|Privatization and Private Sector Development
I. Privatization and Private
Sector Development in Bulgaria
This project achieved several important practical results
in 1994. CSD enlisted the support of a number of key figures in privatization
as contributors, discussion participants and recipients of the project
results. These included the Deputy Prime Minister, heads of departments
at the Privatization Agency, the Chairman of the Supervisory Board of
the Privatization Agency, heads of privatization departments of the branch
ministries, Members of Parliament from all parliamentary groups, the Head
of the Privatization Commission at the National Assembly, and privatization
advisors at the Council of Ministers.
Research activities of the project enabled CSD to be a
major participant in the discussion of privatization and economic reform
issues through the elaboration and promotion of proactive standpoints.
Thus, CSD emerged as one of the principal independent institutions in
Bulgaria professionally engaged in privatization studies.
In addition, CSD maintained close contacts with different
news media and succeeded in obtaining wide coverage of the project activities,
thereby encouraging broad public discussion of privatization issues.
These results were made possible through a wide variety
Institutional Contacts and Networking
The Economic Program provided opportunities for contacts
and the exchange of views and information between
officials and experts involved in privatization issues. It also provided
practical assistance to the state administration in the privatization
process and to municipal authorities in the implementation of the Privatization
Law. The specific activities through which the Economic
Program achieved this are described in greater detail below.
Municipal Privatization in the Bansko Municipality
The project attained practical results including elaboration
of a Regional Development Program, development of a Municipal Privatization
Program, and conclusion of privatization transactions. The Economic Program
prepared and carried out an opinion poll on privatization and regional
development in Bansko. Finally, the Program prepared the Regulations of
the Private and Investment Fund for the Bansko municipality.
Mass Privatization Seminar
This seminar, held in February 1994, was attended by senior
executives and representatives of key institutions in privatization, including
deputy ministers, advisors at the Council of Ministers, heads of departments
at the Privatization Agency and various ministries, representatives of
investment funds in Bulgaria, and researchers. One of the main topics
of the seminar discussions was the results of a national sample survey
on public attitudes towards mass privatization. Discussions led to the
elaboration of specific recommendations which were forwarded to key decision-makers.
Investment Funds: Economic, Institutional and Legal
The seminar, held in March 1994, was designed to suggest
various means for raising and utilizing municipal financial resources
for advancing privatization and regional development in nine municipalities
in different parts of the country. Another objective of the seminar was
to bring together representatives of the existing investment funds and
provide opportunities for the exchange of experience. Several forms of
interaction between the municipalities and the private investment funds
were suggested, including participation in the flotation of investment
funds, confidential management of financial means, issuance of securities
and guaranteeing the flotation, intermediation in privatization transactions,
real estate transactions, swap operations and futures deals with local
Bad Debts: Nine Months after the Passage of the Settlement
of Non-Performing Loans (Extended up to 31 December 1990) Act Seminar
This seminar brought together representatives of all the
institutions involved in the adoption and implementation of the Privatization
Law, including the National Assembly, the Council of Ministers, the Bulgarian
National Bank, the Ministry of Finance, the Privatization Agency, and
several commercial banks.
The Economic Program, with the support of other CSD programs,
formed several working groups which brought together experts from CSD
and the responsible ministries, and government agencies. The following
documents were prepared as a result of the seminar and working group meetings:
a) Bylaws of the Funds:
- Mutual Fund pursuant to Article 8 of the Law on Transformation
and Privatization of State-Owned and Municipal Enterprises. Adopted by
Council of Ministers Decree No. 68/01.09.1994;
- Investment and Privatization Fund with the Ministry of Agriculture pursuant
to Council of Ministers Decree No. 248/02.11.1994;
- Municipal Privatization Fund - Bansko, approved in principle at a municipal
council meeting on December 20, 1994.
b) Explanatory Notes to the Regulations for Organization
and Operation of the following Funds:
- Mutual Fund
- Investment and Privatization Fund with the Ministry
- Municipal Privatization Fund
The Economic Program conducted the following surveys:
Studies on Post-Privatization Behavior of Enterprises
The survey included six case studies of privatized enterprises.
The main objective was to examine the dynamics of post-privatization behavior
and to provide recommendations to decision-makers.
Public Attitudes towards Mass Privatization (National
Sample Survey, January 1994).
The survey estimated the degree of public acceptance of
the government's mass privatization project and provided analysis and
suggestions to make the project more appealing to Bulgarian citizens and
more relevant to the financial potential of different socioeconomic groups.
Public Attitudes towards Mass Privatization (National
Sample Survey, April 1994).
