UKRAINE, HUNGARY OPEN NATO MISSIONS. Ukraine and Hungary on 8 October became the first non-NATO countries to establish missions accredited to the Western alliance, ITAR-TASS reported. Ukrainian Ambassador Boris Tarasiuk presented his credentials to NATO Secretary-General Javier Solana during a meeting of the alliance council on 8 October. In his presentation speech, Tarasiuk reaffirmed Ukraine's desire for gradual integration into European and EuroAtlantic institutions.
UKRAINIAN PARLIAMENT OVERRIDES KUCHMA VETO ON PENSIONS. The Ukrainian parliament on 8 October voted to override a presidential veto of a law that would increase the minimum pension in that country to 70.9 hryvnas ($38) a month, ITAR-TASS reported. President Leonid Kuchma had vetoed the bill saying the government did not have the funds to pay for the increase and that it would "lead the entire budget process into deadlock."
One hundred days after Bulgaria introduced a currency board as an emergency measure to restore discipline to monetary policy, officials in Sofia are cautiously optimistic about the effects on the country's economy.
There have been major improvements, explaining why, in contrast to the gloom of three months ago, the prevailing view now is that better times are coming. Even the IMF, which maintains a notoriously austere profile, has expressed satisfaction. Assistant executive director Stanley Fisher recently called Bulgaria's financial stabilization "impressive."
Lost confidence in the country's banks is returning, and private and company deposits in bank accounts are growing. And the foreign currency reserve has tripled to almost 3,8 billion German marks.
Moreover, at the end of September, meetings took place in Sofia between representatives of the government and Moody's, one of the leading consulting companies that define the credit rating of securities and countries. Moody's classification of Bulgaria in 1996 was B-3, which is the lowest grade and in effect means "payment first, then delivery." Now, according to the French bank Paribas and the German investment bank Deutsche Morgan Grenfell, there are strong expectations that Moody's will raise Bulgaria's credit rating to B-1, thus listing it ahead of countries like Turkey, Romania, or Ukraine.
The positive developments strengthen perceptions among the public that the Union of Democratic Forces (ODS), which won a decisive victory over the former communists in the April parliamentary elections, is leading the country in the right direction. Yet no one believes the crisis is over. The wounds inflicted by the former Socialist Party government through its long neglect of reforms are too deep for that.
Bulgarians are bracing for the hardships that are still to come in the reform process. Emil Harsev, a prominent financier who opposed the Currency Board before its implementation, told RFE/RL that the crucial period will be this winter. He says the Bulgarian economy runs in cycles: summer is the season of income, winter the season of expenses. If the board endures the hardship of the cold months, its standing as an instrument of policy will be strengthened for the years ahead, he commented.
The Currency Board was introduced on 1 July, amid high inflation and a deepening economic crisis. It essentially took currency matters out of the hands of the Central Bank.
Harsev, a former deputy governor of the National Bank, says inflation under the currency board has not dropped as low as had been hoped. In January, prices had been rising at a level near hyperinflation. After the ODS government took power and the currency board was put in place, inflation was about 3.5 percent in July and 5.5 percent in August, instead of the predicted rate of 2 percent.
Prices of consumer goods continue to rise. One reason for this is that privatization has not yet reached the big state monopolies in power supply. Those monopolies deal with the imports of oil, natural gas, and coal; they also own refineries and electrical plants and distribute the products. The result is a "supplier's market" that pushes up inflation.
But Martin Zaimov, the head of the currency board, argues that there is nothing to worry about. Zaimov, who is also vice president of the National Bank, said inflation is and will remain under control. He predicted that the inflation rate will soon fall significantly.
The World Bank apparently shares his optimism. Kenneth Lay, the head of the bank's South-East Europe department, arrived in Sofia at the end of September. His arrival followed the decision, reported at the Hong Kong meetings of the IMF and World Bank, to open negotiations with Bulgaria for a considerable loan.