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Bulgaria: President Warns of Economic Disaster; IMF Loan Delayed

  • Robert Lyle



Sofia, 9 September 1996 (RFE/RL) -- The economic situation in Bulgaria is so dire that it risks becoming a disaster of tragic proportions, says President Zhelyu Zhelev

Zhelev, speaking on Bulgarian television last weekend, blamed the ruling ex-communists for the problem. He called on Prime Minister Zhan Videnov to explain the bread shortage and why wages and pensions are so low that people cannot pay for electricity or heating.

Zhelev, a former anti-communist opposition leader, said the situation is so bad that leaders can no longer afford to be diplomatic about it. He said that if people begin dying from hunger and cold this winter, the country's government should be taken before the courts.

Bulgaria's economic situation has seriously deteriorated this year. Inflation has skyrocketed; the national currency, the lev, has plunged in value; and central bank reserves have fallen sharply. Electricity and heating costs have doubled.

Meanwhile, sources at the International Monetary Fund (IMF) say that the seriously ailing Bulgarian banking system has kept Sofia from passing an IMF review, preventing Bulgaria from drawing the second traunch of its stand-by loan.

An IMF review mission was in Sofia the last two weeks of August and team leader Anne McGuirk told reporters in the Bulgarian capital that the IMF was concerned over the deteriorating lev, the country's banking system and the slow pace of privatization.

An IMF spokesman would not discuss the review mission's report, but acknowledged that without a successful review, Bulgaria is not eligible to apply for the second drawing of around $116.7 million.

The fund approved an unusually long 20-month stand-by loan for Bulgaria in July which totaled about $582 million to support Sofia's 1996-1997 reform and stabilization program. As a reward for strong reform measures already implemented, the fund allowed Bulgaria to draw up to 40 percent of the credit in the first two months of operations.

The first drawing of $116.7 million was disbursed when the loan was signed in late July, but the release of the second $116.7 million traunch required a positive review, which IMF sources say was not given.

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