A block of questions requested by the Center for Mass Privatization
at the Council of Ministers was included in the National Media Omnibus
of CSD. The survey results were based on a representative sample of 1,019
Dissemination of Information
Privatization and Foreign Investment Monitor
This bi-weekly press digest in Bulgarian has been published
by CSD since 1992. In 1994 it was regularly distributed among 350 key
politicians, experts, researchers, members of the Economic, Budget and
Legislative Committees of the National Assembly, cabinet ministers and
members of other government agencies, non-parliamentary political parties,
Bulgarian and foreign consultant firms, embassies, trade unions, associations
and employers' organizations. Since December 1993, the Monitor has also
included a statistical supplement containing information on privatization
and foreign investments for the two weeks under review.
The Economic Program maintained regular contacts with "Plus
Minus", the most popular program on economic issues on Channel One
of the Bulgarian National Television, the Horizont and Hristo Botev national
radio programs, and private radio stations in Sofia, Varna, and Plovdiv.
Contacts were also maintained with the major independent daily newspapers,
such as Standart News, Pari and Kontinent.
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II. Investigating the Efficiency of West European Consulting Firms Working
The second major project of the Economic Program aimed
at providing a qualitative and quantitative evaluation of the efficiency
of western consulting firms advising East European companies. The project
was supported by the European Union and was carried out by research teams
from eight European countries including Hungary, Lithuania, Poland, the
United Kingdom, the Czech Republic, Ireland and Bulgaria.
Project activities included:
- conducting an in-depth survey of eight enterprises that
had used the services of western consulting firms;
- gathering information (via interviews) from 85 enterprises;
- interviewing managers of western consulting firms which
had advised Bulgarian companies;
- organizing a seminar on "Efficiency of West European
Consulting Firms Advising East European Companies". The seminar
took place at CSD on November 9 and 10, 1994. It was chaired by Dr.
Gabor Hovany from the Hungarian Academy of Sciences, Professor Marek
Belka from the Warsaw Institute of Economics and Dr. Daniela Bobeva
- preparing an analytical report and working papers.
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III. Migration - Europe's Integration and the
Labour Force Brain Drain
The third major focus of CSD Economic Program was a two-year
international research project to examine the brain drain from Bulgaria,
with a view of identifying the scientific and economic consequences from
the migration of scientists and experts. This project, supported by the
European Union, involves 15 research teams from eleven Central and East
European countries including Poland, Hungary, Lithuania, Latvia, Estonia,
the Czech Republic, Slovakia, Romania, Slovenia, Albania and Bulgaria.
CSD coordinates the work of the research teams.
To accomplish the first-year project objectives, the Economic
- examined the real migration of Bulgarian scientists
and experts between 1989 and 1995;
- evaluated professional skills and performance, professional
motivation, internal mobility and potential for emigration of Bulgarian
scientists and experts to other countries;
- prepared statistical analyses and over 40 international
comparative tables (for all participating countries) in six blocks,
including comprehensive information on the population, economy;
- unemployment, migration, science (structure, employment,
funding and development);
- developed and coordinated the project research strategy;
- developed and coordinated with the participating countries
the selection of the instruments for gathering empirical information;
- conducted four pilot surveys and organized a focus
group. The pilot surveys included unemployed scientists, scientists
employed in the private sector, real migrants and potential migrants
among undergraduates and graduate students of the Technical University.
The program carried out a total of 127 interviews and organized a focus
group of unemployed scientists;
- prepared statistical analysis including data for Bulgaria
and available data for all of the countries participating in the project;
- organized a working meeting of the international team
in Sofia in December 1994. This meeting was attended by three representatives
from the European Union and 13 coordinators from 10 country teams participating
in the project.
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IV. Reform Round Table
The fourth major focus of the Economic Program was its
participation in the Reform Round Table. Since its beginning in October
1991, the major objective of the Reform Round Table has been to regularly
exchange information among East European countries on the crucial macro-
and microeconomic issues raised by the economic and legal reforms taking
place in these countries. The principal aim of the project is to disseminate
documents to experts, policy-makers and the general public. The topics
for these documents are selected in accordance with the economic priorities
of each country and are reconsidered and adjusted annually on the basis
of the reform measures underway in each country.
The following Reform Round Table papers were prepared
- Ivan Tabakov, The Reform in the Bulgarian Banking System
- Vesselin Passev, Price Reform and Pricing Policy in
the Transition to Market Economy
- Yordan Hristoskov, Unemployment and Labour Market in
- Ivo Kovachev, Privatization in Bulgaria: A Revolution
that Never Happened, an Evolution that is Sweeping Everything Around
- Ivan Angelov, Nature and Main Trends of Development
of the New Agricultural Cooperatives in Bulgaria
- Stefan Ivanov, Financing Private Enterprises in Bulgaria
A collection of papers (in Bulgarian) on tax reform issues
in Latvia, the Czech Republic, Hungary, Romania and Slovenia has also
been prepared. This collection was published in 1995. CSD's main concern
in preparing this publication has been the expected impact it would produce
on policy-making and legislation in the field of tax reform.
