THE Cabinet is to float a 12 million leva loan to the Bulgarian State Railways (BDZ) to cover its outstanding debt.
The money will come from the state budget. The company is to be required to repay the loan by the end of next year.
The funds were provided at the request of Transport and Telecommunications Minister Plamen Petrov, the Government press office said.
Part of the money will go to pay staffers food allowances for the past three months. The railway workers trade union of the Confederation of Independent Trade Unions recently launched a sign-in protest and threatened a strike over the unpaid allowances.
The five-year rehabilitation programme for BDZ EAD and Railway Infrastructure National Company (the two entities into which BDZ was split about a year ago) that is pending adoption will limit the companys expenditures and will guaranty timely payment to the state budget, suppliers and staffers, the Transport Ministrys press office said.
According to the World Banks most recent report on Bulgarian public spending, Bulgarian State Railways is not operating as a commercial entity but rather as an old (pre-transition) government enterprise. To stem the deterioration of the railway sector, Bulgaria needed to terminate loss-making services and reduce the labour force, according to the World Bank experts. They describe the break-up of the BDZ into two entities one for operations, the other for infrastructure, as a step forward.
However, repaying the debts of the BDZ to its employees or to creditors by extending money from the state budget is hardly the most positive step, economists commented. As the state railways will not be able to repay their new debts that now they will owe to the state, the Government will have to use other improper mechanisms to fight the impossible financial state of the company.
Last week, Deputy Transport and Communications Minister Krassimira Martinova said that a total of 143 passenger rail lines would be closed in the next few months, a process which started in September. Thirty-seven per cent of the staff of the BDZ have been laid off since 1995, and another 10 per cent are to be made redundant soon. At the same time, BDZ is forced to retain, as best as it can, its market share in a competitive environment.
The money will come from the state budget. The company is to be required to repay the loan by the end of next year.
The funds were provided at the request of Transport and Telecommunications Minister Plamen Petrov, the Government press office said.
Part of the money will go to pay staffers food allowances for the past three months. The railway workers trade union of the Confederation of Independent Trade Unions recently launched a sign-in protest and threatened a strike over the unpaid allowances.
The five-year rehabilitation programme for BDZ EAD and Railway Infrastructure National Company (the two entities into which BDZ was split about a year ago) that is pending adoption will limit the companys expenditures and will guaranty timely payment to the state budget, suppliers and staffers, the Transport Ministrys press office said.
According to the World Banks most recent report on Bulgarian public spending, Bulgarian State Railways is not operating as a commercial entity but rather as an old (pre-transition) government enterprise. To stem the deterioration of the railway sector, Bulgaria needed to terminate loss-making services and reduce the labour force, according to the World Bank experts. They describe the break-up of the BDZ into two entities one for operations, the other for infrastructure, as a step forward.
However, repaying the debts of the BDZ to its employees or to creditors by extending money from the state budget is hardly the most positive step, economists commented. As the state railways will not be able to repay their new debts that now they will owe to the state, the Government will have to use other improper mechanisms to fight the impossible financial state of the company.
Last week, Deputy Transport and Communications Minister Krassimira Martinova said that a total of 143 passenger rail lines would be closed in the next few months, a process which started in September. Thirty-seven per cent of the staff of the BDZ have been laid off since 1995, and another 10 per cent are to be made redundant soon. At the same time, BDZ is forced to retain, as best as it can, its market share in a competitive environment.
