Spectre of beggary looms over Bulgaria
As the lev sinks, people are desperate to convert savings into dollars, marks, or table lamps, writes Tony Barber
Saturday 01 February 1997
Bulgaria is languishing in its worst economic crisis since its Communist edifice began to crack in 1989. President Petar Stoyanov, newly installed in office, told European Union leaders last Wednesday that Bulgaria was in danger of defaulting on its $10bn (pounds 6.25bn) foreign debt.
The Bulgarian National Bank admitted last week it lacked the resources to control the crisis. "The BNB alone will not be able to contain further depreciation of the currency, galloping inflation and deepening destabilisation of the financial system," a statement said.
There is almost no money left for importing fuel and grain. The International Monetary Fund is withholding a $115m credit because it says Bulgaria's Socialist (ex-Communist) government has failed to introduce meaningful economic reforms.
Actually, it is hard to say whether Bulgaria has a government or not. Zhan Zidenov, Prime Minister since 1994, was forced out of office last December after Mr Stoyanov scored a decisive presidential election victory over one of Mr Zidenov's Socialist colleagues.
Then mass street protests broke out against the Socialists in early January as students, workers and opposition politicians demanded fresh parliamentary elections. Thousands of miners and public-sector workers were on strike yesterday, and demonstrators closed the main road to the border with Greece for the third day.
Since the Socialists are still the largest party in parliament, Mr Stoyanov asked the Socialist Interior Minister, Nikolai Dobrev, to form a government. However, sensing the depth of public hostility to his party, Mr Dobrev has been in no hurry to carry out his task. He mused yesterday that the best solution might be a coalition government that included the anti-Socialist opposition.
Meanwhile, the crisis gathers pace. Monthly inflation in January is thought to have hit 50 per cent. Annual inflation in 1997 is predicted to reach 3,600 per cent.
The lev, which stood at 70 to the dollar one year ago and 495 at the start of this year, was quoted on Bulgaria's interbank market yesterday at 1,730 to 1,900. Its collapse has gutted thousands of people's savings.
Long queues have formed outside banks in Sofia as people withdraw their deposits. They hope to convert them into dollars or German marks before all is lost. So worthless is the lev that some Bulgarians are investing their money in cheap electrical appliances. A table lamp may hold its value better than a wad of leva.
Mr Stoyanov, visiting Brussels this week, said the Socialists bore much of the blame. However, he pointed out that Bulgaria had suffered from the international sanctions imposed on Iraq and former Yugoslavia, which used to be two of Bulgaria's closest trading partners.
"I will be unfair to my fellow-countrymen if I pass over in silence their justified disappoint- ment, when the sacrifice Bulgaria made in the years of sanctions against former Yugoslavia remained on the sidelines of world attention," he said. He estimated Bulgaria's total losses from the sanctions at $6.5bn.
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