk products
meat products
fish and fish products
fruits and vegetables
wine and spirits
petrol and petrol products
medicines
metals and slag
textile
intellectual properties, etc.
In order to ensure better transparency of trade activities, a public register of trade
companies shall be opened.
The further liberalization of agricultural products export shall depend on the projections
of the local production. For
the main products needed to secure the grain balance -- maize, corn, rye, sunflower, etc.
-- a liberalized and
transparent method shall be applied for determination of the minimum export quantities.
There will be gradual
efforts to secure that the minimum buying prices are closely related to the international
prices.
The Government shall propose restructuring of the State Reserve and creation of
contingency stocks of
energy carriers and agricultural products.
One very important objective in 1997 is to reduce the monopoly in power engineering,
telecommunications,
railways, etc.
The illegal import shall be restricted by measures that will make trade deals more
reliable as well as via lower
import taxes that in fact encourage the illegal import.
In 1998 new duty free trade regulations shall be introduced and we shall encourage the
development of free
economic zones in cooperation with the municipalities. The objective is to encourage local
production and to
attract foreign investments.
The main priorities of the foreign trade shall be the positive foreign trade balance,
which will be achieved by
growth of import, minimization of the country's power and raw materials dependency, and
encouragement of the
export of processed goods against raw materials.
The Government shall assist the exporters through the Center of Export Encouragement. We
shall propose to
set up an Export Credit and Export Insurance Fund. By the end of 1997 the Government shall
prepare an export
oriented strategy that will take into account the impact of the currency board on the
trade.
Regarding the bilateral economic cooperation, development of zones for free trade with the
countries
associated to the EU shall expand the access to the European markets.
The negotiations about a zone for free trade with Poland, Hungary, Romania should be
finalized, and by the end of
1997 we should start negotiations for association of Bulgaria to CEFTA. CEFTA membership
shall provide an
additional access of the Bulgarian products to these markets and shall encourage the
integration of Bulgaria into
the European economic structures.
Among the EU member countries Germany is our main trade and economic partner. Germany
holds the biggest
share of the trade between the two countries, and it is the leading foreign investor in
Bulgaria. These traditional
good relations shall continue to develop more intensively.
Russia is an important trade and economic partner. The declaration on the liberalization
of the trade between the
two countries, signed in April 1997, shall facilitate the way to lift the obstacles in
this bilateral trade. Our objective
is to reduce the deficiency of the foreign trade balance. The access of the Bulgarian
merchandise to the Russian
market shall also expand through the mechanisms of the WTO, in particular through the
association of the
Russian Federation to the WTO. The Center of Industry in Moscow shall assist the trade
business of the
Bulgarian companies in Russia, and shall extend their participation in the emerging zones
of free trade in the CIS.
In 1998 we shall start negotiations with the Baltic Republics on the free trade zone
agreements.
The expansion of our business relations with the Balkans is one of our main foreign trade
priorities. Development
of zones of free trade with the neighboring countries and expansion of cross border
cooperation shall help to
improve the economic stability of the region and to attract foreign investments.
The export shall be encouraged by mobilizing the trade and economic cooperation agencies.
As early as by the
end 1997 these agencies shall have a new statute and clear criteria of efficient business
operation. There will be
newly defined criteria for selection of trade advisors.
We shall try our best to collect the debt owned to Bulgaria and to possibly exchange it
for property.
As regards the multilateral economic cooperation, the European integration shall be a
priority. The EU is our main
business partner holding 40% of the total turnover. The strict observance of the European
Association Agreement,
including the trade related part, shall facilitate the equal membership of Bulgaria in the
EU.
We intend to sign and start to apply the Additional Protocol on the adjustment of ESA to
the outcome of the
Uruguayan negotiations on GATT and expansion of the European Union, including an improved
market access to
the mutual trade of agricultural products.
Alongside with the stabilization and restructuring of the economy, Bulgaria shall start
actual talks on
membership in the Organization of Economic Cooperation and Development within the next
four years.
