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Bulgaria Table of Contents

Bulgaria

The Planning System

Prior to 1990, the planning hierarchy in Bulgaria included several levels. The ultimate economic authority was the BCP. The party determined general economic policies, identified economic reforms and their structure, and monitored economic activity. Planning and control were the responsibility of the Council of Ministers, which was roughly equivalent to a Western cabinet. The most important planning committee within the Council of Ministers was the State Planning Committee (SPC). Within the Council of Ministers were specialized economic ministries, such as the Ministry of Finance and the Ministry of Foreign Trade, and various governmental committees and commissions. The composition and authority of the ministries underwent frequent change. In 1986, for example, six ministries with economic powers were eliminated and five cabinet-level "voluntary associations" were formed. The aftermath of these changes, however, showed few new power relationships. In the later Zhivkov years, the prime responsibilities of ministry-level agencies included forecasting development of their industries, assessing development bottlenecks, and generally overseeing state development policy. However, the ministries were not to participate actively in planning. That was a function of the associations.

The associations, also known as trusts, were an intermediary organization between the ministries and the lowest level of the planning hierarchy, the enterprise. The association integrated production, research and development, design, construction, and foreign trade functions. Unlike associations in the Soviet Union, which were merely an intermediary link in the chain of economic command, Bulgarian associations retained several essential decision-making prerogatives and were in direct contact with centers of economic power such as the SPC, the Ministry of Finance, and the Bulgarian National Bank (BNB). At the bottom of the economic hierarchy, enterprises were distinct economic entities that operated under an independent accounting system. They were expected to earn a planned amount of profit, a portion of which went to the state as a profits tax.

In the Bulgarian command economy, almost all economic activity was directed toward plan fulfillment. Economic directives were outlined extensively in the plans, which were not merely guidelines but binding, legal documents. The best known of these was the FiveYear Plan, although planning was done for longer and shorter periods as well. Most important for the day-to-day operations of enterprises were the annual and monthly plans.

One of the most important tasks of central planning was what was referred to as material balances--planning for correspondence between supply and demand of goods. At the draft plan stage, this required that supply (planned output, available stocks, and planned imports) equal demand (domestic demand and exports) for every industry. When demand exceeded supply, planners could increase planned output, increase imports, or reduce domestic demand. The SPC usually favored the last alternative. This manipulation limited the flow of inputs to low-priority industrial branches, which most often made consumer items, resulting in shortages of those goods.

The party began the planning process by providing priorities and output targets for critical commodities to the SPC, which reconciled them with required inputs. A draft plan then was created by a process of negotiation and information exchange up and down the planning hierarchy. After negotiating with the SPC on targets and resources and formulating specific guidelines, the associations then negotiated with their individual enterprises to establish final figures. The output targets then went back to the SPC for a final negotiation with the associations.

The final version of the plan was submitted to the Council of Ministers for approval or modification, after which the approved targets were sent down the hierarchy to the individual firms. Thus enterprises were informed of their binding norms for a planning period, including volume and mix of output, procurement limits, level of state investment, foreign currency earnings, foreign currency limits for imports, and wage rates. An important element of the plan fulfillment stage was manipulation of resources by ministries and the SPC to ensure fulfillment of priority targets and minimize bottlenecks. Occasionally, reforms allowed enterprises rather than higher echelons to make many of these decisions. For most of the communist era, however, this was not the case.

Data as of June 1992


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