Bulgarian Railways avert collapse as Govt restores subsidy

Bulgaria’s Finance Minister Simeon Djankov has agreed to restore the legal government subsidy of the severely indebted Bulgarian State Railways BDZ, Transport Minister Ivaylo Moskovski said.

At the end of last week, Bulgarian Finance Minister Simeon Djankov gave the BDZ Holding management one weekend to come up with new reforms to save the company; this happened as BDZ was about to collapse financially as a result of Djankov’s decision to withhold the BGN 14 M subsidy for the state railways in July even though BDZ is entitled to it by law.
The reason for Djankov’s move was BDZ’s failure to service two 1995 World Bank loans whose interest has had to be assumed by the Finance Ministry.

“The subsidy to BDZ Passenger Services will be fully restored. There will be no layoffs and no termination of train services,” Bulgarian Transport Minister Moskovski told reporters after a meeting between the Finance Ministry, the Transport Ministry, and the BDZ management.

Moskovski also said the government experts are going to work out in the next couple of days what BDZ assets can be used in order to guarantee the servicing of its old loan to the World Bank.

“The reforms in question are not anything new for us. We have been working on them for a while anyway. The matter now is that we hope to have results in the near future,” stated in turn BDZ CEO Yordan Nedev.

Moskovski also revealed that he has been assured by the Bulgarian Privatization Agency that by the end of the year BDZ Freight Services – the one profitable department of the state-owned company – will be sold.

Source : Novinite

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