As a small country of open economy, Bulgaria is interested in the improvement of the world
trade system and its
liberalization. That's why Bulgaria shall strictly observe its obligations related to the
WTO and as its equal
member shall apply its rights to provide
easier access for the Bulgarian merchandise. The active involvement of Bulgaria with the
WTO will be the
cornerstone of Bulgaria's good reputation of reliable partner who maintains a high level
of transparency and
predictability.
In 1997-98 we shall have talks to extend the scope of the Agreement on Bulgaria's free
trade zone with
EFTA and adjustment of the Agreement to the Bulgaria's obligations to WTO as regards the
intellectual
property, state subsidies, services and investments.
Bulgaria shall update its involvement with UNCTAD and ICE.
Encouragement of foreign investments shall be one of the priorities of the Government.
We shall update the existing regulations concerning the foreign investments in Bulgaria as
well as the regulations
protecting the Bulgarian interests and investments abroad. In 1997 we shall finalize the
investment protection
agreements with the Netherlands, Canada, Norway, and shall undertake actions for Bulgaria
to join the Multilateral
Agreement on OECD Investments.
The volume of foreign investments is an indicator of the general economic environment in a
given country, its
stability, business security, predictability of circumstances. Foreign investments can be
effectively encouraged by
improvement of the main factors of the economic policy.
The comparative advantages of Bulgaria in the competition about foreign investments shall
develop in the
following way:
to improve the general macro-economic environment
to secure and properly apply the liberalized regulations concerning foreign investments
to accelerate the privatization
to reduce tax rates
to further bind the country with the European structures
to have well targeted state policy to encourage foreign investments by clearly outlined
priorities
to successfully fight corruption and crime
to legally regulate the rights of ownership and limit the real rights over real estates.
Guarantees are the cornerstone of foreign investment encouragement. Considering the
overall investment
environment, it is very important to have precise legislation that regulates the main
foreign investment guarantees
such as protection against legislative restriction of foreign investment and the right to
repatriate incomes. The law
should protect the foreign investments against subsequent legal restrictions and it should
envisage that the
foreign investments made before the legislation has been amended is affected by the
regulations relevant at that
time.
Additional measures to be taken:
To set up a Foreign Investment Consultative Council under the Prime Minister. The Council
will consist of
representatives of major foreign investors and leading experts. At the Council, the
problems related to
attraction of foreign investments shall be discussed with a broader circle of experts
beyond the state
administration;
To create a favorable environment for foreign investment in different regions:
- by development of regional structures for encouragement of local business;
- by assisting the economic development of backward areas;
To encourage foreign investments in new technologies and research branches; to set up
technological
centers at the Bulgarian universities and scientific and research institutes.
It is particularly important to carry out an information campaign about the opportunities
that the Bulgarian economy
can provide to the foreign investors. This campaign shall be part of the overall strategy
of the information and
communication policy of the Government. An important part of it shall be the two day
national forum on
investments to be held on October 22 and 23, 1997 in Sofia. The forum shall discuss
prospects to attract funds
for infrastructure projects in Bulgaria as a means to accelerate the structural reform.
The WB, IMF, EBRD,
PHARE Program, etc. shall be invited to present their specific involvement with each major
project.
5. REVIVAL OF BULGARIAN AGRICULTURE
The Bulgarian agriculture can be revived only under the conditions of private ownership of
land and production
means. This will be the core of the agricultural policy which will aim at development of
competitive, export
oriented and environment friendly agriculture. This, in particular, requires
implementation of a set of
measures in the following aspects:
To secure the necessary funds to finalize the land reform.
To simplify the procedures of land return by amendments to the Land Tenure Act and the
Regulations on
Application of Land Tenure Act.
To improve the legal regulations in order to preserve the perennial plantations, rice
fields, and irrigation
facilities until the time of their amortization.
To restore land ownership by the end of 1998.
To secure the necessary minimum of agricultural land for the optimum operation of
scientific and research
institutes and organizations, national security, defense, etc.
To improve the existing regulations in order to simplify the administrative procedure
related to construction
projects on agrarian lands.
Returning the land is only the beginning of the reform. It should be accompanied by
restructuring of agriculture
and improvement of agricultural relations.
The Government shall focus on procedures of consolidation of ownership against
unreasonable personal
ownership. This will be accomplished via free land market and re-allocation of land.
