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BOX-FOLDER-REPORT: 6-6-165
TITLE:             The Fourth Five-Year Plan (1961-1965): Success of Failure?
BY:                RD
DATE:              1966-8-12
COUNTRY:           Bulgaria
ORIGINAL SUBJECT:  Bulgaria

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RADIO FREE EUROPE Research

EAST EUROPE

BULGARIA
12 August 1966

THE FOURTH FIVE-YEAR PLAN (1961-1963):
SUCCESS OF FAILURE?

Three months before the Ninth Congress of the Bulgarian
Communist Party is scheduled to convene, [1] the Central Committee has
informed the public about the "basic results of the development of the
national economy during the 1961-1965 period" and also released for
purpose of nationwide discussion, the directives for the new
five-year plan (1966-1970). Both the report on fulfillment of the Fourth
Five-Year Plan and the directives for the Fifth Five-Year Plan (adopted
at a Central Committee plenum on July 12) [2] were published in the press
of July 30. The present paper will examine some of the main results
of the plan just completed; a second Background Report dealing with
the directives for the new plan period will be issued separately.

The Central Committee announcement on the fulfillment of
the Fourth Five-Year Plan (1961-1965) shows that its main targets were
not met. The most serious non-fulfillment was registered in the
targets for national income and rural production, but in other branches
of the economy, too, the plan goals could not nearly be reached.

Before discussing the Fourth Five-Year Plan in more detail,
a word should be said about the figures used in this analysis, almost
all of which are taken from regime sources: Through 1960, the year
which represented the base figure for the increased targets of the
1961-1965 five-year plan, the figures expressing leva values were
given in constant prices. Since 1960, however, the Bulgarian
authorities almost nowhere indicate whether the values in the statistical

----------------------
(1) The opening session of the Ninth Party Congress is to take place
on 8 November 1965, according to an announcement published
in the Bulgarian daily press on 26 March 1966.

(2) Rabotnichesko Delo, 13 July 1966.


[page 2]

figures they publish are in constant or current prices. This is also
the case with the figures just published on the fulfillment of the
1961-1965 plan. It is, therefore, safe to assume that, since 1960,
the Bulgarian planners and statisticians have been using current
prices in their publications, thus being able to show, due to the
steady price increases, a more favorable growth rate and better
achievements.

Following a statement on the important role played by
"fraternal collaboration" with the socialist countries in Bulgaria's
successful development on the road to socialism and the observation
that during the past few years Bulgaria had "deepened and widened its
friendship and collaboration with all socialist countries, and 
especially with the Soviet Union,11 the Central Committee report gives the
following data on the fulfillment of the five-year plan which ended
in December 1965

National Income

The directives on the Fourth Five-Year Plan provided for
an increase of the national income in 1965 by about 60 per cent as
compared with 1960. [3] However, the announcement says that, during
the past five-year period, the national income grew by 41.5 per cent.
[4] In other words, national income fell short of the planned target
by almost one-third.

The most important factor in the non-fulfillment of this
target was, no doubt, the failure to meet the rural production targets
during the 1961-1965 period. The share of the rural economy in the
national income still represents about 33 per cent. [5]

Capital Investments

The plan provided for capital investments (limited and
non-limited) during the years 1961-1965 to reach a total of 8,215
million leva. [6] According to the announcement, however, capital
investments during the past five years actually amounted only to
7,500 million leva. [7]

----------------------
(3) Rabotnichesko Delo, 13 May 1962.

(4) Ibid. 30 July 1966.

(5) Thirty-three per cent in 1964 (Statistical Yearbook 1965, P.96)

(6) Rabotnichesko Delo, 13 May 1962.

(7) Ibid. 30 July 1966.

[page 3]
 
Industry

The Central Committee announcement says that total industrial
production in 1965 was 73 per cent greater than that of 1960. This
compares, the report states, with a 70 per cent increase envisaged in
the directives on the 1961-1965 plan. Thus the regime claims a slight
over-fulfillment of the plan in this area.

However, the directives on the Fourth Five-Year Plan
(1961-1965) actually provided for an increase of industrial production by
"not less than 70 per cent" over 1960, [8] and Stanko Todorov, in his
report on these directives, added that this meant an average annual
increase of 12 per cent. [9]

As the following table shows, only in 1965 was the planned
annual increase of 12 per cent fulfilled and even slightly 
over-fulfilled. These figures, officially announced for each of the five
years, clearly show that the five year plan for industrial production
could not be quite fulfilled.

1961 achieved increase over 1960 9.9 per cent [10]
1962 achieved increase over 1961 11.1 per cent [11]
1963 achieved increase over 1962 10.0 per cent [12]
1964 achieved increase over 1963 11.1 per cent [13]
1965 achieved increase over 1964 13.7 per cent [14]

The announcement does not give a detailed breakdown on the
output of the main industrial products during the 1961-2965 period.
But it does include statements which point to non-fulfillment in the
following key industrial sectors:

a) The Central Committee reports that the production of
electric power in 1965 reached more than 10,000 million kwh. (15) The

---------------------------
(8) Rabotnichesko Delo, 13 May 1962

(9) Ibid., 12 May 1962.

(10) Ibid., 28 January 1962.

(11) Ibid., 27 January 1963.

(12) Ibid., 31 January 1964.

(13) Ibid., 30 January 1965.

(14) Ibid., 29 January 1966.

(15) According to the announcement of the Central Statistical
Department, the exact figure for 1965 is 10,230 million kwh.
(Rabotnichesko Delo, 29 January l966.)

