CHAPTER 11
MASS COMMUNICATIONS
Since the Communists took over the government in 1944, the mass communications systems have been perceived as instruments of propaganda and vehicles for party control. Because of this perception of the significance of the media, the new government immediately claimed all mass media as state property.
There is little if any tolerance of the free expression of ideas throughout the entire mass communications system. Because Bulgaria is more closely tied to the Soviet Union than most of the other Eastern European countries, the dictates of Moscow are virtually followed to the letter in the media. Themes that are initiated in Moscow are reiterated almost verbatim in Sofia. The major theme of the mass media is respect for and emulation of the Soviet Union, although recently some social themes—such as the problems of youth and alcoholism—have been incorporated as well.
The only sources of information and entertainment permitted to the people are the domestically controlled mass media. Most Bulgarians distrust information available to them from these sources but, having no alternative, continue to use them.
Historically, of all the mass communications systems, the press has always reached the largest number of people and has traditionally been viewed by the government as the most effective means of informing the general public. Although the circulation of the press dropped drastically in the mid-1940s, it has since the 1960s once again become the chief instrument of the mass communications system. Radio has greatly expanded in variety and scope since the 1940s. Television, although slow to develop and still limited in its audience relative to other European countries, has been growing rapidly since the early 1960s and was beginning to experiment with color in the early 1970s.
There has been little change in the Bulgarian publishing industry since 1944. Owing to the government's fear of contamination by the West or other capitalist societies, there is very little importation of foreign books into the country. Although books have increased greatly in terms of sheer numbers of editions, the quantity of book titles has remained very much the same since World War II.
Libraries range from those under the control of state ministries and committees to local reading rooms and enterprise libraries. The latter are generally more widely used by the people.
Since the end of World War II the film industry has grown to a great extent. Like other instruments of the media, films are chosen for their propagandistic value; however, since the advent of television, fewer people have attended films.
BACKGROUND
The press—composed of newspapers and periodicals—was the most developed of the Bulgarian media in the first half of the twentieth century. Radio, which was introduced in the 1920s, was under the aegis of what was then the Ministry of Post, Telegraph, and Telephone. The production, importation, and sale of radios were unrestricted. The least developed communications system of the day was the film industry, which was privately owned and operated. Television was not initiated in the country until the mid-1950s.
In the years immediately after the takeover, a strong pro-Soviet policy was established for the media, which was still in effect in 1973. While the new government restricted individual freedom and initiative within the media, it demanded total support by the media of all policies of the Soviet Union. Despite the fact that Bulgaria has never deviated from the policy of complete commitment to the Soviet Union, after the invasion of Czechoslovakia various media conferences were held in which calls for stricter adherence to the Soviet line were sounded.
OBJECTIVES OF MASS COMMUNICATIONS
The government has certain distinct perceptions as to how the media must serve the state. Propaganda permeates every aspect of life from formal education to membership in unions and clubs to the publication of books and pamphlets. The Bulgarian Communist Party (BKP—see Glossary) is the main political force. It both creates the appropriate condition for the expression of public opinion and forms public opinion itself.
At a recent conference on the mass communications system, a leading member of the Central Committee of the Bulgarian Communist Party delineated the principal tasks of the media. The major task of the media was "to work for the broadest possible propagation of the congress decisions and for the mobilization of the people's physical and mental powers to make their decisions materialize...." The second vital task of the media was to "help form a socialist outlook on life among the peoples and educate the new man—active fighter for the developed socialist society, ideologically convinced, morally durable, physically tempered, with profound awareness of duty and responsibility." The third task was to promote the economic awareness of the people and to train managers, specialists, workers, and farmers for the greater economic good of the country. The fourth main task was to continue in the active struggle against "bourgeois ideology ... and the ideological subversion of imperialism."
A basic tenet of the Bulgarian system, however, is the belief that mass communications must be actively supplemented by human contact on the individual level. Iliya Georgiev, secretary of the Varna Okrug Bulgarian Communist Party Committee, in an article on the political knowledge of working people in 1972, stated categorically that the interest stimulated in the people by the mass communications system must be maintained and extended by informal means of communications, such as district (okrug) seminars, meetings in enterprises and farms, activities in the trade unions, and the Dimitrov Communist Youth Union (Dimitrovski Komunisticheski Mladezhki Suyuz—commonly referred to as the Komsomol).
The government has spent considerable time in assessing the extent to which these media objectives have been achieved. In the years immediately following the takeover, the government was consistently distressed by continued Bulgarian feelings of friendship with the West and the continual influence of the West upon the country. Although the propaganda efforts of the communist government were tireless, radio broadcasts and printed materials from the West continued to pour into Bulgaria.
As the government's control over both the formal communications media and the informal means of communications widened, the external threat was perceived to be less, and governmental attention turned to the assessment of the relative popularity of the various branches of the media. In a recent study 3,294 people were questioned as to their favorite source of domestic and international information. The vast majority—64.8 percent—of those polled stated that their preferred source was daily newspapers; 24.6 percent preferred television; and only 2.7 percent preferred radio. Although the newspapers were the favorite source of information, they were frequently criticized by the people, who expressed a basic lack of confidence in the press. In a second study dealing with people's attitudes toward the press alone, 48.1 percent of the 900 people polled said they disliked the press, and 52.1 percent complained of the primitive quality of Bulgarian newspapers.
Young people, especially students, appeared to be even less stimulated by the mass media than their elders. A study performed in the 1969/70 academic year indicated that students were indifferent to both domestic political events and international developments. The pollsters concluded that generally Bulgarian students take little advantage of the mass media as a source of information. Unlike the broad public, whose primary source of information was the press, students tended to see television as their preferred source and the press and radio as secondary sources.
FREEDOM OF INFORMATION
The 1947 Constitution, known as the Dimitrov Constitution, established the stated rights of citizens as well as the nationalization of all private property, including the mass communications network. Regarding the so-called freedom of citizens, Article 88 of the 1947 Constitution claimed: "The citizens of the People's Republic are guaranteed freedom of the press, of speech, of assembly, of meetings and demonstrations." At the same time, Article 10 and Article 17 prohibited the unrestricted freedom of private property and provided for its nationalization under the authority of the National Assembly. More specifically, Article 80 of the constitution dealt directly with the system of mass communications: "The state cares for the development of science and art by establishing ... publishing houses, libraries, theatres, museums, public reading clubs, ... film studios, [and] cinemas...."
In 1956 the premier of the communist regime, Vulko Chervenkov, emphasized the ultimate control of the party over all institutions of the country. He stated: "No institution, organization, or person can be above the Politburo and the Central Committee ... those guilty of deviation from the Bolshevik rule must be held responsible and punished." Under his successor, Todor Zhivkov, a slight liberalization regarding freedom of the media ensued (see ch. 9). For a brief period writers and scholars were given greater latitude of expression. When some writers dared to openly criticize the government, however, Zhivkov was unable to tolerate this criticism and reimposed restrictions on the media. The ultimate authority of the party was again made manifest. In an article in 1969, Georgi Bokov, chief editor of Rabotnichesko Delo and chairman of the Union of Bulgarian Journalists, flatly rejected the notions of freedom and independence for the mass communications system. The stated goals of the Union of Bulgarian Journalists in the late 1960s were "to promote the development of mass information and propaganda media as first-rate ideological weapons in the struggle for the victory of socialism and Communism ... the Union must constantly work to turn the press, radio, and television into effective ideological instruments for the Party."
In 1971, a new constitution was promulgated, but the basic clauses of the 1947 document, regarding so-called individual freedoms and state ownership, remained essentially intact. It was restated in Article 54 that "citizens enjoy freedom of speech, press, meetings, associations and demonstrations." Article 46 again provided for state development of, and control over, the mass communications system.
The results of the policy regarding the media are witnessed by numerous examples of party control and the repression of dissidents. All newspapers must provide space for the official news of the government, and all Central Committee directives must be printed without alteration. No dispatches sent out by the Bulgarian Telegraph Agency (Bulgarska Telegrafna Agentsiya—BTA)—the official news agency of the country—are allowed to be revised. No criticism of government policies is tolerated. Dissident individuals and groups are singled out for criticism by the Politburo. In 1972 a Politburo member, Todor Pavlov, accused certain writers of rejecting Socialist Realism in favor of more bourgeois literature and art. Other writers were criticized for their so-called subjectivistic interpretation of Bulgarian literature and were branded as pseudoscientists.
ADMINISTRATION OF THE MASS COMMUNICATIONS SYSTEM
Administrative Units
As the system has evolved, the broad outlines of propaganda have been dictated from the Politburo, the party's chief policymaking unit. From there policy is transmitted to the Agitation and Propaganda Department (Agitprop), which is a major operational unit of the Central Committee. Agitprop, in turn, is responsible for the transmission of guidelines down to the lowest levels of party organization. Simultaneously, the same dictates are transmitted throughout all cultural institutions by the Ministry of Information and Communications. Under this ministry's jurisdiction are the arts, the film industry, radiobroadcasting, television, book and pamphlet publishing, printing, all cultural or educational institutions, and all so-called independent artists. Still a third channel for the transmission of the original propaganda are the mass organizations that function in the propaganda field under direction of either Agitprop or the Ministry of Information and Communications (see ch. 9).
The administrative center for all media is Sofia, the capital. Eight daily newspapers are published in Sofia and distributed throughout the country; there are also seventeen major publishing houses in Sofia. The National Film Board, which oversees all aspects of film production, is in Sofia, as is Radio Sofia, which is the radio station for the entire country. The Cyril and Methodius Library—also known as the Bulgarian National Library—is within the confines of the city, as are the Union of Bulgarian Writers; the Union of Bulgarian Artists; and the Union of Composers, Musicologists, and Performing Musicians (see ch. 7).
The exportation of propaganda is under the auspices of the Sofia Press Agency. This agency was founded in 1967 with the express purpose of disseminating Bulgarian propaganda to other countries. Its three major tasks are to publicize Bulgaria's achievements and successes actively to the world; to attempt to counter anti-Bulgarian propaganda; and to provide the various communist parties of the world with rationale in their struggles against capitalism.
In 1972 the Sofia Press Agency was in the process of negotiating agreements with the BTA and the Committee for Television and Radio. Agreements had already been established with book publishers, photographic artists, and the film industry. In early 1972 over 500 people—the majority of whom were editors and translators—were working for the Sofia Press Agency, and contracts had been signed with approximately 120 foreign countries. Nine magazines, translated into eleven languages, had been published each year in 2.5 million copies. A dual language newspaper has been published each year in 500,000 copies, and 400 books had appeared in approximately 4 million copies. Some 15,000 articles had been written, 30,000 photographs taken, and dozens of television motion pictures and documentaries had been filmed.
News Agency
The BTA was founded originally in 1898 in Sofia. It is the official news agency of the country and the sole source of both foreign and domestic news. It receives most of its foreign items from the Soviet Union news agency but also maintains exchange agreements with Reuters, Associated Press, and the Associated Foreign Press as well as a host of lesser known foreign news agencies, although it tends to be more discriminating in terms of the items selected from these sources.
