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                     Key Economic Indicators
     (Billions of 1992 Bulgarian leva unless otherwise noted)

                                  1991      1992      1993  /1

Income, Production,
 and Employment

Real GDP /2/3                        222.5     210.0     205.0
GDP (at current prices) /2/3         131.1     210.0     349.0
Real GDP Growth Rate (pct.) /2       -11.7      -5.6      -2.0
Real GDP by Sector /2/3    
 Industry                             99.3      86.1      80.1
 Agriculture                          23.4      20.2      17.5
 Trade and Services                   98.1      88.6      93.0
Per Capita Income (US$) /2/3/4     1,420     1,330     1,270
Labor Force (000's) /2/3           3,983     3,690     3,397
Unemployment Rate (pct.) /2/3       9.0      15.0      15.5
General Government Balance            -8.4      -6.9      -8.4

Money and Prices:

Broad Money (M1, bil. leva) IMF       24.8      41.1      45.2
Commerc. Int. Rate (pct.) /5/6        56.2      61.1      55.6
Gross Domestic Savings Rate /2/3       2.08      2.1    n/a
Gross Domestic Investment Rate         2.27      2.25   n/a
Consumer Price Index  /2/3          100       182       307
  (Dec. 1991 Equals 100)
Wholesale Price Index               n/a       n/a       n/a
Exchange Rate (year-end)
 Official /7                          21.5      23.0      32.0
 Parallel                             22.5      24.0      33.2

Balance of Trade and Payments 
(million U.S. dollars)  /2/3/5

Total Exports (FOB)                3,740     3,500     3,200
 Exports to U.S.                      99        85        95
Total Imports (FOB)                3,780     3,450     3,800
 Imports from U.S.                    85        79       150
Aid from U.S. (U.S. FY basis)         88        40        46
Aid From Other Countries             724       600       154
  (Including International
  Financial Institutions)
External Public Debt              11,700    12,900    13,700
Annual Debt Service Paid ($ mil.)      4       194        90  /8
Annual Debt Service Scheduled      2,444     2,918     2,211
Gold and FOREX Reserves              683     1,268     1,000


1/  1993 Figures are estimates for end-of-year.
2/  International Financial Institutions Data.
3/  U.S. Embassy Estimate.

(4)  Per capita incomes are calculated at the following     
exchange rates:
     1991 18.0 leva:dollar
     1992 23.0 leva:dollar
     1993 27.1 leva:dollar
(5)  Government of Bulgaria data.
(6)  BNB basic (lombard) refinancing rate (period average).
(7)  Rate depreciated from 23:1 to 29.5:1 from January to
October 1993.
(8)  1993 Figure is for first six months.

1.  General Policy Framework

    Following the fall of the Union of Democratic Forces (UDF)
government led by Filip Dimitrov in October 1992, centrist
economist Lyubin Berov formed a non-party cabinet which, with
some individual changes, governed throughout 1993.  Berov
lacked a stable parliamentary majority, and was forced to
depend on the Bulgarian Socialist Party, heir to the Bulgarian
Communist Party structure, for much of his support.

    The Berov government generally continued the policies of
its predecessor:  restrictive fiscal and monetary policies and
incremental structural reform.  Combined with the collapse of
Bulgaria's COMECON trade (80 percent of the pre-1989 total),
the global recession, and United Nations sanctions, first
against Iraq and later against Serbia, this has resulted in a
prolonged economic downturn, which may have bottomed out in
1993.  Bulgaria's healthy 1992 trade surplus shrank
dramatically in 1993.

    The Central Bank (BNB) sought to bring inflation down from
a 6.9-percent to a 3.0-percent monthly rate by year-end 1993,
using a normal range of policy instruments.  Inflation
continued to ease gradually, falling from an official rate of
79.5 percent for 1992 to a projected 65 to 70 percent for
1993.  After gradually reducing interest rates during the year,
the BNB sharply increased them in November to help stabilize
the depreciation of the lev, which had come under severe
speculative pressure.  Despite stagnation in the standard of
living over 1993, exports of U.S. consumer goods have risen
given the relative weakness of the dollar versus European
convertible currencies.

    During 1993, the government struggled with a growing budget
deficit, reportedly approaching 10 percent of GDP late in the
year.  The ballooning deficit resulted from a sharp decline in
revenues, especially receipts from the shrinking profits of
state-owned industrial enterprises, and higher state-sector
salaries.  It financed the deficit through a combination of
Central Bank borrowing and Treasury Bill sales.  In June,
Bulgaria again halted service of current interest due on its
$10 billion defaulted foreign-commercial (London Club) debt. 
In November Bulgaria agreed on a Brady-Plan-type rescheduling
of its debt.  On November 24, the Government of Bulgaria and
the Bank Advisory Committee heading the negotiations agreed in
principle to a debt deal.  A term sheet is expected to be
finalized on January 11, 1994.

