Mr. Oscar de Bruyn Kops has been based in Sofia, Bulgaria as the Country Manager of the World Bank Sofia Office (www.worldbank.bg) as of November, 2001. A Dutch national, joined the World Bank in 1979 as young professional. He has more than two decades of experience with transition economies ranging from Indonesia, Eastern Europe, Middle East, North Africa and Caribbean, including five years residential field experience. Mr. de Bruyn Kops led extensive work on enterprise and financial sector reform and private sector development in Hungary and Bulgaria. Before joining the Bank Mr. de Bruyn Kops worked as UNDP associate expert on a secondment to Premier's Office of theGovernment of Dominica (East Caribbean) to develop and carry out a small business development program. Married with two sons.
Mr. Oscar de Bruyn Kops met with Milena Hristova, Editor of The News and Novinite.com
Q: The World Bank strategy envisages the release of USD 750 M for reforms implementation in Bulgaria over the next three years. The reforms in which sectors do you consider most imperative? Which should be accelerated?
A: The World Bank program for the next three years focuses on poverty reduction, improving living standards and support for Bulgaria's move towards EU accession. 60% of the USD 750 M under the lending program will be in the form of Programmatic Adjustment Loans in support of the government's economic and social reforms. The balance would be for a series of investment projects, employment creation, improved public service delivery, public sector reform, education.
The series of PALs support priority reforms in three major areas. The first one is improvement in the business environment to promote competitive private sector investment. This would translate into continued growth and job creation. The second area aims to strengthen public administration reforms and anti-corruption, thus promoting a transparent and accountable government. Reduction of the social cost of economic transition, particularly for the vulnerable groups, concerns the third area of reforms.
In terms of priorities, we see job creation as the most important area for Bulgaria. This will require reforms in the judiciary, a stable regulatory environment with further reduction in corruption. The World Bank also attaches importance to the effective social safety net programs that help mitigate the impacts on vulnerable groups.
Q: Finance Minister Veltchev and the World Bank Country Director Andrew Vorkink signed February 21 the agreement for a USD 150 M Programmatic Adjustment Loan (PAL) for Bulgaria. Why did you choose Bulgaria, among other countries in the region, to start this program?
A: We see that Bulgaria has made good progress on economic reforms and is now well on its way to EU accession. The approval of the PAL is a clear vote of confidence for far-reaching economic reforms.
Q: What are the risks?
A: Bulgaria faces a number of challenges in terms of external environment, particularly in terms of a possible impact of the Iraqi crisis, oil prices and interest rates, as well as a possible slow-down of EU economies.
On the internal side there is the need to strengthen institutional capacity, including judiciary. Besides the strong political will that we see it is important to be able to analyse, prepare and coordinate the reforms effectively. The major challenge for the reforms is to sustain public support through clear communication of the reform agenda. We work very closely with the government to address those challenges.
Q: How will PAL loans benefit most tangibly Bulgarian citizens?
A: The PAL program addresses a number of challenges, including unemployment rate, continued poverty, insufficient investment both by domestic entrepreneurs and international investors and fairly low quality of public services.
Based on the specific actions that we have agreed under the PAL we are looking at positive outcomes for the average Bulgarians. The program is designed to sustain a growth rate of about 4,5% - 5% a year, reduce unemployment by 20%-25% from the current levels, cut poverty by half and sustain the EU accession agenda. For the average Bulgarian this translates into new jobs, better public services and improved living standards.
Q: What is the trigger, concerning the privatization of major state-owned enterprises, which the World Bank agreed with the Cabinet?
A: First of all I would like to underline that we support the importance of moving ahead with the privatization program as the key ingredient for Bulgaria's structural reforms.
The PAL Program would foresee the completion of the privatization program in the coming years and we hope to see the share of the private sector to GDP total about 70%-75% by 2005.
The World Bank has monitored closely the progress on the privatization program and the government's commitment towards moving ahead on the various transactions. We consider that commitment to be sufficient on the basis of moving forward with PAL 1. We continue to monitor closely a number of transactions and hope that by the release of PAL-2 a considerable progress will be made.
Q: How would you comment on the latest developments of the privatization process in Bulgaria?
A: There is an economic and a legal side to that question. On the economic side we see the need for a continued progress for privatization. The legal question is harder for us to judge since this is a matter of the Bulgarian institutions and the various branches of the Bulgarian government.
Q: How will a possible delay in their privatization affect the disbursement of the PAL-2 facility?
A: At this point this is a hypothetical question. We will continue to monitor the intentions of the government.
Q: Foreign diplomats have recently voiced concerns over the "alarming" corruption in Bulgaria. Are you optimistic about the efficiency of the corruption combat, having in mind that satisfactory implementation of the anti-corruption strategy is a PAL-3 trigger?
A: Corruption is one of the most sensitive issues in Bulgarian society and a main factor holding up improved business environment and delivery of public services.
Although we see clear signs of improvements in the overall corruption level, it ranks very high on the list of concerns in the recent review of Coalition 2000. The main causes are weak legal and regulatory framework, weak capacity to monitor corruption and enforce the law, accountability and transparency.
As part of the PAL program we are supporting the government's efforts to implement its anti-corruption strategy, including initiatives to improve the effectiveness and credibility of the judicial system, accountability and transparency.
It is important that a move is made from drafting strategies and action plans to their implementation and enforcement. The World Bank is working closely with the government on that issue as we prepare PAL 2.
Q: Can you list the concrete steps in the implementation of the Social Investment and Employment Promotion Project (SIEP) in Bulgaria?
A: The project was approved in December and signed recently with the government.
Preparations for implementation have already started and we expect to officially launch the project by the end of the month.
The Social Investment Fund (SIF), the implementing agency for the project, is now starting the implementation of two components of the project - community infrastructure for development initiatives and the program of active labour market initiatives.
The Social Investment Fund will soon announce the first round of collections of proposals from communities and municipalities on the first component. We start to appraise those proposals and prepare them for submission to SIF steering committee for approval. The component will provide direct financing to small infrastructure projects of up to USD 80, 000. More complex municipal projects will be supported up to USD 200,000.
In terms of active labour market initiatives the project will ensure that communities receive additional resources to help people find jobs.
Q: How do you assess the use of the World Bank loans? Is it efficient?
A: Bulgaria has performed well on the implementation of Bank-financed projects. Our portfolio continues to be in good shape. In our regular reviews we look at implementation progress and the degree to which the projects achieved the development objective. If we see that performance starts to slip, we work closely with our counterparts in the government and the project implementation agency to turn things around.
We have periodic joint portfolio reviews with the government that lead to high level meetings, usually chaired by one of the Deputy Prime Ministers. The quality of the portfolio on outstanding issues, actions that need to be taken are discussed that this meetings.
We will have one of those periodic meetings in the next three weeks.
Q: What are the World Bank's priorities in 2003?
A: We will continue to implement our country system strategy, which was reviewed by a board in May last year.
We will start the preparation of the second PAL, which will focus on issues related to state administration, judiciary and anti-corruption.
In terms of our investment projects, we are completing preparations on Revenue Administration Review project and District Heating Rehabilitation project in Sofia and Pernik. Work is underway on projects to preserve force resources in Bulgaria.
We will continue with our analytical and advisory work, do more dissemination work on poverty assessment, fiscal decentralization in Bulgaria, environmental aspects of EU accession, private sector assessment and a country financial accountability assessment.
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