In the 1960s the BTA had twenty-three correspondents posted throughout the nation, as well as foreign correspondents in Moscow, Peking, East Berlin, Prague, Budapest, Tirana, Belgrade, Ankara, Paris, Bonn, New York, Vienna, Cairo, and New Delhi. Correspondents are sent on special assignments to investigate news that is considered to be of interest to Bulgaria. Domestic news is reproduced in Russian, English, French, German, and Spanish, and international news is reproduced in Russian, English, French, German, Spanish, and Italian. In an average day the BTA receives approximately 800 foreign newspapers, magazines, and bulletins and itself produces over 125,000 words.
THEMES OF THE MEDIA
The predominant theme of the media remains the expression of friendship with the Soviet Union. In 1971 a leading member of the party's Central Committee informed members of the media that one of their primary functions was to champion the feelings of "fraternal love, trust, and gratitude" of the Bulgarian people for the "heroic Soviet people," at the same time demonstrating "clearly and convincingly the unbreakable ties linking our present and future with the present and future of the Soviet Union."
A second common theme of the current media deals with the continuing struggle between so-called bourgeois capitalism and socialism. The people are, on the one hand, warned of the invidiousness of capitalistic methods—"The veiled methods of ideological struggle applied on an even broader scale by contemporary imperialism requires greater vigilance from us...." On the other hand they are assured that socialism will ultimately prevail—"their [socialist] ideas make their way with insuperable force into the minds and hearts of working people all over the world, gain more and more new adherents, and become a powerful factor of social progress."
Another dichotomy that the media pose as a continuing theme is that of religion versus socialism. Bulgarian writers triumphantly proclaim that "religion as a component of the sociological structure of society for thousands of years gradually withers away at an even faster pace throughout the transition from capitalism to communism." Since one of the major aims of the government is to eliminate religious sentiment among the people, the public is from time to time assured that—according to the latest survey—only 35.5 percent of the population is considered religious or that the "Bulgarian people is one of the least religious in the world."
Another divisive force that is frequently posed by the media is national patriotism versus proletarian internationalism. Although internationalism is viewed as predominant, citizens are warned against feelings of bourgeois nationalism, since the "unity between internationalism and patriotism is of a relative character, and there is always the real possibility of dissension between them; they may even be placed into a position of mutual opposition." Somehow the conflict, according to the journal Filosofska Misal, is perceived as being resolved through a higher form of patriotism that is inextricably linked with love of the Soviet Union. Socialist patriotism is seen as a "qualitatively new, higher form of patriotism" as expressed in "love and gratitude toward the Soviet Union and the Communist Party of the Soviet Union organically linked with love for Bulgaria."
In accordance with the media's constant expression of admiration for, and solidarity with, the Soviet Union, any issue that raises the question of conflicting loyalties between the People's Republic of China (PRC) and the Soviet Union is summarily dismissed with the reiteration of support for the Soviet Union. One journal warned the people of the dangers from the left in the form of the people of the PRC as well as from the right in the form of capitalist societies: "Contrary to all healthy logic, for years on end, the Chinese leadership has been waging hostile propaganda campaigns against the Soviet Union ... which are in no way inferior to the most malicious fabrications of bourgeois anti-Sovietism."
When the troops of the Soviet Union invaded Czechoslovakia in August 1968, Bulgaria once again rose to the Soviet Union's defense in complete justification of the invasion. The BTA cited a long list of workers, peasants, and intellectuals who were allegedly in favor of the action. Major newspapers such as Rabotnichesko Delo interpreted the event as symbolic of proletarian internationalism, and Zemedelsko Zname stated that "it is our supreme duty to resist the common enemy and not to allow anyone ever to tear away even one link from the chain of the socialist community." The Czechoslovak uprising itself, as reported by the Bulgarian press some months later, was interpreted as nationalistic and counterrevolutionary.
Bulgaria's relationship with the West, as expressed by the media, has evolved over time from overt hostility to some degree of tolerance. In 1968 the Bulgarian media openly denounced the concept of peaceful coexistence with the West. By the early 1970s, however, although citizens were still urged by the media to struggle against bourgeois capitalism as epitomized by the West, a slight thaw in the cool relations that had prevailed since the mid-1940s was detected. On the one hand, all instruments of the media were urged to direct the people away from foreign influences and to struggle against "bourgeois ideology, anticommunism, and the ideological subversion of imperialism." On the other hand, however, Western correspondents in 1973 declared that Bulgaria was entering a period of greater flexibility with the West.
The last polemical theme of the Bulgarian mass media is known as the Bulgarian miracle. Although success for the alleged achievement of Bulgaria's national goals is attributed to correct socialism, the application of Leninist principles, and the unity of party and people, the media take every opportunity to stress the achievements of the Bulgarian state since the advent of communism. One journal stated that "our country strengthened and matured as a state with a modern socialist industry, intensive mechanized agriculture, and flourishing national culture, a state enjoying an indisputable international prestige, respected as an economic partner and as a factor for the safeguard of peace."
On the nonpolemical side, the Bulgarian media discuss both Bulgaria's immediate social problems and issues that affect the world. The issue of alcoholism is discussed relatively openly and is viewed as an issue of national concern. Alcoholism is perceived to be related to both the rising number of divorces and the frequency of crimes (see ch. 5; ch. 15).
Bulgarians also have become involved in the international issue of pollution of the environment, and the press has given the topic a fair amount of coverage. The issue has been dealt with on a completely nonpolemical basis; in fact the brotherhood of all forms of societies is stressed as the means of combating the problem.
THE PRESS
Newspapers
In 1944, three months after the new government took control, all newspaper plants were made the property of the state. In the ensuing year, the government took over the distribution of newsprint, and many noncommunist editors and Communists were either jailed or executed. By 1945 only eight daily and weekly newspapers were permitted to publish. Five of them were published under the aegis of a governmental or party agency. Rabotnichesko Delo—which was patterned on the Soviet Pravda—became the organ of the Central Committee, and Otechestven Front—patterned on the Soviet Isvestia—became the official organ of the government. Izgrev was an organ of the Fatherland Front Zvenos; Narod was an instrument of the Fatherland Front (Otechestven Front) Socialists; and Narodna Voiska was an army organ. Politika was not directly affiliated with the party but was decidedly pro-Communist (see ch. 9).
The other two newspapers, both expressing a degree of opposition, were tolerated only through 1946. These were Narodno Zemedelsko Zname, an organ of the Bulgarian Agrarian Union (Bulgarski Zemedelski Suyuz—BZS) and Svoboden Narod, an organ of the Social Democratic Party. In early 1947, however, they were closed down.
The Fifth Party Congress in 1948, endeavoring to more fully exploit the potential of the press for propaganda purposes, called upon it to serve as the "first assistant of the Bulgarian Communist Party, of the Fatherland Front, and of the government." The primary function of the printed news media, as stated by that congress, was to mobilize the working people in terms of their identification with the so-called great socialist buildup. In the same year the Central Home of Bulgarian Journalists was established in order to train writers in the correct propaganda line established by the party. This institution was replaced in 1955 by the Union of Bulgarian Journalists.
After World War II the national newspapers were generally four pages long and consisted of news concerning Bulgaria, the Soviet Union, and other socialist countries; progress reports regarding national economic plans; foreign news presented with a decided anti-Western bias; and information regarding cultural events and sports. Cartoons, which appeared occasionally in the daily and weekly newspapers, were generally propagandistic and dealt with so-called foreign agents, the bourgeoise, and other so-called enemies of the people. There was little humor in the newspapers, as their overall purpose was to portray and defend the communist system.
The national newspapers were modeled after those of the Soviet Union, in both style and content. During the 1940s they established ties with the Soviet news agency, the Chinese Communist news agency, and the news agencies in other communist countries. All international events—those dealing with the communist-bloc countries and those dealing with the West—were integrated through these sources.
While Stalin lived, all of his dictates were followed to the letter, including the duplication of the Soviet example in the strong verbal campaign against Yugoslavia. When Nikita Khrushchev succeeded him and subsequently made some semblance of peace with Yugoslavia, the Bulgarian press followed suit. Similarly, when the Soviets quickly quelled the Polish and Hungarian revolts, the Bulgarian press endorsed the Soviet versions of these events. Strict control over the press was retained in the early 1970s, and most news still emanated from the Soviet news agency. Censorship was seldom required, however, since all editors were by this time acutely aware of their responsibilities to the party.
In contrast to the natural press, the provincial press concentrated on local matters. It included, in addition to a few regularly published newspapers, a variety of new types of publications, such as multicirculators—which were wall posters—and the so-called bumblebees, which were letters of accusation pointing out alleged failures of particular individuals to maintain acceptable social standards or to attain programmed economic goals. In broad terms, all these publications were designed to indoctrinate specific groups of people, generally in their places of work. The multicirculators called on workers to support the economic goals of the government and promised them rewards if they fulfilled the required objectives (see table 10).
Table 10. Bulgaria, Newspaper Circulation by Frequency of Issue, 1971
| Frequency of Issue | Number | Annual Circulation (in thousands) |
| Daily | 13 | 611,900 |
| Two to four times per week | 31 | 108,181 |
| Weekly | 58 | 100,880 |
| Less than once per week | 604 | 16,533 |
| TOTAL | 706 | 837,494 |
In the early 1970s the style of Bulgarian newspapers remained essentially the same as in the mid-1940s. National daily newspapers ordinarily had four pages, but sometimes had from six to eight pages when there was vital news to cover. Headlines were often printed in red, but stories and articles were in black print. Since the late 1960s or early 1970s advertising increased, and newspapers began to resemble their Western counterparts to a greater extent.
In 1972 thirteen daily newspapers were published, eight of which were printed in Sofia. Rabotnichesko Delo was a descendant of the first workers' newspaper, which was begun in 1897. It led both in importance and circulation, was the primary organ of the BKP, and set the tone for all other newspapers in the country. In 1950 it had a daily circulation of 364,500 copies, and by 1960 its circulation had risen to 567,360. In 1972 this newspaper had a total circulation of approximately 650,000 copies. The second most important daily newspaper published in Sofia was the Otechestven Front, the organ of the government. This publication was initiated as an underground newspaper in 1942. As of 1972 it claimed a daily circulation of 247,000.
The other Sofia dailies and their circulations were: Zemedelsko Zname, 168,000; Narodna Mladez, the newspaper for youth, 225,000; Trud, the organ of the trade unions, 200,000; Narodna Armiya, an organ of the Ministry of National Defense, 50,000; Vecherni Novini, founded in 1951, an evening newspaper, 40,000; and Kooperativno Selo, the organ of the Ministry of Agriculture and Food Industry, 230,000. The major provincial dailies were Otechestven Glas (in Plovdiv), Narodno Delo (in Varna), Chernomorski Front (in Burgas), Dunavska Pravda (in Ruse), and Pirinsklo Delo (in Blagoevgrad) (see table 11).
