A large part of the business community offered up its support to the economic package announced by Prime Minister Simeon Saxe-Coburg last Thursday.

Representatives of the Bulgarian Industrial Association, the Bulgarian Chamber of Commerce and Industry, the Employers' Union, the Bulgarian International Business Association, business people and financiers all expressed support to Economy Minister Nikolai Vassilev, as he met with the groups throughout the day.

The economic measures announced by the prime minister on August 19 include fast and transparent privatization, radical tax reform, higher minimum wage, doubling of child benefits, higher electricity and heating prices, establishing a micro credit fund, better organization at the customs, and a streamlining of the state administration.

"All our steps lead to economic growth and aim to improve the economic and business environment," Vassilev said. The business representatives stressed the need for a stable legal basis for the program, pointing out the main drawbacks of the existing laws. They asked the government to create a mechanism for contacts between businesses and the state administration so that problems in this area could be solved. Vassilev promised to see to this. He asked all the business representatives to help with the making and amending of laws.

The government is ready to launch an MBA program by 2002, Vassilev said, pointing out the need for such education in compliance with international standards. He asked if the business organizations would support it. Earlier on Thursday, Vassilev discussed the economic program with the leaderships of the two most influential trade unions, the Confederation of Independent Trade Unions in Bulgaria (CITUB) and Podkrepa. Job creation, high economic growth, ways to attract investment and the need for higher incomes were on the agenda of the nearly two-hour meeting. Vassilev said further meetings would be held after the 2002 budget passed.

CITUB president Zhelyazko Hristov was pleased with the meeting despite certain differences with the economy minister, who was somewhat reserved about the differentiated VAT rates proposed by the trade union. Hristov voiced the CITUB's concern that only highly qualified experts with large incomes would benefit from the lower income tax rates. Podkrepa vice-president Dimitar Manolov said he has high hopes for this government's term because he has never met with so much openness and willingness for co-operation.

Last week, politicians and experts greeted the economic package, unveiled by the PM, with mixed reactions. Nikola Nikolov, who chaired the Economic Policy Commission of the previous Parliament, found the package "exceedingly bold" but noted that the economic growth expected by the majority was unrealistic. In his opinion, the idea of the measures was rather to bring a larger part of the gray economy into the light. This too, was a good decision, in Nikolov's opinion, because a large part of the business community was now in the gray economy because of the crushing tax burden.

Bulgarian Socialist Party deputy chairman Rumen Ovcharov said that the budget would be additionally strained but the ruling majority could expect the Coalition For Bulgaria to support reasonable proposals, intended to improve and create a normal business climate in the country, attract foreign investment and solve people's social problems.

Economist Emil Hursev described the package as "anti-populist" because it redistributes taxation in a way favouring higher income brackets, since it reduces the upper rates and introduces a zero rate on reinvested profit. Hursev did not think that the package could be called revolutionary but saw the measures as sensible, living up to the business community's expectations, and ones which underlay the campaign platform of the now ruling party.

Alexander Bozhkov, chairman of the board of the Centre for Economic Development, said these are only elements of tax policy and should not be regarded as a comprehensive program for development of the tax system involving an improvement of the competitiveness of the Bulgarian economy and, at the same time, balancing the budget. Any move in the tax sphere should take into consideration the capacity of the tax administration, added Bozhkov.