The re-allocation of land should be supported by the land registration act, inherited land
division act, land
endowment land, land exchange land.
The free land market should be supported by:
adoption of appropriate amendments to the Land Tenure Act and the Regulations of Land
tenure Act
Application;
amendment of the Regulations on Agrarian Land Basic Prices;
amendment of the Agrarian Producers Protection Law and the Regulations on its application
as regards
provision of preferential credits for purchase of agrarian land and credit guarantee of
future agricultural
products;
amendment of the regulations on provision of land to the landless or small land owner and
development of
financial preferences for purchase of land at state subsidized prices on the basis of
leased land zoning.
The key part of the reform shall be the privatization in agriculture. The efforts of the
Government shall be directed
to:
Sharply accelerate the privatization process by reduction and simplification of
procedures.
Fair compensation of land owners whose land cannot be returned.
Restructure and privatize the permanent agricultural research societies and their
independent parts
Strictly observe the Competition Protection Law and prevent any monopoly in the
sub-branches.
Ensure efficient post-privatization control.
Alongside with land return and privatization, we shall create conditions for effective
utilization of land
ownership by:
Adoption of a program for ultimate restoration of land ownership by the end of 1998.
Development of information and advisory system to assist the farmers in taking the best
decisions
concerning their business.
Reasonable investment policy to attract foreign investments.
Development and adoption of leased land zoning system of and differentiation of state
preferences
according to the specific environment and economic circumstances in the areas.
It is out priority to ensure funds for the agriculture. We shall create conditions for
reasonable use of financial,
credit, price and tax mechanisms in order to rehabilitate the agriculture:
To reestablish, by means of law, the Agricultural and Popular Bank and return the property
and assets to
the shareholders.
To develop a target state investment policy in irrigation, agrarian land protection and
improvement of
equipment at higher schools and agricultural colleges after they have been reduced in
number.
To attract additional sources of funds in Agriculture Fund, including from international
financial institutions,
in order to assist the agriculture under the conditions of the currency board.
To regulate the right of the Agriculture State Fund to negotiate trade deals whenever the
market requires
timely financial intervention of different types and mechanisms.
The Government shall assist the adoption of flexible legislation for state regulation of
agriculture and its
compatibility with the market regulation through tax and price mechanisms. In order to
minimize the agency in
the trade of agricultural products, the state shall encourage and participate in
development of securities and stock
exchanges. Later the state shall provide its shares to farm growers for purchase at
preferential conditions.
Whenever needed, the state shall intervene the market of the main agricultural products --
grain, milk, meat, eggs,
etc. -- in order to keep the level of the buying prices close to the international prices.
There will be a special control
of the proportion of the buying prices of agricultural raw material to the market prices
of the products of
agricultural origin. There will be more preferences in agriculture introduced by
amendments of the Agrarian
Producers Protection Law and improved operation of Agriculture State Fund.
The Government shall initiate steps to improve the regulations on pension insurance of
farmers.
An important part of the program is devoted to development of secure and environment
friendly agriculture
and methods of motivation. This part includes:
Introduction of specific penalties and taxes for contamination of soil, water and air.
Encouraging producers of clean products by means of price, tax and credit relieves.
The restoration and development of mountain agriculture shall provide for the living of
the disastrous and
deserted areas, and shall revive the traditional Bulgarian productions. For this purpose
the following should be
done:
To encourage development of rural tourism and traditional productions.
To set up a fund for development of mountain agriculture as part of the overall program
for development of
mountain areas.
To ensure preferential financing of infrastructure projects in these areas.
The grain crisis of 1996 and the disproportion in the vital agricultural productions shall
make us extremely
cautious in our efforts to resolve the food supply for the population and fodder supply
for the animals.
We shall guarantee :
A strict state policy to ensure the balance of the basic food supply.
Annual resource and financial dependence of the grain balance of the country to the
general needs of the
population by use of domestic and foreign sources of finance. To adopt appropriate
measures regarding
other vital products -- meat, milk, vegetable oil, eggs, etc.
To optimize the balance of the agricultural equipment and ensure the necessary funds for
supply of high
capacity machines, service maintenance and spare parts at favorable tax relieves and
exemption of
customs taxes and duties.
