Bloomberg News

Bulgarian Railways to Fire 2,500 Workers to Meet Loan Conditions

November 04, 2011

Nov. 4 (Bloomberg) -- The Bulgarian State Railways EAD will lay off 2,500 workers this year to meet the requirements of a World Bank loan designed to help stave off bankruptcy.

The indebted state railway company needs to cut 30 percent of its employees to less than 11,000 people under a 460 million- lev ($322 million) loan agreement with the World Bank, Chairman Vladimir Vladimirov told reporters in Sofia today. The company delayed the layoffs in March to avoid a strike and did not receive the loan.

“The layoffs are effective immediately and not subject to negotiations with the trade unions,” Vladimirov said. “I hope to complete this by the beginning of next year. We have two options, either we let go 2,000 people or we lead the company into bankruptcy and all 13,000 are let go.”

Bulgaria, the European Union’s poorest country in terms of economic output per capita, weathered the global crisis without borrowing from international lenders. The country aims to narrow this year’s budget gap to 2 percent of gross domestic product and 1.5 percent in 2012 to contain the impact of the euro area’s sovereign-debt crisis. The gap was 3.9 percent in 2010.

The transport company will also close 150 of its money- losing lines and fire additional 500 people servicing these trains, Vladimirov said.

The loss narrowed in September to 29.6 million lev, after a 47 million-lev loss a year ago, he said. Losses in 2010 amounted to 218 million lev, while its debts to banks were 572 million lev in December.

--Editor: James M. Gomez

To contact the reporter on this story: {Elizabeth Konstantinova} in Sofia at ekonstantino@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net


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