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V. Debt Conversion: Guidelines for Bulgaria
Another project of the Economic Program was the preparation
of debt conversion guidelines for Bulgaria. The project was coordinated
by Dr. Mariana Todorova, a leading Bulgarian expert, currently with the
Economic Development Institute of the World Bank. The main objective of
this project was to develop a fully-fledged debt conversion program in
order to assist Bulgarian authorities in devising the arrangements needed
for Debt-Equity Swaps (DES) by combining the existing legal framework
for privatization with the new regulatory framework, institutional and
The main activities carried out within this project
- a preliminary study of the initial conditions and probable
macro- and microeconomic implications resulting from the application
of DES. A paper entitled Debt-Equity
Swaps in the Context of Privatization: The Case of Bulgaria,
prepared by Sophia Kassidova, member of the project team, focused on
these issues and argued that there are opportunities for combining DES
schemes with privatization efforts in Bulgaria;
- a comparative analysis of the major successfully applied
debt conversion models was prepared by the project coordinator, Dr.
Mariana Todorova. The paper outlined the pros and cons of the models
employed by other countries and the relevance of these models to the
- a workshop on Economic Reform and Debt Conversion in
Bulgaria was held at CSD in October 1994. This workshop was the first
official presentation of the project before representatives of relevant
government agencies and the media. The workshop received wide coverage
on radio and TV and in specialized newspapers;
- a visit by Dr. Francisco Garces, Foreign Advisor to
the project, and former Chief Administrator of the External Debt Conversion
Commission in Chile. Dr. Garces visited CSD in October 1994 and met
with legal experts, key government officials from the Bulgarian National
Bank, the Privatization Agency, the Foreign Investment Commission, and
representatives of the International Monetary Fund and the World Bank.
During the discussions, and with the help of Mr. Garces' recommendations,
a consensus was reached on the basic elements of the Bulgarian debt
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VI. Bulgarian-American Economic Cooperation
This one-day forum was held on December 7, 1994. The Forum
brought together 42 representatives of American and Bulgarian institutions
involved in promoting bilateral trade and investment. It was organized
at the initiative of the Bulgarian Ambassador to the United States, Mrs.
Snezhana Botousharova, with support from the Open Society Fund, Sofia.
The objective was two-fold:
- to identify those factors that currently constrain
American investment in Bulgaria and hinder trade expansion; and,
- to define a framework of actions to be undertaken by
the Bulgarian and American institutions to promote expanded bilateral
economic cooperation. Particular attention was paid to the legal framework
of foreign investment in Bulgaria.
The Forum was chaired consecutively by Mrs. Botousharova,
and Mr. William Montgomery, US Ambassador to Bulgaria. It was attended
by the Minister of Foreign Affairs, the Minister and Deputy Ministers
of Trade, Members of Parliament, key government officials, and representatives
of American companies investing in Bulgaria.
The output of the forum was a recommendation paper suggesting
ways to facilitate expansion of bilateral trade and investment. The paper
was presented to the governments of the US and Bulgaria on the occasion
of the US-Bulgarian summit in February 1995.
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VII. International Business Club (IBC)
BC is a joint initiative of CSD and the Ministry of Trade.
It was formally inaugurated on June 17, 1993 by Mr. Valentin Karabashev,
Deputy Prime Minister and Minister of Trade, in the presence of ambassadors,
diplomats and trade envoys to Bulgaria, along with bankers, and managers
of local and international companies. The principal objective of IBC is
to encourage business contacts, popularize business opportunities in Bulgaria,
and promote the development of trade and foreign investment.
IBC organizes regular breakfast meetings to which it invites
prominent figures from the government, financial institutions, and private
businesses as guest speakers.
The guest speakers and topics of IBC meetings in 1994
Mr. Belo Belov, General Manager of Chimimport PLC: "The
Privatization of Chimimport";
Mr. Stanislav Daskalov, Minister of Foreign Affairs of
the Republic of Bulgaria: "Bulgaria's Integration in the International
Dr. Krastyu Mirski, Vice Chairman of the Committee of
Posts and Telecommunications (CPT), and Mr. Antoni Slavinski, Vice President
of the Bulgarian Telecommunications Company (BTC): "The Reform
in Bulgarian Telecommunications";
H.E. Mr. Buheita Fujiwara, Ambassador of Japan to the
Republic of Bulgaria: "Japan-Bulgaria Trade and Economic Relations";
Mr. Alexander Yordanov, Chairman of the National Assembly
of the Republic of Bulgaria:
"Legislative Work of the National Assembly in the
Economic Reform Field";
Mr. Kiril Tsotchev, Deputy Prime Minister and Minister
of Trade: "Bulgaria's Foreign Trade Policy";
Dr. Dimiter Loudjev, Former Deputy Prime Minister and
Minister of Defense: "The Challenges of the Economic Reform in
Mr. Ivan Stancioff, Minister of Foreign Affairs of the
Republic of Bulgaria: "Foreign Policy and the Economic Development