Economic
Program
The Economic Program launched its first
privatization project in 1991. In the years that followed, the
scope of research and advocacy activities was gradually extended to
include all major aspects of the economic reforms taking place in
Bulgaria. Today, CSD enjoys the reputation of an independent
institution which provides reliable professional analyses of
economic reform issues.
1991-1994 Program Highlights
- Held two international conferences on the problems
of privatization and private sector development with the
participation of prominent foreign experts from the US, UK,
Germany, France, the Czech Republic, Poland and senior Bulgarian
government officials;
- Published the Privatization and Foreign Investment
Monitor - a bi-weekly digest of the Bulgarian media reviewing the
privatization and economic reform processes;
- Published four policy recommendation papers
containing analyses, evaluations and suggestions for amendments to
existing legislation in the field of privatization, foreign
investment and debt conversion;
- Held 19 policy-oriented seminars and discussions
on municipal privatization, investment funds, mass privatization,
foreign investment, debt management and the efficiency of
consulting firms;
- Published three brochures on privatization in
Bulgaria and other Central and East European countries;
- Published 23 Reform Round Table papers exploring
some of the most pressing issues of the economic reform in
Bulgaria: tax reform, inflation and pricing policy, agrarian
reform, social security and the labor market.
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- I. Privatization
and Private Sector Development in Bulgaria
-
- Research
- Dissemination,
Education and Promotion
- Media Coverage
of the Project Activities
- II. Privatization
on a Dual Track: Mass and Market Based Privatization in
Bulgaria
-
- Expert
Training
- Institutional
Contacts and Networking
- Privatization
and Foreign Investment Monitor
- Media Coverage
of the Project Activities
- III. Debt
Conversion Program: Guidelines for Bulgaria
- IV. Southern Tier
Business Association Training Program
Program activities were facilitated by the
cumulative effects of the work carried out in the prior four years
- the acquired experience, the network of established contacts, and
CSD's position as an institution committed to promoting economic
reforms and privatization. This allowed CSD to continue placing a
strong emphasis on result oriented initiatives. In 1995, the work
of the Economic Program was concentrated on the following key
issues of economic reform:
- Privatization and Private Sector Development in
Bulgaria;
- Privatization on a Dual Track: Mass and
Market-Based Privatization in Bulgaria;
- Debt Conversion Program: Guidelines for
Bulgaria;
- Southern Tier Business Association Training
Program.
-
I. Privatization and Private Sector Development in
Bulgaria
In 1995, CSD was able to keep the privatization
debate alive and continued to assist the policy-making process. The
project aimed at achieving three main objectives, namely to:
- Assist the enacting of specific legislative
actions and pilot privatization projects in order to accelerate
privatization;
- Enhance the understanding and support for
privatization and private business development among policy-makers,
the business community and the general public;
- Address the lack of information on privatization
available to the public and to policy-makers.
The results of the project were presented in a
policy paper which set forth a number of recommendations to
policy-makers concerning the techniques of mass and market-based
privatization, municipal privatization, post-privatization control
of enterprises and debt-for-equity swap mechanisms.
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Research
National Representative Public Opinion
Survey
Conducted in March 1995, the survey's main
objectives were to measure public attitudes towards different forms
of privatization, the population's readiness to participate in the
mass privatization program, and to reinforce CSD's watchdog role.
It allowed CSD to track the evolution of public attitudes towards
privatization, comparing results with the data collected during
earlier surveys. The survey data were also an important basis for
the development of the project policy recommendations. The data
were provided both to the media and to the Center for Mass
Privatization, thus assisting the government in improving its
program and contributing to public education on these issues.
Study of Post-Privatization Behavior of
Enterprises: Second Phase
This study was included in the project because mass
media and the state authorities had no information about the
behavior of enterprises after the conclusion of privatization
transactions. The political and administrative debates typically
focus on the conditions of the transactions rather than on the
results of privatization transactions, or the behavior of
privatized enterprises in the difficult macroeconomic
environment.
The study provided information with respect to the
financial performance of privatized enterprises. The collected data
clearly indicated a speedy recovery and restructuring of the
enterprises, expansion of their activity following privatization,
positive effects of privatization on employment and labor
organization. The principal conclusions of the survey analysis
revealed a remarkably good financial condition and flexible market
behavior of the privatized enterprises.
The recommendations formulated on the basis of the
study included the institutionalization and regulation of
post-privatization monitoring, and the exercise of closer control
over commitments to privatization contracts. As a result, the
Privatization Agency undertook several studies finding that some of
the buyers were not entirely fulfilling their obligations. The
final paper on post-privatization behavior of enterprises was also
presented at the Annual Meeting of the OECD Advisory Group on
Privatization in March 1995.