To create the necessary economic conditions for fodder production in order to ensure
enough food for the
animals and to prevent their reduction in number.
To participate in the WB project for construction of strategic grain silos near the Black
Sea and Danube
ports of Bulgaria.
To ensure that the grain credits are settled in the agreed way.
We shall not restrict, on the contrary, shall assist all different types of organization
of farmers by:
Encouraging and motivating independent organizations of land owners and their cooperation:
cooperations
of real owners of different types -- credit, servicing production, etc.
Assisting and stimulating other organizational forms such as agricultural sole
proprietors, share-holding
companies of mixed assets, farms, rented farms, etc.
Bulgaria has been a strong exporter of agricultural products for years. The Bulgarian
agriculture should regain its
share in the international trade of agricultural products within the EU market and the
world market.
The main aspects for adjustment of the Bulgarian agriculture to the EC can be summarized
as follows:
To update and improve the Bulgarian legislation regarding standards, vet and phyto
sanitary norms.
To adjust the administrative procedures.
To provide for compatibility of the Bulgarian agricultural policy to the general
agricultural policy of EC.
To improve the agricultural trade policy.
To improve training of people.
To develop institutional structures to implement the general agricultural policy.
To provide a minimum market access, export subsidies and support for the farm growers of
Bulgaria as a
member of the WTO.
In regard to the integration process of CEFTA member-countries, to have negotiations and
conclude
agreements for development of free trade zones and liberalization of agricultural products
exchange. This
process shall be preceded by bilateral agreements with all CEFTA member-countries.
To conclude bilateral agreements with the European countries, not members of EC, in order
to secure
additional market niches for products of agricultural origin whose export is restricted by
EC.
To fulfill the European agreement for association to EC. To increase and incorporate a
number of tariff
quotas and extend the access of the Bulgarian products to the West European export markets
of surplus
agricultural products.
To restore the traditional and gain new markets for the Bulgarian agricultural products.
Seven years have passed since the democratic changes in Bulgaria took place, but the new
agricultural policy
has not yet been fully regulated by the law. Within a short period of time, the GoB shall
submit to the National
Assembly the following proposals for amendment and additions to the existing laws
concerning the agricultural
reform:
Land Tenure Act
The amendments shall aim to accelerate and simplify the procedures of restoration of land
ownership, modify the
land ownership bodies, create actual guarantees for development of land market, provide
for opportunities for
foreign juridical persons, participating in joint ventures of Bulgarian share of over 50%
to acquire ownership of
land. All matters related to par. 4 of the transitional and conclusive regulations of Land
Tenure Act shall be
re-modified into a separate law.
Land Lease Act
There should be different regulations on the size of the leased land, lease term
extension, license to lease land to
local and foreign persons before the ultimate restoration of ownership has been completed
and motivation factors
and tax alleviations for the lessors have been introduced, particularly in regard to the
provision of long term credits
for perennial plantations, irrigation facilities, infrastructure projects, etc.
Farm Growers Protection Act
The amendments shall regulate the procedures related to the provision of preferential
credits for purchase of
agricultural land, establishment of a special fund to assist development of mountain
agriculture, encouragement
of farmers to grow environment friendly and clean products and develop eco-tourism. The
amendments shall also
aim to extend the functions and improve the management of the Agriculture State Fund, and
increase the number
of economical preferences for farm growers.
Tobacco Law
There should be regulations on the advanced payment of part of the production and
guarantees of repayment
within certain period of time, mandatory participation of buying companies and physical
persons in securing the
supply of seeds, resources, fertilizers, chemicals, etc., inflation related compensation
of tobacco growers for
overdue contracts, effective guarantees from insurance companies on partial or total loss
of crop.
Farmers' Cooperation Act
This Act should be adjusted to the requirements of the free market economy. The main
objective is to regulate the
establishment of cooperations for services, production, processing, financing and
crediting.
