Банкеръ Weekly

Briefs

CORRUPTION HURTS POOR PEOPLE AND BUSINESS MOST

Andrew Vorkink, World Bank Country Director for Bulgaria, Romania, and Croatia to the BANKER weekly

Mr. Vorkink, which are the privatisation deals that the World Bank will insist to be finalized first by Bulgaria's new government?
- We have not prepared a list of such privatisation deals. Definitely, we'd like to see the divestment of the Bulgarian Telecommunications Company (BTC) finalized, as there is a great potential in it for ensuring revenues for Bulgaria. However, the telecommunications industry worldwide is in a difficult situation. The market is not as good as it used to be. That's why we realize that the deal on BTC might take longer time. Nevertheless, we are anxious to see things going regarding BTC. Many of the other privatisation activities are already in progress. Work on FESAL III - the third loan for restructuring of the financial and production sector - shows that its fulfillment is good. Most probably, we'll change it in the autumn into a credit of a new type - programme loan. However, we'should first
hold talks with the new government about its plans.

Which are the most important requirements that the future cabinet should fulfill in order to close a new 3-year agreement for financing from the World Bank.
- The reform in public administration is very important. That's why we began discussing it with the outgoing Government. On Thursday I had a very encouraging conversation with Simeon II on how could we help the new government work out an anti-corruption strategy. This will be one of the pilons of reform over the next 4 years.
The overall reform in administration involves issues connected with revenues, decentralization, publicity, reduction of licensing regimes, reform in legislature, and from there - improvement of business climate in the country. All measures are directed against corruption. The World Bank has included them in the economic memorandum with Bulgaria as crucial for the country's accession to the European Union. The EU has also set reform in public administration as one of the priorities. Having in mind preliminary conversations with the National Movement Simeon II, I believe that the new government will approve this sphere as a priority for future changes.

In which spheres do you thing corruption is mostly manifested and what specific measures would you recommend to the government for reducing it?
- First of all, in order to make a plan for fighting corruption, it should be known where it lies. We helped many countries to make such a diagnosis. Several such diagnoses were made in Bulgaria by private organisations as Transparency without Borders and Centre for Democratic Research. Their work can be combined with other researches in order to find out where the problems lie. And they are in the health care sector, in traffic police, in customs offices, in education. We believe, it is important to collect all available information in this sphere and use it for the development of a strategy on what should be done first of all. This, of course, cannot be done overnight. The development of a strategy requires specification of the most problematic spheres for the economy and for the quality of legislature, and then work out programmes for education, reduction of licensing regimes, and a number of practical measures to reduce corruption.
For example, if 10 licences are presently required for starting up a business, cut them to one. This would eliminate nine opportunities for corruption. We'll discuss with the new government how could we cooperate in that direction in future.

Do you think that corruption has turned into a major obstacle to the development of the country's economy?
- Corruption is a problem in all countries of Eastern Europe. I don't think the level of corruption in Bulgaria is much higher than in other countries of the region. But corruption is a hindrance because it raises the expenses for doing business, disencourages investors, and hurts poor people. They cannot afford to pay bribes when they go to a hospital, for example. In that way they are deprived of services, even if the installments they have paid cover the amount charged for these services. So, corruption hurts the interests of the poor and of businessmen.

The new parliamentary majority of the NMSII intends to place customs offices under international supervision. How would you comment this?
- I have heard about that idea, but I am not acquainted in details with it. The World Bank is preparing a trade and transport facility project, aimed at standardization of customs procedures between the countries in compliance with the requirements of the EU. This project will help for the reduction of corruption as each passing through the border by TIR-trucks will be entered into a computer system.

Do you think that supervision on customs should be entrusted to an international organisation, or would it be better to be done
by local authorities?
- The experience in eastern Europe shows that finacing and assistance of customs operations, the improvement and computerization of standard customs procedures, reduces the number of arbitrary acts when going through the border. It is efficient when local officers are involved. I don't know enough about NMSII's proposal, but I know that other countries managed to improve customs services by accepting assistance in getting new equipment and training of customs officers. They did that in a modern way maintaing at the same time the responsibility of their national authorities.

Will the World Bank insist on hiking the prices of heat energy and electricity in Bulgaria?
- We have never insisted on anything, we only advise the government on certain issues.

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