A zero tax rate on reinvested profit will be postponed for at least a year, National Assembly speaker Ognian Gerdjikov told a press conference on Tuesday.

Meeting business people and representatives of branch chambers at the Bulgarian Industrial Association, he discussed proposed tax changes intended to help the development of the Bulgarian economy.

The exemption from tax of companies reinvesting their profits and expanding their business was one of the campaign promises of the ruling National Movement Simeon II. However, after tough negotiations between the government and the IMF and the strong opposition of the fund to the change, it was clear that this promise would be difficult to fulfill.

"The zero rate idea is magnificent, but the Ministry of Finance is not yet ready with the estimates," Gerdjikov said. "We must also take into account the social and economic situation in the country." He predicted that the tax on reinvested corporate profits may be removed from the beginning of 2003.

He argued that Bulgarian and foreign investors should enjoy equal opportunities and all investors should be treated equally.

Gerdjikov also promised a drastic reduction of the time limit for recovery of value added tax. The current period is four months, and businessmen want it reduced to 15 to 20 days. Gerdjikov said that the tax laws will be revised before the end of the year, and an Energy Law will enter Parliament early next year.

On Monday, Finance Minister Milen Velchev left for Washington where he was expected to discuss with IMF officials the fiscal policy of the Bulgarian government and also the new agreement with the fund.

Velchev said the government should not be expected to make endless concessions only to get an agreement with the fund. "It is extremely important and we will do our best to keep as many as possible of our election promises," he said.

"If no agreement is signed with the fund, Bulgaria will take on bigger risks with regard to financing the foreign debt payments next year, which could ultimately lead to shrinking reserves," Velchev said.

He expressed his belief that not using IMF funding is not fatal for the country but Bulgaria definitely needs an agreement with the fund to boost the confidence of international financial institutions.

On Tuesday, Velchev met IMF executive director Johannes de Beaufort Wijnholds, who is also head of the Dutch constituency group, and with IMF mission leader for Bulgaria, Jerald Schiff, as part of the negotiations which opened in Sofia.

Velchev was scheduled on Wednesday to meet World Bank country director for Bulgaria Andrew Vorkink and IMF first deputy managing director Anne O. Krueger. A meeting was arranged with John Taylor, treasury undersecretary for international affairs.

Velchev is also expected to meet Pieter Stek, executive director of the World Bank Netherlands constituency group, and Johannes Linn, the World Bank's vice-president for Europe and Central Asia.

After Washington, Velchev was scheduled to go to London to attend a conference on "New Europe" organized by Fitch IBCA rating agency.