Private Sector Research
The objective of this research was to outline the
main tendencies in private sector development at the outset of the
reforms and during the transition to a market economy, and to
provide the rationale for some basic policy recommendations in this
field.
CSD carried out its analysis of some 450,000
officially registered private sector enterprises and created a
comprehensive body of information on the Bulgarian private sector.
The analysis included the structure and size of the private sector
by branches, legal status and regional distribution. It also
focused on the regulatory and legislative framework of private
sector development and analyzed its efficiency. The research
results were incorporated into a widely distributed report.
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Dissemination, Education and Promotion
Mass Privatization Seminar
The seminar was held on March 28. It was attended by
experts from the Council of Ministers, the branch ministries, the
Privatization Agency and independent consultants. Discussions
centered around the government's mass privatization program
presented by the experts from the Center for Mass Privatization as
well as the conditions for participation in this process, both of
investment funds and of the general public.
The discussion conclusions were summarized and
provided, together with recommendations concerning the initial
stage of mass privatization, to the Parliamentary Economic
Committee and the Subcommittee on Privatization, to the Center for
Mass Privatization at the Council of Ministers, and the Ministry of
Economic Development.
Media Coverage of the Project Activities
As CSD deems encouraging public debate a key aspect
of its research and advocacy activities, careful consideration was
given to publicizing the results of the project. The various
project activities received wide coverage in a total of 51
newspaper articles and 13 broadcasts on radio and television. This
prompted broad public discussion, and contributed to general public
education on privatization issues. A number of privatization
success stories were also published and widely advertised, helping
to generate public support for the process.
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II. Privatization on a Dual Track: Mass and Market
Based Privatization in Bulgaria
Independent research, analysis, and public
discussion are essential to ensuring that mass privatization is
conducted effectively, transparently and competitively. At the same
time, it is essential that independent institutions like CSD
continue their research and advocacy work for market-based
privatization - a form of privatization that should be intensified
at the same time as the mass privatization plan is implemented.
Taking this into consideration, CSD determined the
main objective of this project: to assist the efforts of government
institutions in the preparation and implementation of mass
privatization and to assist the acceleration of market
privatization.
In 1995, the research team's interest continued to
focus on the issues of municipal privatization with the goal of
replicating the positive results accomplished in the joint project
with the Bansko municipality concluded in the previous year. An
important practical achievement of the project was the assistance
provided to the Dobrich municipality. CSD experts participated in a
town hall meeting, and provided comments on procedures associated
with the different stages of the mass privatization process. The
experts also provided know-how to local government officials and
the local business community on the establishment of a regional
privatization fund.
A series of sociological surveys on mass
privatization and economic reforms, carried out within the
framework of the project, allowed CSD to accumulate crucial data
for both research and monitoring purposes. The results of the
surveys were also used to raise public support for privatization,
as well as to heighten public awareness in general.
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Expert Training
Post Privatization Management of Investment Funds
I
The first course took place in Prague on August 18
through September 4. It was attended by 20 participants. The
pending start of mass privatization and the lack of qualified
experts to work in investment funds preconditioned the organization
of this training program. The idea for a similar course was first
proposed by the Privatization Project of the Central European
University, whose representatives contacted CSD in view of its
long-standing experience in research and education in matters of
privatization. The training course participants included
representatives of investments funds, commercial banks, consulting
companies and the Privatization Agency.
Post Privatization Management of Investment Funds
II
This follow-up course took place in Velingrad,
Bulgaria on November 26 through December 7. The program focused on
the following issues:
- Investment fund regulations in Bulgaria;
- Company analysis;
- Industry analysis;
- Financial instruments and markets;
- Portfolio design;
- Workshops with Czech investment funds;
- Corporate governance.
The feedback received from the participants
indicated a high degree of evaluation for the organization and the
content of the courses.
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Institutional Contacts and Networking
Workshop on the Legal Framework of Mass
Privatization in Bulgaria
The purpose of this workshop, held on October 3, was
to analyze some problematic aspects, deficiencies and
inconsistencies in the legal framework of mass privatization, and
to recommend options and solutions for its improvement. The
workshop was attended by experts from the Center for Mass
Privatization, Council of Ministers advisors, and experts from the
branch ministries. Some consultancies, investment funds and
companies, researchers and journalists showed interest in the
workshop discussions.
As a result of the workshop, a document entitled
Mass Privatization Starts Amidst Apprehension was developed. It set
out recommendations for amendments to the legal framework of mass
privatization regarding the issuing of shares by privatization
funds and the prospective development alternatives for
privatization funds. The document was presented to the
Parliamentary Economic Committee, the Center for Mass
Privatization, the Ministry of Economic Development and the
Privatization Agency. The key impact of this part of the project
was that its recommendations were incorporated in the final version
of the Privatization Funds Act adopted by the National Assembly in
December 1995.