Table 11. Bulgaria, Circulation of Newspapers and Periodicals, Selected Years, 1939-71
| 1939 | 1948 | 1960 | 1971 | |
| Newspapers: | ||||
| Annual circulation* | 130,297 | 345,905 | 602,813 | 837,494 |
| Annual circulation per capita | 20.7 | 48.5 | 76.6 | 98.1 |
| Periodicals: | ||||
| Number | 393 | 246 | 151 | 963 |
| Annual circulation* | 11,208 | 10,421 | 20,923 | 48,605 |
| Average annual issues per capita | 1.8 | 1.5 | 2.7 | 5.7 |
| * In thousands | ||||
Periodicals
By 1971 there were 963 periodicals with an annual circulation of 48.6 million, roughly tripling the pre-World War II figures. Periodicals were an extremely popular form of reading material.
Among the leading periodicals of Bulgaria are: Novo Vreme, a monthly journal of the Central Committee; Ikonomicheska Misal, the organ of the Institute of Economics of the Bulgarian Academy of Sciences; Puls, a publication of the Central Committee of the Komsomol; Slavyani, the monthly journal of the Slav Committee in Bulgaria; Bulgarski Voin, the monthly journal of the chief political department of the Bulgarian People's Army (Bulgarska Narodna Armiya); Resorts, a bimonthly journal printed in Russian, French, English, and German; and Lov i Ribolov.
RADIO
In 1939 there were three radio stations and over 60,000 subscribers (see table 12). Approximately one out of every 100 Bulgarian citizens owned a radio set.
Table 12. Bulgaria, Number of Radio Stations and Subscribers, Selected Years, 1939-71
| 1939 | 1948 | 1960 | 1971 | |
| Radio stations: | ||||
| Mediumwave | n.a. | n.a. | 5 | 12 |
| Shortwave | n.a. | n.a. | 2 | 4 |
| Ultra-shortwave | n.a. | n.a. | 0 | 11 |
| Number of radio stations | 3 | 5 | 7 | 27 |
| Number of relay stations | n.a. | 41 | 1,347 | 1,835 |
| Number of radio subscribers | 62,677 | 210,366 | 1,430,653 | 2,304,567 |
| Number of radio receivers | 62,677 | 201,866 | 868,950 | 1,546,163 |
| Subscribers* | 10 | 30 | 182 | 269 |
| n.a.—not available. | ||||
| * Per 1,000 population. | ||||
As of March 26, 1948, the state controlled not only the management of radio stations and the content of radio programs but also the manufacture, distribution, and sale of radio equipment. The ownership and operation of radios were subject to the chief directorate of radio information according to the Law on Radio. Article 15 of this law stated that private homes could only receive programs of Bulgarian radio stations. Article 17 of the same law stated that all people wishing to purchase radios had to receive prior authorization and pay a radio tax.
The ideological purposes of radio broadcasts are presented by the government in quasi-cold war terms. One radio commentator, Lyuben Popov, has described the radio as a weapon for waging war on the air. He explained that "the struggle on the air is becoming sharper and sharper and more and more uncompromising.... Our propaganda work is part of the ideological struggle for victory of communist ideas." Radio is perceived as serving two principal ends. On the domestic level it serves to provide information as well as propaganda to the public; on the international level it functions in a purely ideological capacity.
There are twelve mediumwave radio transmitters: two are located in Pleven; two in Kurdzhali; two in Sofia; and one each in Plovdiv, Blagoevgrad, Varna, Shumen, Stara Zagora, and Stolnik. There are eleven ultra-shortwave stations: three are located in Sofia, two in Botev, two in Slunchev Bryag, two in Kyustendil, one in Snezhinka, and one in Plovdiv. There are four shortwave radio stations in Bulgaria. Of the total number of twenty-seven radio stations in the country, six broadcast in both amplitude modulation (AM) and frequency modulation (FM); twenty broadcast in AM only; and one located at Botev Peak broadcasts only in FM.
Bulgarian radio stations are on the air approximately 500 hours per week. Foreign broadcasts are transmitted approximately twenty-six hours a day Monday through Saturday and twenty-nine hours on Sunday. These programs are broadcast in Bulgarian, Turkish, Greek, Serbo-Croat, French, Italian, German, English, Spanish, and Arabic and are transmitted to Europe, the Middle East, Africa, North America, and South America. The number of domestic listeners has approximately doubled over the 1960-71 period. In mid-1973 over a quarter of the population owned radio sets.
The leading radio programs are transmitted by Radio Sofia. Radio Plovdiv, Radio Varna, and Radio Stara Zagora also transmit popular programs. Radio Rodina is the main station transmitting to Bulgarians residing abroad. Generally, radio programs consist of news bulletins dealing with both local and international events; programs for rural listeners and industrial workers, which deal with industrial, agricultural, and cultural matters; programs for children, which complement the formal educational curriculum; literary and cultural programs; and scientific programs.
In January 1971 Radio Sofia took steps to refurbish its old programming. Some critics felt that the old programming was lacking in variety, causing listeners to turn to foreign broadcasts for more enjoyable entertainment. Others within the medium wanted to have more freedom and creativity in programming. As a result, in mid-1973 the three main programs of Radio Sofia had a singular and distinctive character. "Horizont" provided both general information and popular music. "Christo Botev" had a more cultural and propagandistic nature, presenting ideological, literary, and educational programs. "Orfei" was the program for classical music, which was occasionally supplemented by theatrical and literary features. The results of these changes have been mixed. Although some critics felt that the new programs were more lively than their predecessors, others continued to criticize them for a "dearth of original thought, a laconic style, and a pompous tone."
Other recent developments in radio have been the establishment of radio relay ties with nearby countries. These relay ties are expected to increase Bulgaria's communications with the West while providing her new partners with access to the East. In July 1972 the construction of radio lines between Bulgaria and Turkey was completed. In December 1972 plans for a radio relay line between Sofia and Athens were announced; the line was to be completed by 1974. This particular line was expected to provide Greece with access to Eastern Europe and Bulgaria with access to the Middle East and North Africa.
TELEVISION
Television, like radio, became a state monopoly under the control of the Ministry of Culture on March 26, 1948, but the first strictly experimental broadcasts were not undertaken until 1954. It was 1959 before the first regular programming—consisting of two programs per week—was being broadcast. By 1962 programs had been increased to only four per week.
The number of television subscribers rose from a mere 2,573 in 1960 to 185,246 in 1965 and to 1.2 million in 1971. These figures meant the number of sets per 1,000 people were; less than one, in 1960; about twenty-three, in 1965; and 138, in 1971. During the same period an increasing number of transmitting stations was making reception possible in nearly all parts of the country. By 1972 there were twenty-seven transmitters; the major ones were located at Sofia, Slunchev Bryag, Botev, Varna, and Kyustendil. In spite of the expansion of the network and the increasing numbers of sets available, in comparison to other European countries there were still relatively few television subscribers per 1,000 of the population.
Three-quarters of the television sets are located in the cities. Although there is only one major television program, Program I, plans are underway for the transmission of a second program, Program II. This, when added to the coverage of Program I, is expected to reach 95 percent of the population by 1975.
Television is transmitted on a daily basis. The weekly programs run between 68 and 72 hours. Television time has been apportioned more or less according to popular taste. Of the total hours, 22 percent of television time was devoted to documentaries, 15 percent to music, 12 percent to news, 11 percent to programs for children, 10 percent to language and literature programs, and 8 percent to sports. There were also special broadcasts to villages and question-and-answer programs in industrial enterprises and cooperative farms. Unlike the rest of Eastern Europe, Bulgaria imported very few television films from the United States.
One of the most recent innovations in television programming was the transmission of a special program for tourists in 1973. Bulgarian Radio and Television decided to cooperate with the Committee for Tourism to promote a 1-½-hour program for foreign tourists on the Black Sea coast. The program, as envisioned in 1973, would consist of local news, presented on three different channels in Russian, English, and German respectively; local events; international news; tourist information; and advertisements.
Future plans for Bulgarian television were outlined in the Sixth Five Year Plan (1971-75). Although color television programs in the 1970s were transmitted to Bulgaria from Moscow, Bulgaria's own color television was to be transmitted in late 1973. Along these lines, Bulgaria planned to collaborate with Intervision—the Eastern European television network—in the promotion of color television. In 1972 plans were also being formulated for the construction of between 250 and 300 relay stations and additional television transmitters.
In 1939 there were 2,169 books and pamphlets published in 6.5 million copies, and in 1948 there were 2,322 books and pamphlets published in 19.9 million copies. By 1960 the number of book and pamphlet titles had risen to 3,369 in 30.2 million copies, and by 1971 the number of book and pamphlet titles reached 4,188 in 46.8 million copies.
More recent studies of book and pamphlet publication conducted in 1969 and 1970 indicated that the overwhelming majority of books and pamphlets were written by Bulgarians. Of the 3,799 books published in 1970, there were 3,368 by Bulgarian authors. The foreign works during this year were predominantly in Russian, 131; French, sixty-five; English, sixty-five; and German, fifty-four. There were few books translated from Spanish and a sprinkling of translations from other lesser known languages. Of the translated works most were literary, followed by works dealing with the social sciences, the applied sciences, the arts, geography and history, the so-called hard sciences, philosophy, philology, and religion.
A 1971 study illustrates the fact that—in terms of titles alone—books are more popular than pamphlets by a ratio of approximately three to one (see table 13). The greatest number of book titles in 1971 were in the areas of artistic and folkloric literature, technology and industry, and scientific and educational texts. The smallest number of book titles were in the areas of general handbooks, community affairs, and atheism and religion. The greatest number of pamphlet titles, on the other hand, were in juvenile literature, communist party literature, and science and education. The fewest pamphlet titles dealt with atheism and religion, Marxism-Leninism, languages, and labor and trade unions.
Because the Bulgarian publishing industry has emphasized the quantity of books available in terms of copies rather than variety or number of titles, there has been some serious criticism of policy, particularly from the newspapers. In fact, among the Balkan countries, Bulgaria ranks below Yugoslavia, Romania, and Turkey in the number of titles published annually. One newspaper claimed that of the total number of books published in 1972, only approximately one-third were so-called real books, meaning that they were not simply textbooks or brochures. This newspaper claimed that foreign literature was not well known in Bulgaria and pointed out that the literature of Asia, Africa, and South America had increased by only 470 titles since 1939.
The state not only is in charge of the publishing houses themselves but also supervises the distribution of books throughout the country. Editorial councils are the final authorities in determining the output of individual publishing houses. The one exception to the general administration of publishing houses is the publication of textbooks. In this case the Committee on Art and Culture is responsible for the printing of textbooks, and the Ministry of National Education is, in turn, responsible for their distribution.
