Bulgaria Top Military Plant VMZ Sopot Heavily in Debt to State

Business » INDUSTRY | October 11, 2009, Sunday // 16:17| Views: | Comments: 0
Bulgaria: Bulgaria Top Military Plant VMZ Sopot Heavily in Debt to State State-owned plant VMZ Sopot is in deep financial trouble. Photo by vmz.bg

One of Bulgaria's largest military plants, VMZ Sopot, owes about BGN 50 M to the state.

This was announced Sunday by Traicho Traikov, Bulgaria’s Economy Minister, after a meeting with Prime Minister Borisov, Defense Minister Mladenov, and the VMZ Sopot Director Ivan Stоеnchev.

Bulgaria’s Defense Minister, Nikolay Mladenov, said the previous governments poured money into the state-owned factory indiscriminately, and that the previous management of the plant was involved in violations together with the government officials.

The state loaned money to VMZ Sopot without the plant meeting any criteria; much of those money was used to pay out workers’ salaries but without their social security and health insurance benefits.

Mladenov said VMZ Sopot was not an isolated case but that it was an example of the condition of all military factories in the country. In his words, the state will be seeking ways to sell the factory’s produce on markets in Asia, Africa, and elsewhere.

According to the VMZ Sopot Director Stоеnchev, currently the factory works at 10% of its production capacity. No massive layoffs of the plant’s 3 700 workers have been planned but some of the administrative and support staff may be directed towards other activities.

VMZ Sopot has been in a troubled financial condition in the last few years. In 2007, Bulgaria's Privatization Agency started to sell of the plant's assets in order to cover some of its debts; some of its assets were also sold at the beginning of 2009.

Over the years, the governments have failed to decide on a strategy to privatize VMZ Sopot, and the Privatization Agency is said be expecting a solution from the GERB government and the new Parliament dominated by them.

The VMZ Sopot plant is located in the town of Sopot in central Bulgaria, which is the birthplace of Bulgarian writer and poet Ivan Vazov. The plant was founded in 1936, and during the communist period was developed into a large-scale military industrial unit.

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Tags: Ivan Stоеnchev, Defense Minister, Economy Minister, Nikolay Mladenov, Traicho Traikov, state-owned, indebted, Sopot, military factory, VMZ Sopot
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