    Bulgaria rescheduled its 1992 maturities with the Paris
Club (official creditors), but failure to conclude one
bilateral under the 1991 rescheduling and two bilaterals under
the 1992 rescheduling agreement, as well as the need for a
follow-on IMF Standby Agreement blocked talks on 1993
maturities.  Parliament gradually passed elements of a
comprehensive tax reform proposal, including a unitary 18
percent VAT (to be implemented April 1, 1994), to replace an
unwieldy system of turnover taxes.

    The transition to a market-oriented economy continued,
albeit slowly and against political and social resistance. 
Structural reforms necessary to underpin macroeconomic
stabilization were not pursued vigorously.  Restitution of
urban shops and houses put capital into the hands of many
ordinary Bulgarians, helping fuel rapidly growing service and
consumer goods sectors.  However, legal privatization of
state-owned industry moved hardly at all, as did the breakup of
state-organized collective farms.

    Parliament ratified Bulgaria's association agreement with
the European Community (EC), although implementation was
delayed by an internal EC dispute over safeguard provisions. 
An agreement with the European Free Trade Association entered
into force.  A Bilateral Investment Treaty with the United
States was ratified by the U.S. Senate in November, 1993.

2.  Exchange Rate Policies

    From January to November 1993, the lev weakened in nominal
terms (from 26.1 to 31.3 per dollar).  In real terms
(considering inflation), it continued the appreciation which
started in April 1991 after the introduction of shock
stabilization.  The BNB intervened in the currency market to
stabilize the nominal lev depreciation.  In doing so the BNB
significantly increased the country's convertible currency
reserves to more than $1 billion by late 1993.  During 1994,
the lev is forecast to depreciate nominally at about the rate
of inflation, i.e. 30 to 40 percent.  The BNB sets an
indicative daily U.S. dollar rate for statistical and customs
purposes, but commercial banks and others licensed to trade on
the interbank market can set their own rates.  A parallel
market operates openly, if illegally, offering about a
four-percent premium.  For goods such as autos and some machine
tools the United States remains fully competitive with Western
Europe and Japan.

    Only some of the commercial banks are licensed to effect
currency operations abroad.  Companies may freely buy foreign
exchange for imports from the interbank market.  Individual
Bulgarian citizens may legally buy only 10,000 leva worth of
hard currency per year without specific cause.  Companies are
required to repatriate, but no longer to surrender, earned
foreign exchange to the Central Bank.  Bulgarian citizens and
foreign persons may also open foreign currency accounts with
commercial banks.  Foreign investors may repatriate 100 percent
of profits and other earnings.  Capital gains transfers appear
to be protected under the revised Foreign Investment Law; free
and prompt transfers of capital gains are guaranteed in the
Bilateral Investment Treaty.  A permit is required for hard 
currency payments to foreign persons, for direct and indirect
investments, and for free transfers unconnected with import of
goods or services.

3.  Structural Policies

    Bulgaria's new market-oriented legal structure does not
inhibit U.S. exports, which are more affected by the
government's tight monetary policy and Bulgaria's isolation
from trade financing.  Further revisions in the Commercial Code
(regarding commercial activity and bankruptcy) and draft
bankruptcy and security and exchange laws are mooted. 
Implementation of reforms is hindered by slow decision making
and bureaucratic red tape.

    Privatization made little progress in 1993.  Although Prime
Minister Berov entered office pledging his would be the
"privatization government," only two significant state
enterprises have been privatized.  In an effort to get the
process moving, Berov announced in May a mass privatization
plan.  A compromise proposal eventually was submitted to
Parliament, where it remained under consideration in October. 
Until privatization is well rooted, one can expect a certain
unpredictability in commercial dealings.

    Another high government priority, a package of tax reform
legislation, moved slowly through parliament.  Tax
administration and tax proceedings laws were passed in July and
the value added tax (VAT) in October.  Income tax and profits
tax bills remained in committee and approval is expected in
early 1994.  The VAT will be implemented April 1, 1994, while
the revised income and profits taxes are to take effect January
1, 1995.  While average tax rates are relatively low according
to the IMF, marginal tax rates are too high to stimulate the
economy, according to U.S. experts.  In 1993, most of the tax
burden fell on corporate profits, which created a significant
drag on companies' ability to import capital goods and inputs. 
The government plans to offer new private firms substantial
profit-tax relief for the first three years, provided that they
create jobs.  There is no export tax.