Table 13. Bulgaria, Book and Pamphlet Publication, 1971
| Subject of Publication | Total Number of Titles | Book Titles | Pamphlet Titles |
| Marxism-Leninism | 26 | 23 | 3 |
| Communist party | 270 | 158 | 112 |
| Socialist and communist construction | 181 | 97 | 84 |
| Foreign policy and economics | 94 | 74 | 20 |
| Philosophy | 70 | 52 | 18 |
| History | 147 | 121 | 26 |
| Economics | 29 | 21 | 8 |
| Production | 90 | 82 | 8 |
| Finance | 15 | 11 | 4 |
| Labor and trade unions | 55 | 39 | 16 |
| Legal and constitutional system | 73 | 53 | 20 |
| Military policy | 38 | 28 | 10 |
| Natural science and mathematics | 261 | 225 | 36 |
| Technology and industry | 490 | 415 | 75 |
| Agriculture and cooperatives | 284 | 214 | 70 |
| Trade and nutrition | 51 | 37 | 14 |
| Transportation and communications | 75 | 64 | 11 |
| Community affairs | 4 | 4 | ... |
| Health | 215 | 157 | 58 |
| Physical education and sports | 72 | 53 | 19 |
| Scientific and educational texts | 397 | 301 | 96 |
| Literary criticism | 133 | 55 | 78 |
| Art | 152 | 118 | 34 |
| Languages | 70 | 66 | 4 |
| Artistic and folkloric literature | 609 | 534 | 75 |
| Juvenile literature | 277 | 146 | 131 |
| Atheism and religion | 8 | 7 | 1 |
| General handbooks | 2 | 2 | ... |
| TOTAL | 4,188 | 3,157 | 1,031 |
The party is the final arbiter regarding the acceptability of work for publication. All party control, however, is theoretically unofficial; censorship exists only in the sense that all power of decision regarding publication is in the hands of party members. The official process for publication is that the writer submits his work to the publishing house. The publishing house then sends it, with a brief description of its ideological content, to the Committee on Art and Culture. If the book is approved at this stage, it is returned to the publishing house, where it is again checked for its ideological content.
The major criterion for acceptance is the ideological soundness of the work in question. According to a refugee playwright from Bulgaria, "The journalist must praise the party, and government, and criticize the West. The poet, the playwright, the novelist must uphold the communist ideal." Since the works of leading Communists are almost always accepted for publication, one writer has stated; "In Bulgaria dead communist heroes are the safest bet."
The government is actively engaged in attempting to promote Bulgarian books abroad. In the late 1960s and early 1970s books by native authors—although in relatively small numbers—were published in such diverse countries as Great Britain, Japan, France, Turkey, Italy, Iran, Austria, Argentina, and Finland. According to the latest available source on the promotion of Bulgarian books abroad, plans also have been formulated for the publication of books in the United States, Belgium, Brazil, and Syria.
One of the most serious problems in the publishing industry, other than the broad issue of freedom of expression of the writers, is that of a shortage of textbooks. In 1970 the Committee for State Control discovered that courses in 1,013 subjects at the university level had no textbooks whatsoever. In the University of Sofia alone, where approximately 317 subjects were taught, textbooks existed for only 216 of these subjects; roughly half of the books for the 216 subjects that used textbooks were out of print.
LIBRARIES
When the Communists took power in 1944, they began to allocate relatively large sums of money to develop new libraries in both large cities and small villages. By 1971 the country had over 10,000 libraries, whose collections numbered nearly 50 million volumes (see table 14).
The Committee on Art and Culture maintained a number of libraries, including the country's largest, the Bulgarian National Library. Founded in 1878 in Sofia, it contained 814,000 works in 1971, including about 13,000 old and rare volumes, approximately 17,000 graphic works, and some 20,000 photographs and portraits. The library published both a yearbook and a monthly periodical.
The committee maintained two other libraries. One was the Ivan Vazov State Library, situated in Plovdiv, whose collection included a wide variety of periodicals, old and rare books, and archives. The other library under the committee was the Elin Pelin Bulgarian Bibliographical Institute, which maintained a record of all printed works in the country and published a monthly bulletin listing all of its publications, an annual yearbook, and a monthly list of all articles published in reviews and journals.
In addition there were research-related libraries maintained by the Academy of Sciences; public school libraries; university libraries; libraries organized in state plants, factories, and cooperative farms; regional libraries; and local libraries.
The major regional libraries were located in Burgas, Ruse, Stara Zagora, Shumen, Varna, Velsko, and Turnovo. The best known local library was the City Library of Sofia, which contained about 452,862 volumes.
Table 14. Libraries in Bulgaria, 1971
| Kind of Library | Number | |||
| Libraries | Books* | Readers* | Books Lent* | |
| National | 1 | 814 | 25 | 189 |
| Local | 27 | 5,287 | 259 | 4,807 |
| Reading rooms | 4,108 | 20,387 | 1,359 | 20,744 |
| Enterprises and government offices | 2,110 | 6,532 | 537 | 4,984 |
| Public schools | 3,860 | 9,336 | 772 | 6,653 |
| Universities | 23 | 2,077 | 84 | 1,320 |
| Specialized: | ||||
| Science | 115 | 1,409 | 29 | 507 |
| Government | 35 | 594 | 16 | 282 |
| Party and public organizations | 93 | 804 | 39 | 280 |
| Technical | 212 | 864 | 54 | 398 |
| Medical | 60 | 405 | 36 | 361 |
| Theaters (archives) | 133 | 443 | 6 | 34 |
| Educational | 14 | 152 | 8 | 57 |
| Total specialized | 662 | 4,671 | 188 | 1,919 |
| TOTAL | 10,791 | 49,104 | 3,227 | 40,616 |
| * In thousands. | ||||
The so-called public reading room was another form of library. Founded by educated Bulgarians during the Turkish occupation as centers of culture and education, the reading rooms have become quite widespread, particularly in the villages, and supply books to farmworkers and other members of the rural population. In the early 1970s there were 4,108 reading rooms with over 20 million volumes.
FILMS
By 1947, after the new constitution had been enacted, the film industry became a state monopoly. The next year the new Law on Motion Pictures was passed, which essentially expanded on the theme of state control. It officially abolished free enterprise in the film industry and prohibited individual activities in the importation and exportation of films and the private operation of movie theaters. The film industry fell under the official control of the Bulgarian Cinematography Association, which was under the Department of Motion Pictures of the Committee for Science, Art, and Culture. By 1950 the entire film industry was under the complete control of the Council of Ministers. The Department of Motion Pictures became officially attached to the council.
One of the early laws regarding films stated that "the motion picture must become a real fighting assistant of the party and the government and be an ardent agitator and propagator of the government policy." The focus of the industry was to be placed on the building of socialism while increasing the country's bonds with the Soviet Union. Early legislation stated that "Soviet films gave immense educational influence and mobilized action and conscious participation in the building of socialism for still greater friendship with the Soviet Union." This emphasis on the relationship with the Soviet Union was not only ideological. Soviet films also represented approximately 87 percent of the films shown in Bulgaria from 1945 to 1956, and the Bulgarian film industry was in large part assisted by its film counterpart in the Soviet Union.
The film industry expanded quickly under the new government. There were 187 films produced in 1960 (see table 15). By 1965 there were approximately 2,000 motion picture houses, roughly 83 percent of which were in the villages.
Table 15. Bulgaria, Films Produced and Translated,
Selected Years, 1939-71
| 1939 | 1948 | 1960 | 1971 | |
| Full length | 3 | ... | 11 | 18 |
| Art | (3) | ... | (10) | (16) |
| Documentary | ... | ... | (1) | (2) |
| Television | 0 | 0 | 0 | 19 |
| Short and medium length | ... | 19 | 110 | 252 |
| Documentary | ... | (15) | (36) | (60) |
| Popular science | ... | (4) | (32) | (61) |
| Technical education | ... | ... | (16) | (21) |
| Animated | ... | ... | (8) | (16) |
| Propaganda | ... | ... | (18) | (94) |
| Previews | ... | 53 | 66 | 58 |
| TOTAL | 3 | 72 | 187 | 347 |
In mid-1973 information on the film industry indicated that the production, distribution, importation, exportation, and exhibition of films were still controlled by the Bulgarian Cinematography Association. This agency was subdivided into three sections: the chief studio at the Bulyana film center where feature films and cartoons were produced; a second studio that produced documentary shorts and popular science films for schools; and a third studio that specialized in newsreels.
Relative to other European countries there was little importation or exportation of films. In mid-1973 data suggested that between 100 and 150 feature films were imported per year. These films generally came from the Soviet Union and other Eastern European countries, although a few were imported from Italy, France, and Great Britain. The first Bulgarian film to be exported was The Chain, which was shown in Czechoslovakia in 1964. The same year another Bulgarian film, The Intransigents, was shown in Ireland, and still another, The Peach Thief, was shown in Great Britain. The precise number of Bulgarian films exported was unknown, although one writer claimed that in 1973 Bulgarian films were viewed in about seventy countries.
In mid-1973 the subject matter of Bulgarian films was characteristically contemporary, and there was little focus on historical events. Although a few historical films had been produced, they were in the minority. A few films had dealt with the subject of Bulgarian resistance to the Nazis, but they too were relatively scarce. More films were devoted to the so-called people's heroic struggles. Most films in Bulgaria, however, dealt with contemporary life in the country and current events. The overwhelming majority of these films treated the conflicts and issues of Bulgarian youth.
SECTION III. ECONOMIC
CHAPTER 12
CHARACTER AND STRUCTURE OF THE ECONOMY
Under comprehensive control of the Bulgarian Communist Party (BKP—see Glossary), the economy was severely strained in mid-1973 as the result of the dual task imposed upon it by the BKP leadership to increase productivity rapidly and substantially and to provide a growing volume of consumer goods and services under a newly announced program for raising the population's low standard of living. A first step in improving the living standard took the form of an upward adjustment in the lowest wage brackets and a broadening of social security provisions. Further improvements, however, were made conditional upon attainment of the productivity and production goals.
The development of the economy and of the consumer program faced severe limitations because of the inadequacy of domestic resources, including basic raw materials, fuels and power, skilled workers, and trained professional personnel. Economic development was heavily dependent on financial and technical aid from the Soviet Union, and dependence upon that country was to be increased in the 1971-75 period. Efforts to overcome persistent and growth-retarding difficulties in the economy led to frequent organizational and procedural changes in the economic mechanism, the structure of which in mid-1973 was still in flux as a result of decisions taken by the BKP in 1965 and in 1968.
The main trend in reshaping the organization and management of the economy was one of concentration and centralization—a trend that led to the creation of huge trusts in industry and distribution and of vast agroindustrial complexes in agriculture. In the process, divisions and lines of authority were blurred, and violations of government directives were frequent because of their complexity and the constraints they placed on the day-to-day operation of economic enterprises.
