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Bulgarian Banks Falling; IMF Proposes Special Courts

By Maxim Behar

Sofia, May 23 (RFE/RL) - Bulgaria's President Zhelyu Zhelev charges that his country's economy is on the verge of collapse, and that the ruling socialists are to blame.

This surprising outburst for a country's president came in an interview yesterday published in the mass-circulation daily 24 Tchassa (24 hours) in reponse to financial turmoil. The country's currency has plunged in value and two banks have declared bankruptcy. Zhelev says that the government run by the ex-communist, now-socialist supporters of Premier Zhan Videnov bears responsibility for delaying needed reforms for a year. Zhelev said: "Something even worse has become apparent. They (the socialists) cannot govern at all."

The two banks' official declaration last week of bankruptcy created a market panic. First, the nation's largest private bank closed. And two representatives of the National Bank replaced its managing board. Then, the state-owned Mineralbank followed. It had been regarded as one of the most reliable in Bulgaria.

In recent months, three other banks had already shut down. Two of these - Crystalbank and Private Agricultural & Investment Bank - are suing the government and their bankruptcy procedures are suspended.

The head of International Monetary Fund Bulgarian Mission, Anne McGuirk, has been in Bulgaria for more then two weeks pressing for hard reforms. She issued a statement, saying what she called "credit millionaires" must be sued as soon as possible, because they are the main reason for the bank crises. She said that thousand of companies in Bulgaria borrowed sums of money, and then went bankrupt or disappeared. She said that both bankers and creditors should be sued in special courts.

The government recently announced plans to close scores of heavily-indebted state-run companies and troubled banks.

The Bulgarian currency, the lev, has been dropping in value. It reached 124 to the dollar yesterday, from 70 to the dollar in January. The government last week set the basic annual interest rate at 108 percent, the highest in Bulgaria ever.

National Bank Governor Ljubomir Filipov says he cannot predict what will happen. As he put it, "All now depends on an agreement with the IMF" that would provide "about a billion of dollars" in aid for Bulgaria. Vice Premier Roumen Getchev, who is responsible for economic reform, said he is optimistic an IMF agreement will be signed next month.

A week ago in a Sofia restaurant, McGuirk's return ticket to Washington, along with her purse, passport, credit cards, and several hundred dollars, were stolen. A quip is circulating among Sofia bankers that her stolen purse will be returned only if she accedes to a favorable agreement between the IMF and the government.

Another development exacerbating economic conditions has been an influx of counterfeit currencies. Central Bank officials said Tuesday that counterfied U.S. dollars and German marks are flooding Bulgarian currency markets.