The GoB shall propose a package of new regulations related to the agricultural reform:
Land re-allocation act
Land registration act
Farm property and production protection act
Inherited land division, land endowment and land exchange act
Grain-growing act
Agrarian equipment act
Animal selection act
Seed and planting materials act
Mountain agriculture act
Regulations on amendment and additions to wine law
Regulations on amendment and additions to vet law
Rose-growing law
Regulations on amendment and additions to fish farms law
Water companies law
Farmers pension insurance law
Environment friendly agriculture law
The Government shall have to resolve a number of problems as early as in 1997 in order to
provide for
development of the agriculture under the currency board.
To ensure the balance of the main foodstuffs and fodder for the farm year 97/98 by
reasonable distribution
and utilization of local production and imported products.
To ensure that there are effective legislative regulations and financial prerequisites for
ultimate restoration of
ownership of land.
To ensure financial and technical prerequisite for 96/97 harvesting.
To create favorable conditions for irrigation by introduction of special favorable tariffs
for electricity in order
to minimize the price of the water for the farmers.
To ensure that autumn seeding is done on time and with the proper equipment and funds.
To finalize the privatization of the milling and fodder enterprises.
To finance and credit stock breeding.
6. BULGARIAN TOURIST INDUSTRY
Tourism is the industry that can help to overcome the economic crisis and facilitate a
steady economic growth.
Bulgaria has a considerable potential for development of tourism. There are favorable
circumstances for
development of all kinds of modern tourism.
The Bulgarian tourism is favored by Bulgaria's geographic location, climate and spas, sand
coast line and varied
mountains, unique cultural and historic heritage, preserved ethnic peculiarities and
traditions, the existing
recreation facilities and trained personnel, and the available areas in eco-regions.
Our efforts shall be directed to overcome our weaknesses that impede the development of
tourism in Bulgaria:
There is a certain disproportion related to constant concentration of recreation
facilities, most of them being
worn out and old-fashioned.
There is a distinct delay in development of national and regional infrastructures and
utilization of modern
transportation and communication means, information and reservation systems.
There is a lack of national marketing and promotion activities, lack of coordination on
national and regional level
between local government, private and state tourist sectors and line associations and
companies.
In the next four years we shall restructure this industry and shall have legislation on
the regional development,
national promotion, loyal competition.
Our primary objective is the steady development of the Bulgarian tourism and integration
with the European and
world structures.
In particular, we shall concentrate our efforts to:
Accelerate the privatization of state-owned enterprises; attract foreign investors, and
leading
international companies that can guarantee future development by implementation of new
technologies,
management, and integration with the European and world tourist structure.
Increase the percentage of tourism in GDP and state budget, boost foreign exchange
proceeds and
expand on-the-site export of goods and services, encourage development of tourism related
branches and
regions, improve distribution of labor resources.
Increase employment, create better recreation conditions for the Bulgarian people, allow
for more travel
opportunities, develop the tourist industry according to the national interests and
involve the civil society
more actively in the local management via the councils of tourism, regional and national
associations of
tourism.
Preservation and recreation of natural resources, protection and promotion of historic and
cultural
heritage, building responsibility about the management and utilization of tourist
resources of Bulgaria.
It is our plan to have a steady economic growth of the tourist industry in the next four
years. Our projections of the
main indicators are as follows:
The total number of foreign guests crossing the border in 1997 is expected to reach 8
million, including 1,2
million of tourists, and in 2000 it is expected to reach 13 million, including 3 million
of tourists. The total
revenues generated from foreign guests, including revenues in transport, trade, exchange,
etc., are expected to
reach US$900 million in 1997, and USD1300 million in 2000.
By 2000 we shall have privatized 80% of the long term assets of the tourist industry. The
remaining 20% include
mainly infrastructure systems and facilities.
The main aspects of development of the tourism shall be as follows:
To increase supply of tourist services in Bulgaria. To develop tourist information centers
in towns and
villages and set up councils of tourism to help attract local and foreign guests and
provide high quality
services.
To open for the Balkan tourist market and attract more guests from Greece, Turkey,
Macedonia, Serbia
and Romania via simplification of visa, customs and border formalities ;
To optimize the regional market structures and identify target groups and financially
secure customers from
EU member countries, Central and East Europe and overseas.
To integrate with the European tourist structures though extension of the existing
contacts, including
through the PHARE program. To attract new hotel chains in Bulgaria, to participate in
European tourist
information centers and international computer networks.