In the search for a more efficient organization and management pattern, heavy reliance was placed on the introduction of complex automation into all economic processes with the aid of a nationwide computer network—a system of automation that would extend from the highest levels of national economic planning down to the individual factory shop and cow barn. No ideas have been advanced, however, on how complex automation would solve the basic problem of the economy—the widely acknowledged and pervasive lack of incentives to work. The methods used to grapple with this problem were limited to a tinkering with the wage and bonus system, administrative sanctions, political indoctrination, and exhortations.
ORGANIZATION
State ownership of the means of production predominates in the economy. Collective ownership has prevailed in agriculture, but it may be gradually eliminated in the course of the agricultural reorganization initiated in 1970 (see ch. 13). Private ownership of productive resources is limited to subsidiary farm or garden enterprises of collective farmers, industrial and state farmworkers, and artisans; a small number of individual farms on marginal lands; and noncollectivized artisan shops. In 1971 private ownership encompassed about 10 percent of the agricultural land but only 2.5 percent of the fixed assets used in production. Private ownership of personal property and homes is allowed.
The proportions of national income (net material product) generated in each of the ownership sectors in 1971 were: state, 70 percent; collective, 21 percent; and private, 9 percent. The importance of private enterprise in the production of food, however, is much greater than its contribution to the national income may suggest. The private sector has provided more than one-fifth of the crop output and one-third of the livestock production (see ch. 13).
Whereas the leadership has promoted livestock production on private farm plots, since 1968 it has placed increasingly severe restrictions on the activities of private artisans, who had originally been encouraged to expand their operations through liberal regulations issued in 1965. Aside from providing essential services, private artisans played an important role in supplying a variety of consumer goods for the population. The restrictions on artisans' activities have been based on the BKP tenet that private ownership of means of production and the use of personal property to acquire unearned income are incompatible with the socialist order and the country's new constitution.
Economic activities are centrally planned and directed along lines prescribed by the BKP. The functions of planning and control are exercised by the Council of Ministers with the aid of specialized economic ministries, such as the Ministry of Finance, the Ministry of Chemical Industry and Power Generation, and the Ministry of Foreign Trade, and of various governmental committees and commissions (see ch. 8). The state banking system and, more particularly, bank credit have also served as tools for the control of enterprises and trusts.
The economic management structure has been subject to frequent changes. In the spring of 1972 there were fourteen economic ministries, including five ministries exclusively concerned with branches of industry and construction. The Ministry of Agriculture and the Food Industry, as its name implies, has functioned in two major economic sectors and has also had substantial responsibilities in the field of distribution. Among the committees and commissions the most important have been the State Planning Committee, the Committee on Prices, and the Commission for Economic and Scientific-Technical Cooperation. In December 1972 the Commission on the Living Standard was created to coordinate and control the fulfillment of the national living standard program decided upon by the plenum of the Central Committee of the Bulgarian Communist Party. Attached to the Council of Ministers and chaired by a deputy minister, the commission is composed of ministers and deputy ministers, representatives of public organizations, scientists, and other members.
Since the beginning of 1971 economic management has been more highly centralized than before. A plan for partial decentralization of economic decision making adopted in 1965 was abandoned by 1968. The economy is organized into trusts (officially known as state economic associations) that unite enterprises within branches of economic sectors along functional lines, such as metallurgy, textiles, food processing, railroads, freight forwarding, tourism, wholesale distribution, publishing, and filmmaking. In agriculture, trusts are known as agroindustrial complexes; each complex unites several previously independent farms (see ch. 13). Trusts are subordinated to economic ministries and are ultimately responsible to the Council of Ministers. The extent of the ministries' authority over trusts is not clear. In some important respects trusts receive instructions directly from the Council of Ministers.
Agroindustrial trusts number 170. In the nonagricultural sector about sixty-two trusts were originally created, with an average of thirty branches but as many as 106 in one instance. The process of concentration and centralization continued on a small scale at least until the spring of 1973, in part through the consolidation of separate trusts. Before the reorganization, trust branches had been legally and financially independent enterprises, and trusts served only as administrative links between enterprises and ministries. Whereas individual enterprises were previously regarded as the basic economic units in the country, it is the trusts that have been officially considered as such under the new system of management.
Trusts have assumed various functions previously performed by the enterprises themselves. They formulate economic and technological development policies for the trust as a whole and for each branch; establish relations with suppliers, distributors, and financial institutions; and centralize research and development. Trusts have also been charged with responsibility for providing operational guidance to their branches and for organizing the export of products that they manufacture. Branches remain responsible for the effective organization of operations, efficient uses of resources, and the conscientious fulfillment of tasks assigned to them by the annual plan.
Regulations governing the authority of trusts over their branches were intended to permit the establishment of flexible internal management organizations adapted to the particular needs of each trust. The trusts' policies were expected to be based on the rule that whatever the trust could do better than the branches should be centralized in it and, conversely, whatever the branches could do better than the trust should be left in their field of competence. Each trust was supposed to arrive at an optimal combination of management centralization and decentralization.
The transition to the new management system involved difficulties because of delays in issuing pertinent regulations, misinterpretation of the regulations by trust managers, and the reluctance of enterprise managers to acquiesce in the loss of their independence. Most of the organizational and personnel problems were reported to have been resolved by the end of 1971, and in March 1973 party chief Todor Zhivkov reported that further consolidation of the new management structure had been achieved. In the long run, greater efficiency of economic management is to be attained through pervasive automation of all management functions with the aid of a synchronized national network of electronic computers.
Under the new system of trusts, profits of individual branches are pooled and redistributed by the parent organization. Highly productive branches may thus find themselves in the position of having to share their profits with unproductive branches. This feature, some observers believe, may reduce incentives to raise the level of efficiency, increase output, and improve the quality of products.
STRUCTURE AND GROWTH
National income (net national product, which excludes most services not directly related to production) was officially reported to have been 10.41 billion leva (for value of the lev—see Glossary) in 1971, compared to 10.53 billion leva in 1970. Nevertheless, the official index of national income growth showed an increase of 7 percent from 1970 to 1971. This example illustrates the difficulty of using official statistics to describe the structure and growth of the economy or structural changes over a period of time.
According to the 1971 statistical yearbook for Bulgaria, the respective shares of industry and agriculture in national income in 1970 were 49 and 22 percent. The yearbook issued in 1972, however, cited 1970 figures of 55 and 17 percent instead. According to the earlier source, the proportion of national income contributed by industry increased by 6.5 percent in the 1960-70 period, whereas the subsequent source shows a growth of 17 percent for the same period. Similarly, the contribution of agriculture to national income was reported to have declined by 36.4 and by 33.3 percent. An upward trend in the contribution of trade to national income was shown in the earlier source, but a declining trend appeared in the latter.
The differences in statistical presentation resulted primarily from a major revision of wholesale prices, introduced by the government in January 1971. Price revisions made in earlier years, changes in the composition of individual statistical categories and other methodological modifications also contributed to the inconsistency of statistical time series in value terms. Because of differences in concept and coverage, Bulgarian national account data are not comparable with those of the United Nations or the United States systems of national accounts.
In the 1960-71 period national income at prices of 1957 was reported to have increased 2.25 times, which is equivalent to an average annual 7.7 percent rate of growth. The growth of national income was more rapid in the years 1966 through 1971 than it had been in the 1960-65 period. The official national income index implies an average annual increase of 8.5 percent in the latter period, compared to 6.7 percent in the earlier years. Reliable data on the growth of Bulgarian national income in Western terms are not available. Relatively high rates of economic growth are generally associated with early stages of industrial development.
In 1971 industry still lagged behind agriculture in terms of employment, although the proportion of the labor force employed in industry had been steadily rising, while employment in agriculture had been declining. In the 1960-71 period employment in industry rose from 21.9 to 31.2 percent of the labor force, and employment in agriculture declined from 54.7 to 33.4 percent of the total. During the same period employment in the services sector increased from 9.2 to 13.4 percent of the labor force, and gains in employment were made in all other economic sectors except forestry, including construction, transportation and communications, and trade.
LABOR
Growth and productivity of the economy have been adversely affected by shortages of skilled labor and of adequately trained and experienced technical and executive personnel. In the words of the minister of labor and social welfare, the level of worker's current training is inconsistent with the country's industrial base; it lags behind the requirements of the scientific and technical revolution. The lack of required skills has contributed to frequent machinery breakdowns and to the output of low-quality products. As a means of upgrading the skills of workers and executives, a broad program for training and retraining was launched in October 1972 with the cooperation of the Ministry of National Education. About half the number of persons undergoing training were below the age of thirty.
Other persistent shortcomings in the field of labor that have plagued the economy and have been the target of frequent criticism and administrative action by the leadership are inefficient organization of labor and poor labor discipline. Inefficient labor organization has been mainly an outgrowth of inferior management skills. Poor labor discipline has been a consequence of inadequate work incentives. In 1972 the minister of labor and social welfare estimated that more than 20 percent of the working time was lost through idling and other violations of labor discipline.
Adequate information on the structure of wages was not available in mid-1973. The main faults of the wage system that prevailed in early 1973 after repeated revisions, however, were outlined by the BKP leader, Zhivkov, and these faults were also discussed by labor ministry officials from the point of view of their effect on labor productivity. The basic wage constitutes the main incentive for work; bonuses, premiums, and honors play a minor role. Because of the large investment needs for industrial development and the corollary need to restrict consumption, wages have been kept low, and the rise in wages has been slower than the growth of productivity.
Basic wage pay has been based on the place of employment and not on the work performed. Wage scales for identical work have differed substantially between branches of the economy and industry. In industry, wage scales have been lower in branches manufacturing consumer goods than in branches producing capital goods; they have been lowest in textile mills. Wages have been determined by job classifications within economic and industrial branches, the workers' level of education, and length of service. Normal increases in pay for workers remaining in the same positions have therefore been infrequent.
Slow promotion and the disparity in wage scales contributed to excessive labor turnover because, under the prevailing conditions of scarcity, trained workers were able to improve their incomes through a change of jobs. It also led to irregularities in job reclassification by employers seeking to retain their workers through increases in pay. Wages have been raised from time to time by the government through general upward revisions of pay scales. This method, however, has no incentive value because it is not directly linked to an improvement in the workers' performance.
With a view to enhancing the stimulative effect of wages on productivity, Zhivkov proposed a basic reform of the wage system that would be carried out gradually in the 1973-80 period. In presenting his proposal to the BKP Central Committee plenum, Zhivkov dwelt on some of the major principles to be embodied in the new wage system. The minimum wage must be higher, and the rise in wages must be more rapid than before. Increases in basic wages must be closely linked to individual performance and to overall labor productivity in general, pay would be based on performance rather than on formal qualification or length of service. To this end the sectoral approach to wage determination is to be abandoned in favor of a functional approach that would establish a uniform economy-wide wage scale for jobs in relation to their complexity and hardship and to the specific conditions of work. Rigid pay scales are to be replaced by flexible schedules providing a range of pay for each job depending upon the ability and performance of the worker.
