[Source: BTA]

"... financial gratitude for Bulgarian support for NATO against Yugoslavia will not come soon..."

BULGARIA-IMF-WORLD BANK
Annual Meeting of IMF-World Bank Brings Only Disillusion,
a feature article for the BTA economic weekly bulletin "Bulgarian Economic Outlook" by Anna Moudeva

The Bulgarian delegation went to the annual meeting of the IMF and the World Bank in Washington with great expectations but instead of returning with a full basket, it came home empty-handed. The Bulgarian delegation learnt that it shall have to wait for the promised funding for health care reform, that no specific actions are being undertaken under the Stability Pact for Southeastern Europe, and the unexpected focus of the meeting was on the call for remission of the debts of the poorest countries.

The hit at the Washington meeting, Deputy Prime Minister Alexander Bozhkov said upon the return of the delegation, was the idea of the World Bank and President Bill Clinton to remit the debts of the poorest countries. "The eyes of Financial Minister Mouravei Radev were watching angrily and I saw no desire in him to perform such activities", Mr. Bozhkov said. Over fifty percent of Bulgaria's loans are exactly from such countries, namely Mozambique, Nicaragua, Angola, Ethiopia, and others. Radev has repeatedly said in the past that Bulgaria will claim 100% of its lending. One idea, would be for the rich countries to compensate Bulgaria for the loans it forgives, Deputy Financial Minister Plamen Oresharski said. Bulgaria cannot afford to forgive any loans, Mr. Radev and Mr. Bozhkov pointed out.

To defend this position the former stressed that this country is still receiving funding to get a handle on its balance of payments, and the latter said that the losses incurred from the Kosovo crisis exceed $300-400 million USD.

As regards the latest issue the next disillusionment surfaced. Once again the Bulgarian statesmen were essentially told that financial gratitude for Bulgarian support for NATO against Yugoslavia will not come soon. The Balkan countries are not satisfied with the Stability Pact. There are no specific activities forthcoming, Mr. Bozhkov and Mr. Radev said. In fact, in Washington for yet another time the USA and Europe passed the responsibility from one to the other. The US said they had paid for the costs of the war, and that Europe should pay for the reconstruction. Europe, on the other hand, advised the Balkans to help themselves, to improve their investment climate and to attract private
investments for themselves. "Many technical issues surfaced.

For example, one of them is the question how the legislation of the separate countries will combine in the implementation of the separate projects. The Pact has to be institutionalized, which their creators fail to realize", Mr. Bozhkov said. "Specific decisions and activities under the Stability Pact are still being avoided. That is why my Albanian and Macedonian counterparts and I decided to coordinate our priorities and to serve as a coordination center", Radev said. The meeting is planned for November 5 in Sofia. Apart from these problems the Bulgarian delegation failed to convince the World Bank about the health care reform. The Bank's experts think that Bulgaria is not ready to start the reform on January 1, but they at least agreed to extend a loan of over sixty million USD for the health fund. The problem with this loan, however, is that it is planned for fiscal year 2000, which starts July 1, Mr. Bozhkov explained. Otherwise, he also promised that "the reform in all cases will be launched on January 1, next year". Mr. Radev, though, thinks differently. "The budget cannot afford costs concurrently for the health care reform and for the social reform, which is also planned to start on January 1", Mr. Radev said. According to him, for the start of the health fund alone $100 million USD is needed, which exceeds the ability of the state budget. In addition the plans are to reduce taxes as of early 2000, Mr. Radev recalled. All these activities cannot be carried out at the same time, he said. One piece of good news came from the fact that the World Bank and the IMF support Bulgaria in principle about the proposal to the Paris Club for a debt-for-investments swap. Things here are not simple either, though. Even if the Paris Club accepts this scheme, bilateral negotiations have to be held with each member-country of the club to which Bulgaria is indebted. Besides, this country should be ready with specific projects into which the payments for the debt would be diverted, and this would be a lengthy process.

Otherwise the World Bank and the IMF commended Bulgaria in Washington on the achieved stabilization - that's all.

Starting October 4, the next IMF mission, led by Juha Kakhonen, came. The talks will focus on the budget for the year 2000. The chief parameters include 4% GDP growth, 2% inflation, and budget deficit of 1.5% of GDP, the Ministry of Finance said.

However, these are preliminary figures and their final form will depend on the start of the health care reform, Minister Radev said. The draft budget is to be ready by October 14, so as to enter the National Assembly by October 20. No objection of the IMF to the budget parameters has been received in Washington.

But no approval for lowering the taxes was received either. Mr. Kakhonen only said that the social and health care reforms will incur huge costs from the budget and therefore stronger control on revenues was needed.