To offer a variety of tourist products via motivating the agencies involved with cultural,
ecological, rural,
hunting, touring and other types of tourism.
To modify the offered tourist products according to the actual potential and location of
resources. To offer
new tourist services and attractions associated with the Bulgarian traditions and
lifestyle.
To introduce mandatory classification and licenses for tourist activities and tourist
sites in order to raise the
standard of the tourist products and bring it closer to the international standards.
Our immediate responsibilities in 1997 are as follows:
We intend to privatize long term assets of Leva 11 billion.
In 1997 we expect USD 20 million of foreign and local investments for renovation of hotels
and related
infrastructure, including establishment of joint ventures as independent units within the
tourist complexes.
The tourist products and quality of services shall be improved by development of a system
of councils and
associations of tourism at local, regional and national levels. They will include
representatives of the state
body of tourism, municipality, local bodies of self-government and line organizations.
There will be local
bureaus and regional centers of tourist information which will be interconnected in a
network and will
use modern computers and communication means.
An important part is devoted to the establishment of consortiums based on state-owned,
private and
municipal property. These will handle the maintenance and development of infrastructure,
security matters,
promotion and other auxiliary matters in the big recreational complexes in order to ensure
that the
complexes operate up to the standard.
7. INFRASTRUCTURES OF BULGARIA
7.1. MODERNIZATION OF BULGARIAN POWER ENGINEERING
The energy policy is extremely important for recovery of the economic stability of
Bulgaria and ensuring Bulgaria's
national independence. That's why power engineering is defined as national priority for
the Government.
Unfortunately, the Bulgarian energy complex has preserved almost all negative features,
characteristic of the
soviet power engineering, such as low efficiency, and poor quality of power. Bulgaria is
rated last in Europe by
power efficiency, and that means that there are losses of power whose original sources are
predominantly
imported from other countries.
The power and technological dependence of Bulgaria on separate countries has created
prerequisites for
influence on our sovereign right to take decision of national importance.
The modernization of the power structures generating economic losses, non-profitability
and corruption, has been
already delayed. We shall do our best to compensate this delay by restructuring and
privatization.
The main principles and objectives of development of the Bulgarian power engineering are
as follows:
The initial objective of the energy policy of the Government is to secure a reliable power
supply. For this
purpose it is necessary to take special measures in the existing situation of a poor legal
framework,
consumers' inability to pay and crime.
The permanent objectives shall be to reduce the level of power consumption of the GDP, the
power
dependence on other countries, emissions and harmful impact on living environment, improve
the living
comfort of Bulgarian people at lower consumption of power products.
The Government has accepted and shall try to legally support the implementation the
principle of development of
power engineering per the minimum of social expenses, including all related expenses for
protection and
restoration of cultivated land and environment, deteriorated health condition, nuclear
waste disposal, closing and
disposal of the oldest nuclear blocks.
In order to ensure national independence, our energy policy shall have the following
priorities:
Power efficiency. Power saving should not be associated with constraints on the quality
and quantity of
power services. This is one of the most modern branches of power engineering that is
important for every
industry and determines the optimum power conversion. It is aimed at efficient
satisfaction of living needs at
minimum expenses and minimum harm on environment.
To implement the above priority, the Government shall not rely solely on the market
mechanisms. We shall
propose a special chapter on power efficiency to be included in the draft law on power
engineering. Later the
Committee of Energy and other central institutions shall prepare the secondary
legislation, norms and standards,
national, branch and regional programs and projects.
A consistent national program on power efficiency can save more than 1500 megawatt power
in a period of 20
years. This is as if to put out of operation the old four nuclear blocks of Kozloduy power
plant and Varna and
Russe steam power plants at one time.
The available coal reserves are presently estimated at 4,5 billion tonnes and at the
present rate of
consumption are expected to satisfy our needs for another 100 years.
Development of coal mining shall be the most difficult part of the energy program, because
it needs to combine
a number of contradicting requirements: no competitiveness, old-fashioned technology and
organization, higher
quality and ecological requirements, no alternatives, conservatism.
Without a special law on the use of underground resources, the coal mining related
problems that have not been
solved for decades, cannot be resolved.