The reform would also gradually eliminate the egalitarian aspect of the current wage system by providing appropriate differentials for workers with higher qualifications. Under the current system, for example, the salary of economists has been below that of engineers, and the salary of engineers has been equivalent to the wages of skilled workers. This problem has been repeatedly considered in the past, but its solution was delayed for lack of funds.
Zhivkov also cited shortcomings of the prevailing piecework system and suggested some long-range remedies for the ills. About 60 percent of all workers have been employed on the piecework system. Production norms under the system have been low because of technological advances and the infrequency of adjustment of norms. Under these conditions workers have been able to exceed the basic norms to such an extent that payment for work above the norm has become a large, and in some cases the predominant, portion of the workers' earnings. Striving to increase their wages, workers under the piecework system have often resorted to shortcuts that have lowered the quality of output.
Zhivkov's proposal for improvement included the introduction of more realistic and more flexible quantitative and qualitative production norms and a gradual transition to hourly rates of pay with bonus payments for superior work whenever the quantity and quality of output is not directly dependent on individual workers. Under these conditions bonus payments would be linked to the performance of the entire working personnel, and the importance of the bonus in wage payments would be enhanced.
The wage reform has been discussed in the context of a broad program, announced by the BKP Central Committee plenum in December 1972, for a general rise in incomes and an improvement in the population's level of living. In the process the difference between urban and lagging rural incomes is to be eliminated. Implementation of the program has been made contingent upon the attainment of greater productivity and output through workers' efforts to surpass production and efficiency targets set by the government. These more difficult targets must be embodied in what have been officially labeled workers' counterplans. The BKP and the government have launched a new form of so-called socialist competition among workers and economic units, the aim of which is to exceed in performance the requirements of the counterplans.
Implementation of the standard of living program began with the introduction of wage increases, effective March 1, 1973, for workers employed under difficult or hazardous conditions, schoolteachers and university faculties, physicians and medical personnel, and employees of artistic and cultural institutions. Effective June 1 the minimum wage for all types of work was raised from 65 to 80 leva per month, and a level of 88 leva per month was decreed for all workers earning between 80 and 87 leva. The resultant distortion of the wage structure is to be eliminated over a period of several years.
Another important measure affecting labor was announced in March 1973—a gradual transition from a six-day, forty-six-hour workweek to a five-day week of forty-two and a half hours. Under the BKP directive the transition must be accomplished without loss in production; the loss in worktime must be compensated by a corresponding rise in productivity. The shorter workweek had been in effect on an experimental basis for about 17 percent of the industrial workers since 1968. In 1973 and 1974 it was to be introduced in enterprises of the material production sector, excluding agriculture, provided that the required rise in productivity has been assured. In 1975 the reduced workweek will be introduced in transport, for management of state economic enterprises, and for persons employed in the field of services other than health services and educational institutions. Preparations for experiments with a shortened workweek in these two areas and in agriculture are to be undertaken in 1974 and 1975. The decree on working hours gave formal approval to an established practice that requires workers to make up by work on Saturdays or Sundays for worktime lost whenever official holidays fall on weekdays.
INVESTMENT
The proportion of national income devoted annually to capital formation (net investment) rose steadily from 22.6 percent in 1961 to 35.4 percent in 1966 and 1967 and declined thereafter progressively to 26.8 percent in 1971. In absolute terms annual capital formation increased from 1.06 billion leva in 1961 to 3.06 billion leva in 1970, then declined to 2.74 billion leva in 1971. More than half the net addition to capital (from 46 to 67 percent annually) consisted of fixed assets; the balance represented equipment and inventories.
Gross investment at current prices increased from 1.4 billion leva in 1961 to 3.6 billion leva in 1971; investment was officially estimated at 3.9 billion leva in 1972 and was scheduled to reach 4.3 billion leva in 1973. The bulk of investment has been channeled into the material production sector (including trade). The annual investment share of this sector increased from about 74 percent in 1960 to 79 percent in 1969 and declined to 76 percent in 1971. The proportion of investment devoted to housing and services declined correspondingly in the 1960-69 period from 26 to 21 percent and rose in the subsequent two years to 24 percent. The shift in the investment trend foreshadowed the formal directive issued by the Tenth Party Congress in April 1971 for the development of a program to raise the population's standard of living.
Industry has been the main beneficiary of investment funds; its share rose to almost 50 percent in 1969 but declined slightly thereafter. Agriculture received only about 15 percent of investment in the years 1969 through 1971, compared to 28 percent in 1960 and 19 percent in 1965. Residential investment declined from 14 percent in 1960 to an average of not quite 10 percent in the 1969-71 period.
Building construction and installation work absorbed the largest, though declining, share of investment—60 percent in 1960 and 46.4 percent in 1971. The share of investment spent on machinery and equipment rose by 50 percent in the 1960-69 period from 26 to 39 percent, but declined to 34 percent in 1970 and 37 percent in 1971. Imported machinery, mostly from the Soviet Union, constituted a major though declining proportion of investment in machinery—from two-thirds to one-half of the total in the 1965-71 period. Other investment expenses, including geological surveys, absorbed from 12 to 17 percent of annual investment.
New investment has been increasingly concentrated in state enterprises. In the 1960-71 period the proportion of investment absorbed by state enterprises increased from 68 to 83 percent, while the share of investment devoted to collective farms declined from 18 to 8.5 percent. Annual investment in artisans' collectives rose from 1.2 percent of total investment in 1960 to 2.7 percent in 1968 and declined to 1.1 percent in 1971. This trend paralleled the government's policy of initial encouragement and subsequent restriction of private artisan activities; it suggests that the government's restrictive policy may not have been limited to private artisans alone (see Organization, this ch.).
Private investment in residential construction declined from 12.7 percent of annual investment in 1960 to 6.5 percent in 1970 but rose to 7.2 percent in 1971. In absolute terms private investment increased from about 174 million leva to 262 million leva. By 1973, however, new restrictions were being introduced on housing construction by private individuals. As much as 90 percent of the residential construction in 1960 and 70 percent in 1971 was privately financed. In the 1968-70 period about half the private investment in housing was supported by bank loans or by loans from special funds of employing organizations.
The rise in the volume of capital per worker in the 1960-70 period as a result of the investment activity did not produce a corresponding increase in labor productivity; that is, the efficiency of investment declined. Whereas the amount of fixed capital per worker in the sphere of material production increased at an average annual rate of 10.4 percent, and the volume of machinery and inventories rose by 12.5 percent per year, output per worker increased at an annual rate of only 7.7 percent. In an effort to increase the efficiency of investment, the Tenth Party Congress, convened in the spring of 1971, directed that 35 percent of new investment in the sphere of material production during the 1971-75 period should be used for the reconstruction and modernization of existing facilities. In 1972, however, the proportion of investment used for this purpose was only 18 percent.
In the context of the eventually abandoned program for economic decentralization, provision was made for reducing the role of the central government budget in financing investments and for increasing participation by investors with their own funds and bank credits. In the sphere of material production, excluding trade, budgetary allocations in 1965 accounted for 55 percent of investment, and bank credits made up 7 percent; in 1969 investment funds from these sources constituted 21 and 32 percent, respectively. The contribution from the budget, however, rose again after 1969 to 28 percent in 1971, whereas bank credits declined to less than 20 percent of the investment funds. The share of investors' own resources, including funds of local governments, increased from 36 percent in 1965 to 52 percent in 1971. Budgetary investment funds are being increasingly concentrated on projects in the fields of services and raw materials production.
A satisfactory explanation of the shifts in the pattern of investment financing is not feasible in the absence of adequate information on the changing methods of financing economic enterprises and organizations. The announced government policy is to shift financing progressively from the budget to the economic trusts. The shifts did not alter the fundamental fact that all investment funds, excluding the small private investment, remained public property subject to governmental controls and that the difference was merely one of bookkeeping. The change in the channeling of public investment funds was introduced in the hope of increasing the effectiveness of their use.
The realization of major investment projects, particularly in industry, has been made possible by very substantial technical and material assistance from the Soviet Union. Nevertheless, serious shortcomings have been officially reported in the implementation of investment programs, both in industrial and in residential construction. The main problem has been posed by the initiation of building programs that exceed the capacity of the construction industry and the consequent scattering of limited resources. The situation has been aggravated by frequently poor project planning, inferior design, delays in the delivery of machinery and materials, poor organization of work, and slack discipline.
As a result of the difficulties in construction, the completion and commissioning of new industrial plants has often been delayed, and housing construction has fallen chronically short of the volume planned—by as much as 25 percent in 1972. The consequent failure of the anticipated output from new plants to materialize created shortages in various areas, thereby affecting production and market supplies adversely and necessitating revisions of the economic plans. In an effort to minimize these difficulties, the government adopted various administrative measures in 1971 and 1972, including the formulation of a list of nationally important construction projects, direct supervision of which was assumed by the Council of Ministers. The number of projects included in the list for 1972 was variously reported as thirty-five and thirty-nine out of a total of more than 3,000 projects. The listed projects consisted mainly of plants for the production of industrial materials.
BUDGET
The budget constitutes the basic financial plan of the country's leadership. It is the monetary expression of the annual socioeconomic plan and provides for the financial flows implicit in that plan. The budget is comprehensive; it takes into account all aspects of the economic, social, and cultural activities of the country. In line with the government's policy of gradually placing economic trusts and their branches on a self-financing basis, a progressively larger share of the funds budgeted for the economy is being retained by the trusts rather than channeled to the budget. The sums thus retained by economic organization rose from about 3 billion leva in 1971 to a planned level of more than 5 billion leva in 1973. Ultimate control over the use of these funds, nevertheless, remains with the government, and their disposition is subject to the provisions of the budget.
The national budget is formulated by the Ministry of Finance along lines dictated by the BKP leadership and must be approved by the National Assembly. As a rule only very minor modifications are made in the process of legislative review. Budgets for local governments are prepared as a part of the national budget; in 1972 and 1973 their total amount was equivalent to about 17 percent of the overall national budget. The Ministry of Finance is also responsible for ensuring the scrupulous implementation of the budget. It is assisted in this task by a nationwide network of state and local inspectors and by agents of the banks. Actual budgetary results are directly affected by deviations from the annual economic plan and therefore seldom, if ever, correspond to the original estimates, which have the force of law.
Systematic publication of budgetary data was discontinued in the mid-1960s. Since then only scattered figures have become available through press reports on the presentation of the budget to the National Assembly and occasional articles by the minister of finance or other ministry officials.