4.  Debt Management Policies

    Bulgaria's former Communist regime more than doubled the
country's external debt from 1985 to 1990.  With more than $10
billion outstanding, the government declared a debt service
moratorium in March 1990.  Bulgaria continued to service three
small convertible-currency bond issues.  Of Bulgaria's current
$13 billion debt, more than 80 percent is owed to foreign
commercial creditors; almost half of the commercial debt is
trade financing.  The cut-off of trade financing by western
banks because of the moratorium remains the main barrier to
imports from the U.S. and elsewhere.

    Debt service theoretically due in 1993 approximates 59
percent of exports.  The debt to GDP ratio is 181 percent. 
Bulgaria rescheduled its official ("Paris Club") debt for 1991
and 1992.  Negotiations on its 1993 maturities are delayed,
pending completion of three bilateral agreements that remain 
unsigned from 1991 and agreement with the IMF on a third
Standby Agreement.  In late November 1993, Bulgaria reached an
agreement-in-principle with its commercial creditors ("London
Club") on a Brady-Plan-type rescheduling of its $10 billion
debt.  The parties hope to reach a Brady-Plan-type agreement in
early 1994.

    Bulgaria is negotiating with the IMF its third one-year
Standby Arrangement.  Bulgaria also is the recipient of a $250
million structural adjustment loan from the World Bank,
although release of the $100 million second tranche now hangs
on successful negotiation of the IMF Standby Arrangement.

5.  Significant Barriers to U.S. Exports

    Import licenses are required for a specific, limited list
of goods.  Among others, the list includes radioactive
elements, rare and precious metals and stones, ready
pharmaceutical products, and pesticides.  Armaments and
military-production technology and components also figure on
the list.  (In March 1993, COCOM took the first steps to ease
export controls on selected technologies and products. 
Bulgaria was granted "favorable consideration status," the same
status enjoyed by Poland and the former Czechoslovakia. 
Favorable consideration status means a presumption of approval
for COCOM applications and a shorter approval period.)  The
Bulgarian government has declared that it grants licenses
within three days of application, without fees, and in a
non-discriminatory manner.  The U.S. embassy has no complaints
on record from U.S. exporters that the import-license regime
has affected U.S. exports.

    The Bulgarian government states that its system of
standardization is in line with internationally accepted
principles and practices.  Imported goods must conform to
minimal Bulgarian standards, but in testing and procedures
imported goods are accorded treatment no less favorable than
that for domestic products.  Bulgaria accepts test results,
certificates or marks of conformity issued by the relevant
authorities of countries signatories to international and
bilateral agreements to which Bulgaria is a party.  All imports
of goods of plant or animal origin are subject to veterinary
and phytosanitary control, and relevant certificates should
accompany such goods.

    In 1993, Bulgaria repealed tax incentives (a five-year tax
holiday, a profit-tax rate 25 percent less than that of
domestic enterprises) nominally available to foreign high-
technology investors.  Foreign investors are now subject to the
same 40 percent Profits Tax as Bulgarian enterprises.

    Under the January 1992 Foreign Investment Law, Bulgaria
grants national treatment unless otherwise provided for by law
or international agreement.  Foreign investors may hold up to
100 percent of an investment.  Foreigners may not own
agricultural land, real estate, or natural resources, but may
lease for up to 70 years.  Foreign persons may freely
repatriate earnings and other income from their investments at
the market rate of exchange.  Although capital gains are less
clearly covered in the law, Bulgaria committed itself to their
free repatriation in the U.S.-Bulgarian Bilateral Investment
Treaty signed in September 1992.

    Foreign investors are required to obtain a license to own
or have controlling interest in banking or insurance; in firms
manufacturing arms, ammunition, or military equipment; in
so-far unspecified geographic areas; and, in research,
development and extraction of natural resources.

    There are no specific local content or export-performance
requirements nor specific restrictions on hiring of expatriate
personnel.  Bulgaria committed itself in the U.S.-Bulgarian
Bilateral Investment Treaty to international arbitration in the
event of expropriation, disinvestment, or compensation disputes.

    There is no legal requirement for the Bulgarian government
to procure only local goods and services.  Government
procurement works mostly by competitively-bid international
tenders.  There have been problems of lack of clarity in many
tendering procedures (e.g. the extension of the E-80
superhighway from Plovdiv to the Turkish border).  U.S.
investors are also finding that in general neither the
remaining state enterprises nor private firms are used to
competitive bidding to supply goods and services within
Bulgaria to these investors.

    Bulgaria's new harmonized tariff schedule increased average
tariffs, although a 15 percent import tax was eliminated.  (The
import tax remains on 10 agricultural commodities.)  The new
schedule did reduce the overall range of tariff rates and
eliminated spikes.  Customs duties are paid ad valorem
according to the tariff schedule.  Imports from the United
States are assessed at the most-favored-nation (MFN) rate.  A
one-half percent customs clearance fee is assessed on all
imports and exports.  Bulgaria applies the single
administrative document used by European Community members.