[page 4]

five-year plan, however, provided for electric power production to
reach 11,250 million kwh by 1965. [16]

b) It is admitted that, "because of some shortcomings in
the organization of work, the construction of some production
capacities of the Kremikovtsi metallurgical combine were delayed
and the targets in the sphere of ferrous metallurgy were not fully
achieved." A comparison of the directives on the 1961-1965 five-year
plan with the official announcement on the fulfillment of the 1965
annual plan demonstrates, however, that this is a gross
understatement: less than half of the planned production of steel and rolled
iron could be achieved, [17]

The following remarks in the announcement also show that
the general development of industry during the 1961-1965 period was
not satisfactory:

-In some spheres of production, new products, new
technology, new production capacities and economic indices were only slowly
adopted and made use of. The necessary efforts were not made
every-where to save raw materials and power and to make efficient use of
production funds.

-Also insufficient were the efforts to improve quality
and to broaden the production assortment, as well as to supply the
population with industrial services.

-The achievements in the development of the country could
have been even greater if all the possibilities of the national economy
had been fully utilized and if certain shortcomings in the
management of the economy had not been allowed.

Agriculture

The greatest failures in the fulfillment of the five-year
plan targets have been registered in agriculture.

The directives for the 1961-1965 plan provided for total
rural production in 1965 to be 45 to 50 per cent greater than that
of 1960. [18]

--------------------------
(16) Rabotnichesko Delo, 13 May 1962.

(17) Planned for 1965 by the five-year plan (Rabotnichesko Delo,
13 May 1962): 1,400,000 tons of steel and 1,000,000 tons of
rolled iron. Produced in 1965 (Rabotnichesko Delo, 29 January
1966): 588,000 tons of steel and 431,000 tons of rolled iron.

(18) Rabotnichesko Delo, 13 May 1962.

[page 5]

The announcement says that rural production in 1965 had
increased by "about 17 per cent" over 1960, However, data previously
released by the regime show that the growth was actually even smaller.
Figures published in a leading article in Rabotnichesko Delo indicated
that the increase between 1960 and 1965 was only 15.1 per cent. [19]

The failure in rural production is admitted by the Central
Committee announcement as follows:

Shortcomings were allowed in the organization and the planning
of the rural economy. As a result of this, some production
reserves and possibilities were not utilized. The plan for the
production of some rural products was not fulfilled.

Separate figures on agriculture were released only for
irrigation, and they show that the targets in this area also could
not be fulfilled. Whereas the directives had provided for the area
under irrigation to reach 1,050,000 hectares by 1965,[20] the 
announcement says that the total irrigated area in 1965 amounted to almost
920,000 hectares.

Trade

There was also underfulfillment of the five year plan
targets for both foreign and domestic trade, though by comparatively
smaller margins.

a) The total volume of foreign trade in 1965 was,
according to the Central Committee announcement, "about 75 per cent" over
that of 1960, while the directives had provided for an increase of
80 per cent. [21] In this connection, it must be borne in mind that,
in three of the five years, the Bulgarian trade balance was strongly
negative. Only in 1961 were exports and imports almost balanced,

---------------------
(19) According to Rabotnichesko Delo of 19 February 1966,
total rural production, expressed in value, increased
from 2,536,000,000 leva in 1960 to 2,919,000,000 leva
in 1.965 -- i.e. by 15.1 per cent.

(20) Rabotnichesko Delo, 13 May 1962.

(21) Rabotnichesko Delo, 13 May 1962.

[page 6]

and in 1965 exports slightly exceeded imports. [22]

b) In internal trade, the announcement states, the retail
goods turnover in 1965 was "more than 40 per cent" higher than in
1960, whereas the directives stipulated a 45 per cent growth. [23]
Since the statistics on retail goods turnover are usually given in
current prices, it is obvious that part of the claimed increase was
due to the increase of many retail prices during the period in question.

Conclusion

When the directives 0n the Fourth Five-Year Plan were
published, it was generally felt that the ambitious targets would impose
additional strains on the Bulgarian economy, already under stress, which
clearly appeared to be beyond its current abilities. This impression
has now been shown to be correct. As the above survey has clearly
shown, the main targets of the 1961-1965 plan were not fulfilled.

Despite its desire to present a rosy picture of the Bulgarian
economy to the Ninth Party Congress, the Party Central Committee has
been forced indirectly to admit this failure. It singled out as a
significant reason for these shortcomings, "the discrepancy between
the level of development if the economy and the old system of
management of the national economy" and the "shortcomings in the sphere of
material incentives and in the use of the economic laws of socialism."

The results achieved in implementing the Fourth Five-Year
Plan again show that continually overstrained targets are not always
purposeful, and can, in many cases, even serve to have a discouraging
effect on those whose task it is to fulfill them. Moreover, the regime
itself gains nothing: by setting at the outset unrealistic targets
which cannot be met this is forced, directly or indirectly, to admit
failures, instead of being able to point with pride to genuine
achievements.

(Bulgarian Unit)

-------------------
(22) Bulgarian Exports and imports 1961-1965 (in million leva);
Exports Imports
1961 775.2 779.2 (Stat.Yearbook 1964, p.300)
1962 903.9 918.1 (Stat.Yearbook 1964, p.300)
1963 975.8 1,091.9 (Stat.Yearbook 1964, P. 300)
1964 1,146.2 1,243.0 (Stat.Yearbook 1965 p.298)
1965 1,251.0 1,189.0 (preliminary figures; Vanshna Targovia
No.4, April 1966.)

(23) Rabonichesko Delo, 13 May 1962.

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