The annual budgets have grown steadily larger. The approved budget for 1973 called for revenues of 7,057 million leva and expenditures of 7,035 million leva. In 1970 actual revenues totaled 5,723 million leva, the expenditures amounted to 5,650 million leva. Usually about 90 percent of budgetary revenue has been derived from operations of the economy, and the remainder has been raised through a variety of levies on the population. The largest single item of revenue—more than 30 percent of the total—has been collected in the form of a turnover tax on sales that has been passed on to the ultimate consumer. The second most important revenue source has consisted of levies on enterprises in the form of a profits tax, a tax on fixed capital (interest charge) and miscellaneous other deductions from income. Social security taxes based on payrolls have been the third major source. Levied at a rate of 12.5 percent through 1972, the social security tax was raised by 20 percent in 1973 in order to meet rising costs. In 1972 about four-fifths of the turnover tax and two-thirds of the revenue from taxes on profits and capital was to be derived from industry.
In December 1972 the BKP Central Committee plenum embarked upon a gradual modification of the income tax system that would eventually lead to a total abolition of income taxes for wage earners and collective farmers by 1980. Initially, the existing system is to be improved by introducing unified taxation for all blue- and white-collar workers and collective farmers and by establishing a tax exemption equal to the official minimum rate of pay. Gradual elimination of all income taxes for these population groups in the 1976-80 period is to be synchronized with the contemplated reform of wage scales. At the same time a system of progressive taxation is to be introduced on incomes derived from activities in the private sector that are not in conformity with the amount of labor invested.
The most complete recent information on budgetary expenditures is available from the approved budget for 1972. Out of a total outlay of 6,514 million leva, 3,224 million leva was earmarked for the national economy, and 2,065 million leva was set aside for social and cultural needs. The remaining undisclosed balance of 1,225 million leva, or 19 percent of the total outlays, must have included expenditures for defense, internal security, and government administration. The social and cultural expenditures included; social security payments, 1,054 million leva; education, 532 million leva; public health, 303 million leva; culture and arts, 83 million leva; and science, 93 million leva, in addition to 235 million leva to be provided by research organizations and economic trusts.
Information on the budget for 1973 was more sketchy. No information had been disclosed on the magnitude of the expenditure on the national economy; the usually undisclosed residual was therefore also not ascertainable. The increase in overall revenues and expenditures over those in 1972 was about 8 percent. Outlays for social and cultural affairs, however, were planned to increase by 11.8 percent, including increases of 18.8 and 15.7 percent, respectively, for public health and education. These figures reflected the government's announced program for increasing the well-being of the population.
The BKP and government leadership look upon the budget as a major tool for executing BKP economic policies. As expressed by the minister of finance in 1973, the budget contains a whole arsenal of financial and economic levers—levers that must be used ever more skillfully to raise the efficiency of economic performance, to improve the structure of production and consumption, and to bring about a well-balanced economy. The budget is also considered a tool for exercising effective control over the entire sphere of production and services, not only to ensure smooth current operations but also to inhibit any undesirable departures from official policy.
The disciplinary powers of the budget have yet to be more fully developed to cope successfully with the officially reported shortcomings in the economy. One step in this direction calls for the further intensification of what has been officially called financial and bank control through the lev, that is, the discretionary use of financial sanctions, including the denial of budgetary allocations or bank credits, to enforce strict compliance with specific plan directives. Another advocated measure is to intensify the public campaign against waste and the irresponsible attitude toward public funds and for tighter financial discipline. An implacable campaign is also to be waged against wrongs done to the citizens in the use of public funds, illegal formation and misappropriation of funds by economic organizations, irregularities in the supply of materials, failure to produce consumer goods despite the availability of needed resources, accumulation of excessive inventories, and pilferage.
Many apparent violations of economic and budgetary discipline arise because of the frequently inadequate knowledge or understanding by personnel at all levels of the economy of the constantly changing laws and regulations concerning the operation and interrelation of the diverse economic units, particularly in the area of finance. The changes in laws and regulations are the result of an unceasing search for a system that would provide effective incentives toward conscientious and efficient work to all gainfully employed persons.
BANKING AND CURRENCY
Banking
Since early 1971 the country's banking system has consisted of the Bulgarian National Bank and two semi-independent banks attached to it: the Bulgarian Foreign Trade Bank and the State Savings Bank. This banking system emerged after three reorganizations in the 1967-70 period and conforms to the general pattern of institutional and management concentration in the economy. In addition to serving as the central bank of issue, the Bulgarian National Bank, an independent agency under the Council of Ministers, is directly responsible for financing all sectors and phases of the economy other than foreign trade and consumer credit, in which fields it supervises the activities of the Bulgarian Foreign Trade Bank and the State Savings Bank. The bank is also responsible for exercising close control over the economic units that it finances, with a view to ensuring the fulfillment of all national economic plans and the scrupulous adherence to existing laws and regulations.
A minimum of current information was available in mid-1973 on the structure of the banks, the relationships between them, and their financial operations. Official statistics are limited to annual data on bank credits for investment and on the volume of outstanding short- and long-term loan balances for the banking system as a whole. Data on outstanding loans are broken down by type of borrower and, in the case of short-term loans, also by purpose. With minor exceptions, no information was available on the volume of loans extended, on loan maturities, or on interest rates after 1970. Statistics had also been published on the volume of personal savings in the accounts of the saving bank at the end of each year.
The total amount of loans outstanding at the end of the year increased from 3.6 billion leva in 1965 to 9.2 billion leva in 1971. The proportion of long-term loan balances rose from 24 percent of the total amount in 1965 to 40 percent in 1970 but declined to less than 36 percent in 1971. The increase in lending activity to 1970 was a direct consequence of the partial shift from predominantly budgetary financing of economic activities to a substantial measure of self-financing by enterprises and trusts. The subsequent decline was related to the tightening of investment credit in an effort to reduce waste in the construction program (see Investment, this ch.). Long-term loans have been granted predominantly, if not exclusively, for fixed investment purposes.
Of the 3.27 billion leva in long-term loans outstanding at the end of 1971, 2.61 billion leva was due from state and collective enterprises, and 660 million leva was owed by private individuals who had borrowed to finance home construction. Only 12.5 percent of the loan balances was due from collective farms—an amount equivalent to barely 62 percent of the sums owed by private individuals. Collective enterprises in industry and services had outstanding loans of only 13 million leva. In relation to the value of each sector's fixed assets in 1971, the proportion of outstanding long-term loans was: state enterprises, 11.3 percent; collective farms, 16.1 percent; and collective artisans, 2.9 percent.
Nine-tenths of the short-term loan balances at the end of 1971 were owed by state enterprises, and one-tenth was due from collective enterprises. Wholesale and retail trade accounted for 36 percent of the outstanding loans; industry and construction were each liable for 28 percent. Short-term loan balances of agriculture amounted to less than 8 percent of the total sum, and balances of the services sector constituted less than 0.2 percent. The largest part of short-term loans was granted for working capital purposes, including the procurement of farm products. A balance of almost 1 billion leva, however, was outstanding on loans for the completion of building construction, including a small amount for housing.
A very small, though increasing, volume of consumer loans for the purchase of durable goods and clothing has been granted by the State Savings Bank. The volume of such loans—36.5 million leva in 1966, 48.2 million leva in 1967, and 45.4 million leva in 1968—was equivalent to slightly more than 1 percent of retail sales in the commercial trade network. The outstanding balances of consumer loans at the end of the year rose from 49.1 million leva in 1968 to 102.1 million leva in 1971. Consumer loans may not exceed the sum of 500 leva and may be used only for the purchase of designated goods. In 1969 the authorized list included twenty-three categories. A sample survey in 1969 indicated that about two-thirds of the loan volume was used to acquire television sets, furniture, and motorcycles; another 20 percent was spent on radios, sewing machines, and scooters.
Apart from consumer loans, the State Savings Bank grants small loans to licensed private craftsmen for working capital and to collective and state farmworkers and other qualified applicants for the purchase of productive livestock, seeds, fertilizers, small tools, and other farm perquisites. The bank also makes loans for adapting premises to the needs of tourism; for current building repairs; and for meeting personal emergencies, including loans to newlyweds for the acquisition of furnishings. Depending upon the purpose of the loans, loan ceilings range from 150 to 800 leva, and maturities extend from ten months to eight years.
The volume of consumer loans was reported to have reached 116 million leva in 1972. Under the economic plan for 1973, the State Savings Bank was scheduled to make loans to individuals for the purchase of consumer goods and other needs in the amount of 203 million leva and for home construction in the amount of 180 million leva. The bank was also expected to lend 141 million leva to people's councils.
Loan funds of the State Savings Bank have been derived from personal savings deposits and, presumably, from interest payments. The bank also conducts state lotteries for the benefit of the state budget. There is no evidence as to whether the bank retains a portion of the lottery proceeds for its own operations. Savings deposits increased almost fivefold in the 1960-71 period to a level of about 3.6 billion leva—a sum equivalent to 64 percent of total retail sales or 150 percent of food sales through commercial and institutional channels in 1970. According to preliminary data, savings deposits rose by 630 million leva in 1972, and they were scheduled to increase further by 870 million leva under the economic plan for 1973. The bulk of savings deposits has been channeled into the budget.
The repayment record on loans by the State Savings Bank was excellent, at least through 1969. The proportion of delinquent loans was reduced from 3.1 percent in 1966 to 0.01 percent in 1969. This result was achieved by a regulation that provided for penalties to be imposed on paymasters throughout the economy who failed to withhold or to report to the bank monthly loan payments. According to a bank official, there had been no need to impose any penalties because the regulation itself proved to be an adequate deterrent.
The loan repayment record of enterprises, trusts, and other economic organizations has not been nearly so good and led to a tightening of credit provisions in 1971. The proportion of overdue short-term loans in the production sector increased from 10.7 percent in 1966 to 11.8 percent in 1971. Similar information on long-term loans has not been published.
The penalty interest rate on delinquent loans is 10 percent (it was 8 percent through 1970), compared to a normal range of 1 to 5 percent on loans for working capital. Whenever a bank loan or supplier credit is delinquent for more than three months and the delinquent amount exceeds 20 percent of the borrower's working capital, the borrower becomes subject to a special credit and repayment regime, the specific conditions of which are not known. The ultimate sanction is the refusal of credit and, at times, even the replacement of the trust or enterprise director. The special credit regime is also applied whenever a trust or its branch (enterprise) stockpiles unneeded inventories; procures materials for production without guaranteed outlets for the output; undertakes a construction program without adequate financial provisions; increases its obligations; or suffers a worsening of its financial condition for any other reason.
Interest costs in excess of those planned lower the economic organization's income and, under the prevailing incentives system, also reduce the funds available for the payment of wages, salaries, and bonuses. Loan delinquency and the associated penalty interest rate, therefore, often bring about the reduction or elimination of bonus payments and, in extreme cases, the withholding of a portion of regular pay. Application of the more severe sanctions entails a serious deterioration of the economic organization's finances that adversely affects its production program. Through close contact with borrowers and detailed supervision of their operations the bank endeavors to forestall delinquencies and the attendant losses to the economy. In December 1972 the Council of Ministers adopted a decision to enhance the role of the banking system in administering the economy by intensifying its participation in the formulation of economic plans and by expanding its authority in monitoring plan fulfillment.
