Bulgarians Face Economic Struggle


BULGARIANS are experiencing longer lines than most can remember and are simply wondering how they will manage through the winter. Food shortages have grown so severe that rationing for staples such as sugar, cooking oil, and cheese have been introduced for the first time since World War II. ``Since we are not prepared economically or psychologically to raise prices, rationing was the only acceptable solution for the short term,'' Prime Minister Andrei Lukanov explained in a recent interview. Rationing, he says, ``is not viable in the long term as it goes against reforming our system but it brings, temporarily at least, some social justice.''

But the current food problems pale in comparison to the difficulties faced by the Bulgarian industrial sector. According to the Central Bureau of Statistics, some 280 industrial companies report a drop in production. For the country's 10 largest companies, production has fallen more than 40 percent from last year. Only textile, glass, and china manufacturers reported growth.

Soaring inflation

Fewer goods have meant higher prices. Real wages are dropping because of rising inflation, which reached 10.51 percent for the combined months of June, July, and August 1990, according to Chavdar Kantchev, deputy chairman of the Bulgarian Foreign Trade Bank. Inflation is calculated on a basket of 1,700 items, and it is estimated that a less diluted and even higher figure is more accurate.

The decline in industrial production stems largely from a lack of raw materials and spare parts. Bulgaria relies almost entirely on the Soviet Union for raw materials, and endures chronic problems with deliveries.

The disintegration of the East bloc trade organization, the Comecon, has also threatened existing markets. More than 80 percent of Bulgaria's foreign trade in recent years was conducted within Comecon. After the Soviet Union, East Germany was Bulgaria's largest trading partner.

``No matter how much we would like to open the Bulgarian economy and have a more dynamic cooperation with Western partners, our relation with the Soviet Union remains of paramount importance,'' Prime Minister Lukanov said after a recent meeting with Soviet President Mikhail Gorbachev in Moscow.

Oil crisis

Like other Eastern European nations, Bulgaria has been hit hard by the Middle East oil crisis. Lukanov estimates that up to 30 percent of Bulgaria's oil imports had come from Iraq, either directly or indirectly via the Soviet Union. In an official newspaper, Deputy Foreign Minister Filip Ishpekov stated that Bulgaria's decision to join the United Nations' total embargo against Iraq will cost the country $1.4 billion. By the end of 1990, Bulgaria was due to be repaid $600 million of a $1.28 billion loan to Iraq. Other receivables would have been paid with Iraqi oil.

There is no telling how Bulgarian industries will fare in the case of a lengthy oil crisis, especially in light of the recent decision by the Soviet Union that its oil and gasoline will be sold for hard currency at world prices.

Added to the international crisis are the structural inefficiencies of Bulgarian factories. These are hindering any economic turnaround.

Unemployment could rocket to 800,000 by March 1991, says Ognyan Krumov, vice-chairman of the Confederation of Industrial Trade Unions. ``At the moment, you have many firms just keeping workers a few days a week or just simply unoccupied in order not to make them redundant,'' Mr. Krumov explains. Retraining workers to make them competitive in world markets will be difficult. He says 60 percent of the country's factory workers - who themselves make up 80 percent of the country's work force - do not have a high school degree.

Western aid needed

Only massive aid from Western countries toward a complete modernization of the economy offers hope. Bulgaria and Czechoslovakia have now been admitted to the International Monetary Fund (IMF) and the World Bank. Bulgaria received a $350 million credit line.

Part of the IMF funds will have to be used to reschedule Bulgaria's foreign debt, estimated at $10.2 billion by Chavdar Kantchev, deputy president of the country's Foreign Trade Bank. No interest payments have been paid since last March, when the government declared a moratorium on its debt servicing.

``People expect a magic solution,'' says Stoyan Tsvekov, deputy chairman of the Central Statistics Office. ``In the meantime, the economic strain could push this nation over the edge.''

Economic reforms have been slow coming since the country's parliamentary elections last June, in which the Bulgarian Socialist Party, formerly the Communist Party, won 53 percent of the seats. The opposition Union of Democratic Forces has refused to form a coalition government.

You've read  of  free articles. Subscribe to continue.
QR Code to Bulgarians Face Economic Struggle
Read this article in
QR Code to Subscription page
Start your subscription today