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Bulgaria: The First 100 Days Of The Kostov Government

Sofia, 1 September 1997 (RFE/RL) -- The democratic government of Bulgaria marks its first 100 days in office today amidst encouraging signs of economic stabilization. But experts say there is room for much improvement in living conditions for the people of the impoverished nation.

The cabinet of Ivan Kostov, leader of the Union of Democratic Forces, replaced the interim government of Sofia Major Stefan Sofianski after the then-opposition won a strong victory in early elections April 19. But to ensure continuity, some ministers, including those of the Interior Ministry and the Economics Ministry, remained in the new government.

Bulgaria suffered accelerated economic decline at the beginning of this year, with the country on the verge of hyper-inflation and a Gross Domestic Product that plummeted 12 percent in the first three months of the year. Since then, prices and the foreign exchange-rate have stabilized and there has been an improvement in real wages.

Under an agreement with the International Monetary Fund (IMF), Bulgaria implemented a currency board on July 1 that fixed exchange rate of the Bulgarian lev to the German Mark. The currency board also prohibits the National Bank from financing the budget deficit. Meanwhile, Kostov's government announced plans for rapid, large-scale privatization backed by changes in the laws on privatization and foreign investment.

Some major industrial properties have been put on sale. Authorities say they expect the privatization of the state telecommunications company and one of the national television to be completed by early 1998.

The World Bank's August report notes progress toward financial stabilization and an improved investment climate. But the report also says that several economic sectors, including retail trade, have failed to show signs of recovery.

At the end of July, foreign exchange reserves were estimated at $1.3 billlion and the country was able to meet payments on its foreign debt.

At the same time, prices of some consumer goods -- especially food prices -- showed a trend to grow, despite falling inflation in the economy generally. On a couple of occasions, the government was forced to drop import tariffs to slow increases in the prices of milk and milk products, meat and eggs.

Public opinion polls conducted in August suggest the government's policy continues to enjoy wide support. Analysts say the government's effort to crack down on organized crime is one of the reasons for this support.

In an interview with Reuter last week, the Deputy Prime Minister responsible for Industry, Alexander Bozhkov, said Kostov's cabinet is encountering "resistance from the state administration" as it attempts to speed privatization. Bozhkov said the managers of state firms are reluntant to lose control. In order to counter this resistance, he said, the government is now drawing up privatization plans to minimize the involvement of state firm managers.

Bozhkov also said the legal system must be revised in order to deal with organized crime. He said that, although amendments to the penal code were passed by parliament in July, it will take time for some of them to become effective.

Interior Minister Bogomil Bonev has launched several high-profile assaults on racketerring groups, as well as corruption among police and customs officials.

The Socialists -- the former Communists -- have criticized Bonev, spreading rumors that a "police state" is being planned. The Socialists have also strongly criticized plans to give Bulgarians the right to examine secret police files kept on them during the totalitarian era.

Kostov's first 100 days were marked by renewed diplomatic efforts to secure a place for Bulgaria in a future wave of NATO enlargement, and to deepen cooperation with -- and actively pursue -- membership in the European Union.

Polls suggest Bulgarians believe their current government is honest and that there is cause for optimism. But observers also say the political and economic future remain uncertain. Inflation for this year is expected to top 1,000 percent, but the government predicts that it will fall to only 12 percent for all of 1998. Rather than an increase in the Gross Domestic Product, the government hopes merely to slow its rapid decline, and unemployment is projected at 25 percent for this year.