Accessibility links

Breaking News

Bulgaria: Opposition Leader To Present Plan For Economic Crisis

Washington, 6 December 1996 (RFE/RL) - The leader of the opposition United Democratic Forces (UDF) group in Bulgaria, Ivan Kostov, says he will present a plan of action to the UDF leadership in Sofia on Monday to deal quickly with Bulgaria's economic and financial crisis and handle its immediate political crisis as well.

Kostov would not reveal details of what he has in mind, but he told reporters in Washington Thursday that as a result of a week of consultations at the International Monetary Fund (IMF), the World Bank and the U.S. Government, he believes "a new national consensus" can be put together to bring about a quick change in the current Bulgarian government cabinet and the board of the Central Bank.

The UDF chairman traveled to Washington to clarify the IMF proposal that Bulgaria adopt a currency board form of Central Bank, which would tie the lev to a fixed exchange rate with a major anchor currency, such as the dollar. The board would limit the supply of lev to an amount equal to the reserve currency held by Bulgaria.

Kostov said that in the IMF meetings, which started off with positions "farther apart," exposed a "lack of understanding" on both sides. The UDF, said Kostov, misunderstood the specifics of the currency board proposal while, he said, the IMF did not understand that the UDF was not unalterably opposed to a currency board.

Kostov said that as a result of the consultations there had been "a certain evolution in our positions" on a currency board, although the opposition group's belief that a currency board could not effectively be implemented by the present government remained strong.

"The cabinet and the board of directors of the national bank, who do not enjoy the credibility of the public, cannot implement a currency board arrangement," he said. The risks would be "very high," Kostov said, because "the latest opinion polls show the government's approval rating to be between 13 percent and 16 percent, with two-thirds of those interviewed saying they are opposed to the current government and the parliamentary majority."

Kostov said it was "correct" to say that he supports the idea of a currency board for Bulgaria, but not one set up by the present government.

The UDF has been demanding that the governing Socialist party (BSP) call early parliamentary elections, which Kostov says he hopes can be held by early spring. But Bulgaria's financial crisis is too serious and deep to wait for an election, Kostov acknowledges, so the plan he will present to the UDF's Supreme Political Body on Monday aims to draw some Socialist parliamentary deputies to join with the UDF in an immediate vote of no-confidence in the cabinet.

Kostov would not discuss how it could be accomplished or even if his aim was to try to remove the entire standing cabinet and central bank board.

A financial analyst in London who has been following the situation in Bulgaria, Andrew Kenningham, senior economist with Merrill Lynch, says he is "confused" by Kostov's comments about seeking a new consensus but wonders if the UDF chairman has already arranged for some Socialist deputies to support his plan. "You have to wonder about his confidence, unless he's already got some deputies lined up," Kenningham told our economic correspondent.

IMF officials declined all comment on the consultations, saying privately that the fund has offered Bulgaria all manner of technical assistance to implement a currency board but that the decision, to be effective, must have very broad political support in the country. Kostov said he was told repeatedly that a "broad consensus" is necessary to "guarantee the stability and sustainability" of a currency board.

The United States has not publicly acknowledged any meetings with Kostov although sources told our correspondent he did have at least one long meeting with a U.S. treasury department official who focuses on international issues.

The IMF mission that left Sofia a few weeks ago underlined that the political issues must be worked out by Bulgarians, but that once necessary public support is clear and there is agreement on a "strong policy package," an arrangement with the IMF by the turn of the year is "a realistic objective."

The IMF had approved a stand-by loan of around $582 million for Bulgaria in July, but Sofia was not able to draw even the second $116.7 million tranche in September because the country's situation had deteriorated so badly.