Privatization and Foreign Investment
Monitor
In July 1995, CSD renewed the regular publication of
the Monitor of Privatization and Foreign Investment. Its
distribution was broadened in comparison with the previous years.
This allowed the project to provide a watchdog or oversight
mechanism to maintain the public awareness of how the privatization
process is proceeding, and to let officials know that an
independent think tank was tracking their performance and
encouraging improvements.
Media Coverage of the Project Activities
The media coverage was designed to reach two major
groups: policy-makers, experts, and the business community, on the
one hand, and the general public, on the other. With the purpose of
reaching the first group, a number of articles on the legal
framework and procedures of mass privatization, foreign debt
conversion, and other professional topics were published in
selected newspapers. Another set of articles of a more general
nature were published in newspapers with wide circulation ensuring
coverage of about 50-70% of the country's population aged 18 years
and over.
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III. Debt Conversion Program: Guidelines for
Bulgaria
The project was coordinated by Dr. Mariana Todorova,
a leading Bulgarian economic expert, currently with the Economic
Development Institute of the World Bank. The main objective of the
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 by combining the existing legal
framework for privatization with the new regulatory framework,
institutional and swap mechanisms. This project started in 1994,
and its activities continued into 1995.
Dr. Francisco Garcйs, former Chief Administrator
of the External Debt Conversion Commission of Chile, consulted the
CSD's Debt Conversion project headed by Dr. Mariana
Todorova.
Recommendations to the Ministry of Economic
Development on Debt Conversion Related Issues
Drawn up on the basis of in-depth critical analysis
of the experience of government institutions in charge of debt
conversion, this paper provided valuable suggestions and
recommendations supported by concrete arguments. The
recommendations were approved by Mr. Entzislav Harmandjiev, Deputy
Minister of Economic Development.
Assistance to the Ministry of Economic
Development and the Foreign Investment Agency
CSD provided assistance to the Ministry of Economic
Development and the Foreign Investment Agency in the preparation of
an information package on the terms and conditions for the use of
Bulgarian Brady bonds in privatization. The material was among the
official documents presented by the Bulgarian delegation at the
Annual Meeting of the EBRD on April 8-11, in London.
Workshop on Privatization and Debt Conversion in
Bulgaria
Representatives of commercial banks, the Bulgarian
National Bank, the Privatization Agency, USAID, the Ministry of
Finance, Members of Parliament, independent analysts and experts
participated in this event held on April 25. The workshop was the
concluding public presentation of the results of the project. The
economic team of CSD presented for open discussion the main results
and findings of several months of research. The exchange of views
and opinions among the participants was extremely helpful for the
project team in drafting the policy recommendations and the final
study on debt conversion in Bulgaria.
Preparation and Dissemination of the Final
Study
The final study of the debt conversion project
incorporated the results of the comprehensive efforts of
researchers. Its main objective was to propose a fully-fledged debt
conversion strategy, envisaged as an integral part of the overall
national privatization program. It provided a thorough assessment
of the Bulgarian debt-for-equity swap model as well as a detailed
analysis of the regulatory framework and institutional arrangements
for debt conversion.
The final document was presented to government
agencies involved in the management of Bulgaria's external debt and
the process of privatization. It was sent out to over 100
correspondent institutes of the International Center for Economic
Growth around the world.
An occasional paper on Bulgarian Privatization and
the Use of Brady Bonds was prepared by Sophia Kassidova and Iliya
Avramov, Research Fellows at CSD. The paper analyzes the experience
in privatization deals where Bulgarian Brady bonds are employed as
a payment instrument. It also contains a detailed analysis of the
dynamics of the price of Bulgarian Brady bonds.
IV. Southern Tier Business Association Training
Program
The training course was held on May 21-27, 1995 in
Bistritza, Bulgaria, by the Center for International Private
Enterprise (CIPE), Washington, DC, with the assistance of CSD.
Representatives of business associations and chambers of commerce
from five countries of south eastern Europe - Albania, Bulgaria,
Croatia, Macedonia and Romania - in which CIPE has projects,
participated in the training course. The lectures were presented by
experienced American experts and consultants with knowledge on the
incorporation and functioning of business associations.
During the course of the program, the trainees
attended lectures and participated in practical exercises on
subjects such as strategic planning and programs of work,
membership development, sources of non-dues income, public policy
advocacy and government relations, communication techniques, the
role of business associations in a democratic society, and small
business development.
The participants pointed out that they considered it
particularly important that such a course was organized for
representatives of the countries in the region since market
institutions, including business associations in south eastern
Europe, were less developed by comparison with those in central
Europe.
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