site.btaFebruary 19, 1999: Parliament Passes Act on Re-denomination of Lev

On February 19, 1999, the National Assembly passed an act on the re-denomination of the lev, resolving that BGN 1,000 will exchange for BGN 1, effective July 5, 1999. Following is BTA's news piece on the matter.

The Bulgarian lev will be redenominated on July 5, 1999, with 1,000 old leva equal to 1 new lev, under a Lev Redenomination and Change of the Standard of Prices Bill which Parliament passed conclusively on Friday.

The redenomination also applies to all property and pecuniary rights and obligations, including enterprise assets and liabilities, securities, the amount of participating interests, the amount of commercial corporations' capital entered in the Commercial Register, and all mediums of payment denominated in leva.

A motion by Ventsislav Dimitrov MP of the Alliance for National Salvation that the lev be redenominated on January 1, 2000 was defeated.

The prices of goods and services will be quoted in old and new leva until December 31, 1999. Until the same date, the old and new lev banknotes and coins will remain in parallel circulation and will be legal tender up to any amount, the old ones counting at their proportionately reduced face value.

After the entry of the law into force, the old banknotes and coins will be exchangeable without a time limit and in unrestricted amounts when presented at central bank desks. All exchange rates will also be announced in new leva after the effective date of the redenomination law.

Parliament determined that the new lev will exchange for the Deutsche mark at a fixed rate of 1 to 1. The old lev was anchored to the DM at a 1,000:1 ratio.

Ventsislav Dimitrov insisted on a 1.25 lev/DM 1 exchange rate, arguing that this will encourage production and export, but his motion was killed. Independent MP Nansen Behar moved that the lev be pegged to the euro, but was also voted down.

According to the Chairman of the National Assembly Economic Committee Nikola Nikolov, there is no economic mechanism that can stop the depreciation of the lev. "The crisis of competitiveness is overcome by production growth, and this is the target of the structural reform," he said.

"A revision of the exchange rate would be tantamount to disaster for the country and automatic increase of the prices of petrol, central heating, electricity and gas," central bank Governor Svetoslav Gavriiski said.