6.  Export Subsidies Policies

    The Bulgarian government does not subsidize exports.

7.  Protection of U.S. Intellectual Property

    During 1993, Bulgaria enacted new Patent and Copyright Laws
which on paper generally brought the country's IPR system up to
international standards.  Bulgaria's third major piece of IPR
legislation, the Trademark and Industrial Design Law, is in
need of updating but considered adequate overall.  Production
and trade secrets are nominally protected under Art. 14 of the
"Protection of Competition Act."

    The most serious problem with current IPR legislation is
the lack of retroactive copyright protection for sound
recordings, which are protected internationally by the Rome and
Geneva Conventions, to which Bulgaria is not a signatory. 
Until Bulgaria does sign, sound recordings copyrighted prior to
August 1, 1993 are not protected.

    Enforcement of the new laws is problematic.  Authorities
must establish a record of vigorous enforcement to make the
laws credible.  But straitened resources and difficult economic
times will test Bulgaria's ability and resolve to protect IPR. 
A major U.S. pharmaceutical company notes continued problems
with patent violations.  A major U.S. beverage company
estimates that it is losing 15-20 percent of its sales volume
due to trademark infringement.  Although this firm has
successfully prosecuted two cases of piracy, it does not regard
the fines or the publicity given the cases as sufficient to
deter future infringement.  In October 1993, a major U.S.
motion picture association publicly threatened to file a
Special 301 complaint against Bulgaria because of an estimated
$10 million in annual losses from video piracy.  For 1992, the
International Intellectual Property Alliance estimated total
trade losses for the U.S. of $47 million due to piracy.

8.  Worker Rights

    a.   Right of Association

    The 1991 Constitution guarantees the right of all workers
to form or join trade unions of their own choice.  This right
appears to have been freely exercised in 1993.  Estimates of
the unionized share of the work force range from 30 to 50
percent.  Bulgaria has two large trade union confederations,
the Confederation of Independent Trade Unions of Bulgaria
(CITUB), and Podkrepa.  CITUB is the successor to the trade
union controlled by the former Communist regime, but now
appears to operate as an independent entity.  Podkrepa, the
independent confederation created in 1989, was one of the
earliest opposition forces, but is no longer a member of the
UDF.  The two confederations cooperate on some tactical issues,
particularly in the country's tri-partite body, the National
Social Council, which includes employers and government.  The
Labor Code passed in December 1992 recognizes the right to
strike when other means of conflict resolution have been
exhausted, but "political strikes" are forbidden.  Military,
police, energy production and supply, and health sectors are
defined as essential services, and workers in these sectors are
restricted from striking.

    b.   Right to Organize and Bargain Collectively

    The Labor Code institutes collective bargaining, which is
practiced both nationally and on a local level.  Only Podkrepa
and CITUB are authorized to bargain collectively.  This led to
complaints by smaller unions, which may in individual work
places have more members than either of the two larger
confederations.  Smaller unions also complained that they are
excluded from the National Social Council.

    c.   Prohibition of Forced or Compulsory Labor

    Some observers suggested that the practice of shunting
minority and conscientious-objector military draftees into work
units which sometimes carry out civilian construction could be
considered a form of forced labor.

    d.   Minimum Age of Employment of Children

    The Labor Code sets the minimum age for employment of
children is 16, and 18 for dangerous work.  Employers and the
Ministry of Labor and Social Welfare are responsible for
enforcing these provisions.

    e.   Acceptable Conditions of Work

    The National Social Council adjusted the national monthly
minimum wage on three occasions in 1993, most recently in July
when it was raised to 1,343 leva, approximately $49.  Inflation
in 1993, forecast as 65 percent, dramatically increased the
cost of living.  The Constitution stipulates the right to
social security and welfare aid and assistance for the
temporarily unemployed.  The Labor Code provides for a standard
workweek of 40 hours, with at least one 24-hour rest period per
week.  Bulgaria has a national labor safety program with
standards established by the Labor Code.  Conditions appear to
be worsening owning to budget austerity and the growing private
sector, which has weaker links with the labor inspection

    f.   Rights in Sectors With U.S. Investment

    Overall U.S. investment is relatively small as of late
1993.  Of the nine sectors covered in the Trade Act Report,
only the "Food and Related Products," "Electric and Electronic
Equipment," and "Other Manufacturing" sectors have an active
U.S. presence as of late 1993.  Conditions do not significantly
differ in these sectors from the rest of the economy.

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