Currency
The currency unit of the country is the lev, divided into 100 stotinki (see Glossary). It is a nonconvertible currency with a variety of exchange rates, usable only in domestic transactions. Since January 1, 1962, the lev has been officially defined to contain 759.548 milligrams of fine gold—equivalent to 1.17 leva per US$1 at that time. This exchange rate was valid only for commercial transactions. In the wake of the United States dollar devaluation on December 18, 1971, the official commercial exchange rate was set at 1.08 leva per US$1 (greenback—see Glossary). A further revision of the exchange rate was put into effect on February 13, 1973, which established a parity of 0.97 leva per US$1. The subsequent decline in the value of the dollar in foreign markets did not call forth another official exchange revaluation to mid-1973.
The official tourist exchange rate for so-called capitalist currencies underwent similar revisions and was set at 1.65 leva per US$1 on February 14, 1973. The noncommercial rate for ruble area countries, based on a parity of 0.78 leva per 1 ruble, was equivalent to 0.64 leva per US$1 until that date; thereafter, at the new ruble-United States dollar parity, it was equivalent to about 0.59 leva per US$1.
In addition to the official exchange rates, there are three varieties of clearing account rates. The multilateral transferable ruble is used to clear accounts with other European members of the Council for Mutual Economic Assistance (COMECON—see Glossary). Socialist bilateral units arise from bilateral trade agreements with other communist countries. Neither of these two exchange varieties has private markets abroad. Bilateral clearing units arise from bilateral trade and payments agreements with about thirty noncommunist trading partners. These clearing units are traded sporadically abroad at varying rates of discount.
The lev has been traded on the black market in exchange for so-called capitalist banknotes or gold coins. The black market rate of the lev fluctuated between 4.60 leva per US$1 in January 1963 and 2.58 leva per US$1 in June 1972.
Except for small remittances or travel allocations to other communist countries, the lev is nontransferable for residents; resident status applies to all physical and juridical persons who have resided in the country for more than six months, regardless of their citizenship. Ownership of or trade in gold, foreign currencies, or so-called capitalist securities is prohibited, as is the import and export of Bulgarian banknotes. There are no investments by noncommunist country nationals in Bulgaria.
Exchange transactions are administered by the Bulgarian National Bank jointly with the Ministry of Finance, the Ministry of Foreign Trade, and the Bulgarian Foreign Trade Bank. Bulgaria is neither a member of the International Bank for Reconstruction and Development nor of the International Monetary Fund. Statistics on currency in circulation, the public debt, foreign exchange reserves, gold stocks, and the balance of payments have not been published.
FOREIGN TRADE
Foreign trade is a state monopoly. Trade policy is formulated by the BKP and government leadership; it is translated into a complex set of laws and regulations designed to encourage the expansion and qualitative improvement of production for export, to promote import substitution, and to bring about greater efficiency in production and foreign trade operations. Control over foreign trade is shared by the Ministry of Foreign Trade, the Ministry of Finance, and the Bulgarian National Bank through the Bulgarian Foreign Trade Bank.
Along with other elements of the economic structure, the foreign trade apparatus and the laws and regulations governing foreign trade have been frequently modified. As a result, there are two basic types of foreign trade organization: those attached to and serving individual economic trusts with a large export volume and organizations serving several trusts whose export activity did not justify a separate export department. Two foreign trade organizations that imported most industrial materials were attached to economic trusts responsible for the domestic distribution of supplies. Foreign trade organizations affiliated with trusts retain their legal identity and are not considered to be branches of the trusts they serve. Relations between foreign trade organizations and the trusts whose products they handle are governed by contracts, the framework of which is provided by official regulations. As a rule, foreign trade organizations carry on their activities for the account of the trust. There are a few organizations, however, that trade for their own account, and there are also a few economic trusts that have the right to engage in foreign trade activity directly.
Export plans are approved by the Council of Ministers for each economic trust in physical and value terms and by major trading areas, that is, member countries of COMECON, other communist countries, Western industrialized nations, and developing countries. Trusts pass their trade plans to foreign trade organizations. The plan of a single trust may be apportioned among several foreign trade organizations, and many foreign trade organizations receive plan assignments from several trusts so that their own foreign trade plan is a composite.
Under the regulations of 1971, as amplified in 1972, and unlike earlier conditions, the financial results of export operations are directly reflected in the producer's profit position. This circumstance is counted upon by the leadership to motivate trusts toward attaining optimum efficiency in export production and toward adjusting output to foreign market requirements. Financial incentives to surpass official foreign trade targets are provided by allocating the producers and foreign trade organizations a portion of the receipts from excess exports and a portion of savings made on imports through import substitution. Excess exports may not be made by diverting output scheduled for the domestic market, and savings on imports may not be made at the cost of quantitative or qualitative deterioration of the domestic supply.
Producers for export are obligated both to produce the items called for by the export plan in accordance with specifications and to meet contractual delivery dates; with few exceptions, they have no direct contact with foreign buyers. It is the responsibility of the foreign trade organizations to seek out the most profitable markets and to handle all physical and financial details of the trade transactions. It is also their duty to keep producers currently informed about changing conditions in world markets and to make them aware of needed adjustments in production.
Standard subsidies per 100 leva, differing by trading area, are granted on all exports. These subsidies, in effect, modify the official exchange rate so that trade is actually conducted on a multiple exchange rate basis. Subsidies from the state budget are also provided for exports, the returns from which do not cover costs. Special bonuses are offered to economic trusts and their branches that fulfill or surpass their export assignments to noncommunist markets. Proceeds from exports are credited to the economic trusts and not to the foreign trade organizations.
Relations between economic trusts and foreign trade organizations are determined in broad outline by government regulations. Specific details, however, including precise financial arrangements that are the core of the relationship, must be worked out by the parties to the contract. This situation provides opportunities for friction that may be harmful to the export program. Trusts and export associations were therefore enjoined to undertake negotiations in a cooperative spirit and to avoid taking advantage of their monopoly position as producers or exporters. Disputes that threaten to involve financial losses are to be settled by the Ministry of Foreign Trade and the Ministry of Finance.
Total trade turnover increased more than 3.5 times in the 1960-71 period to a level of 5 billion leva, including 2.55 billion leva in exports and 2.45 billion leva in imports. The growth of trade was erratic, particularly in the case of imports. Over the entire 1960-68 period, however, the average annual growth of exports and imports was almost identical—13.9 and 13.8 percent, respectively. In the subsequent three years exports rose almost twice as rapidly as imports, though at a lower rate than in earlier years. The change in the relative rates of growth during the 1969-71 period—10.5 percent for exports and 5.6 percent for imports—helped reverse the consistently negative trade balance of the earlier period and produced trade surpluses in three consecutive years.
The great bulk of the trade has been carried on with communist countries, primarily the Soviet Union. The share of these countries in total trade, however, declined from 85 percent in 1961 to 78 percent in 1970; it had fallen to 73 percent in 1966. Communist countries outside COMECON, primarily Cuba and the Democratic Republic of Vietnam (North Vietnam), accounted for only 3 to 4 percent of the trade annually. The Soviet Union alone provided more than half the imports and absorbed an equal amount of exports. The German Democratic Republic (East Germany) and Czechoslovakia were the main COMECON trading partners after the Soviet Union, but the volume of trade with these countries was very much lower. The share of East Germany in the total trade had been 10.5 percent in 1960 but ranged between 8 and 8.6 percent in the 1965-70 period. The proportion of trade with Czechoslovakia declined from 9.7 percent in 1960 to only 4.8 percent in 1970.
The orientation of trade toward the Soviet Union has been based largely on political factors but has also been dictated by the shortage of export goods salable in Western markets and the inadequacy of foreign exchange reserves (see ch. 10). Trade with COMECON members is conducted on the basis of bilateral clearing accounts that do not involve the use of foreign exchange. Furthermore, the Soviet Union has supplied Bulgaria with a large volume of industrial plants and equipment in exchange for the products of these plants. In the 1971-75 period trade with the Soviet Union is scheduled to increase by 60 percent over the volume in the preceding five-year period, and the share of the Soviet Union in the total trade volume is planned to reach 68 percent.
Trade with noncommunist countries rose from about 15 percent of the total volume in 1961 to 27 percent in 1966 but declined thereafter to 22 percent in 1970. From three-fourths to four-fifths of this trade was accounted for by Western industrialized nations, primarily the Federal Republic of Germany (West Germany), Italy, France and Great Britain. The balance of the noncommunist trade was with developing countries, mainly India, the United Arab Republic (UAR), and Iraq. Trade with the United States has been negligible.
There has been a gradual shift in exports from agricultural to industrial commodities and from raw materials to manufactured and semiprocessed products. Yet in 1970 exports of agricultural origin still constituted 55 percent of the export volume, including 8 percent of raw farm products. The share of industrial exports rose from 25 percent in 1960 to 45 percent in 1970, of which 13 and 27 percent, respectively, consisted of machinery and equipment. In 1972 the proportion of machinery and equipment in exports was reported to have risen to 34 percent.
Machinery and equipment have been exported almost exclusively to communist and developing countries. In 1968, the last year for which information was available, machinery and equipment constituted only 1.8 percent of exports to Western industrialized nations.
Imports in the 1960-70 period consisted predominantly of machinery and equipment, fuels, raw and processed industrial materials, and raw farm commodities. Imports of foods and industrial consumer goods were limited to about 10 percent per year. Machinery and equipment constituted from 40 to 44 percent of imports; fuels and industrial materials accounted for about one-third; and agricultural raw materials made up the balance.
In the 1960-70 period the country's overall trade balance was negative each year with the exception of 1969 and 1970. The trade deficit for the entire period amounted to 580 million leva, including 530 million leva in the trade with noncommunist countries and 50 million leva in the trade with communist partners. A breakdown of the trade balance by all four trading areas was available only for the 1965-70 period. For that period the overall trade deficit amounted to 278 million leva. Whereas trade with communist and developing countries had positive balances of 148 million leva and 154 million leva, trade with developed Western countries accumulated a deficit of 580 million leva. Almost all of this deficit was incurred in the years 1965 through 1967, when government controls over foreign trade were temporarily relaxed in an aborted economic reform. Under the system of bilateral agreements governing Bulgaria's trade, the surplus in the trade with communist and developing countries cannot be used to offset the deficit with Western trading partners.
Data bearing on the balance of payments have never been published. The Soviet Union has granted substantial loans to Bulgaria since 1946, some of which were used to finance imports from that country. Bulgaria, in turn, has made some loans to developing countries to help finance its exports. A portion of the deficit with Western trading partners may be offset by income from the rising Western European tourist trade, particularly with West Germany. A reputable Western source reported Bulgaria's indebtedness to Western nations to have been US$88 million in 1971, but the basis of this estimate and the degree of its reliability are not known.