Bulgaria's needs of electricity even at maximum electricity consumption (24Twh/year by
2010) can be
satisfied at minimum expenses in the following way:
large scale rehabilitation program affecting the existing power plants. The necessary
funds are 6-15
times less than the funds for new constructions.
building substitutions and new assemblies of maximum unit power of 300MW of Maritsa Istok
lignite
coal, equipped with sulfur oxide purification installations;
to start construction of water cascades Sreden Inskar (44MW), Sredna Vucha (120 MW) and
Gorna
Arda (160MW) as well other power plants along Vurbitsa, Krumovitsa and other rivers that
so far have
never been destructive, but have not been studied as energy sources either.
rehabilitation of electricity carrier and distribution network.
The problem of Belene power plant and development of nuclear energy. An extended technical
council of
participants of all prestige Bulgarian institutions has already established that the
completion of the first block
of Belene power plant of 1000 MW capacity is technically and economically feasible. This
was a clear
signal that Bulgaria cannot further develop nuclear power engineering with the existing
power reactors.
The society should drop the old imposed illusion about the low quality of electricity and
reliable safety of Kozloduy
power plant.
All current and future expenses, including those related to the national problem of
disposal of high radioactive
waste, require re-evaluation of the programs of modernization and reconstruction. Provided
that the safety of the
old rectors is improved at good cost, the reactors can remain in operation.
Recoverable energy sources We plan first to build a number of small and medium steam power
plants
and to improve the capacity of the existing plants. In this way, by the time of closing
the next 2000 megawatt
old assemblies, let's say around 2010, the Bulgarian power system shall have new modern
cost saving and
more environment friendly sources of the cheapest electricity. For this purpose we have
already started the
implementation of the National Program of Construction of Small Steam Power Plants funded
by the
EBRD.
To increase the potential of the recoverable sources. Given the known power potential of
15%-19%, the existing recoverable sources (bio-mass, sun, small steam power plants, wind,
geothermal springs) cover less than half percent of the end power consumption. On one
hand, this
discloses the disadvantages of the previous energy policy and its nihilistic attitude
towards these
sources, and on the other - the scale of the work that needs to be done. This priority
shall be
supported by norms and regulations and by market mechanisms through a national program on
recoverable sources in conformity with the EU programs of steady development.
Utility gas supply of natural gas. The average annual consumption of gas in Bulgaria is
around 6
billion cubic meters. The transit traffic is around 7 billion cubic meters. About 30% of
gas
consumption in Bulgaria is burning in power or water heating boilers of very low power
efficiency, the
remaining part is being used as industrial raw material.
The gas supply shall improve the comfort of living, but this is not its sole advantage.
Very important are the
ecological and economic effects that will be the result of replacement of the heating and
cooking electricity and
naphtha, as well as the impact on trade, services and craftsmanship For example, the gas
supply of 500
thousand living places, shall release over 400 MW electricity.
Alongside with the above, Bulgaria shall have to resolve its main problem of
diversification of gas supply and
connection of the Bulgarian gas network to the European network as well as participation
in overseas projects.
The adjustment of energy production and energy consumption to market principles is related
to the
implementation of accelerated privatization in power engineering:
To develop and submit for adoption a new general law on power engineering, and improve the
existing
regulations on power sub-systems;
To improve the methodology of cost effective and organizational style of management of the
transition from
command to market oriented power engineering;
To develop new accounting, contract, and tariff systems which will differentiate the
production and
consumers prices of coal, steam and electric power;
To rehabilitate and restructure the loss making units and companies;
To update the main functions of the state body which will implement the energy program of
the
Government.
To re-evaluate and assets and liabilities of power companies;
To provide for and gradually carry out disintegration and decentralization of heating and
other related
companies;
To provide for and gradually carry out accelerated privatization;
To entirely suspend uranium yield and complete re-cultivation of polluted environment; to
develop and
privatize substitution activities;
To accelerate completion of projects that will provide for the structural changes in the
power balance
(research and design of unstudied river valleys, design and construction of small, medium
and big steam
power plants, energy saving).
The energy independence of Bulgaria is closely related to the national security of
Bulgaria. It cannot be
resolved solely by the selected priorities and restructuring. We need to implement the so
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