Whatever the pace of the Bulgarian economic transition, 1991 promised substantial dislocation before an upturn could be expected. In 1990 industrial production had fallen by 10.7 percent. Prime Minister Popov warned that as much as 25 percent of the population would require social assistance in 1991, an increase from the 20 percent of 1990. Although the Popov government launched a consensus economic reform plan, pending national elections in mid-1991 it remained only a caretaker government. Popov's commitment to tough financial measures and the political calm that prevailed during the crisis period encouraged foreign financial assistance. IMF loan requirements included liberalizing foreign trade policy, lifting price and currency controls, compensating for social dislocation that resulted from reforms, maintaining a low national budget deficit, eliminating centralized production and resource allocation, initiating privatization of small firms, and deemphasizing trade with Comecon countries.
In January 1991, the United States extended most-favored-nation status to Bulgaria; the United States Congress approved the move in April. The recently chartered EBRD committed between 100 and 120 million European currency units (ECUs--see Glossary) to Bulgaria in 1991 and 1992. Most of the money was to go through the PHARE program. Of that amount, 40 percent was earmarked for restructuring the economy, 25 percent for agriculture, 20 percent for health care, and 10 percent for the environment. In March 1991, the IMF approved US$500 million in loans, and the EEC added a loan of US$377 million. A request to reschedule part of Bulgaria's international debt was denied in early 1991, however. Western aid was conditioned on visible evidence that the government remained in control of its reform program. The immediate goal of the reform program was to reduce inflationary pressure by removing the surplus money supply that had been caused by shortages. Prices would remain subject to the Regulations on the Control of Prices issued in February 1991, to limit price fluctuations and prevent monopolies from gaining huge profits. Meanwhile, privatization remained a potential political quagmire because, unlike many of the measures in the first phase, differences in approach and timing remained substantial among major political factions. The National Assembly still included many politicians from the Zhivkov years who would lose their power base if reform went too far. For that reason, the National Assembly delayed deliberation on several vital economic bills in 1991. For the same reason, many remaining Zhivkovite industrial managers opposed application of reforms to their enterprises. Advocates of reform hoped that the 1991 parliamentary elections would redistribute legislative power, enabling reform to continue and shortening the traumatic transitional period.
* * *
Several English-language monographs provide useful information on the Bulgarian economy. Unquestionably, the most comprehensive is John R. Lampe's The Bulgarian Economy in the Twentieth Century, which covers economic structure, development, and performance and provides abundant statistics. Although somewhat dated and less inclusive, Growth and Reforms in Centrally Planned Economies by George R. Feiwel covers the same general field. Robert J. McIntyre's Bulgaria: Politics, Economics, and Society devotes a chapter to postwar economic development through the 1980s, and John D. Bell's The Bulgarian Communist Party from Blagoev to Zhivkov analyzes the theory and practice of Bulgarian economic planning from 1947 through 1985. The Statistical Yearbook of the People's Republic of Bulgaria (the English-language version of which is an abridgement of the Bulgarian state publication) provides comprehensive economic data. Periodicals such as the Radio Free Europe/Radio Liberty Report on Eastern Europe and Business Eastern Europe cover current economic issues. (For further information and complete citations, see Bibliography.)ch. 3
Data as of June 1992