ABSTRACT
On March 29, 1990 the Bulgarian Foreign Trade Bank made an unprecedented move: it declared - via telex - a “temporary freeze” of principal repayments to Western commercial banks, referring to hard currency shortage and the country’s need for economic stabilization and for radical economic reform. In trade with the LDCs, exports contracted by more than one third, and imports by one fifth in 1989, leaving Bulgaria for the first time with a deficit. Considering the impact on Bulgarian trade with the West, a moratorium entails, in theory, sharp reactions on the part of the creditors -with imports, at best, to be paid for in cash. The embargo on Iraq involves additional shortfalls in oil imports to Bulgaria, both in the shape of repayments of the US$ 1.2 bn owed to the country by Iraq, and as regards oil deliveries of 2.5 mn tons from Iraq, agreed between Bulgaria and the Soviet Union.
