Quotes of the Day

The black eye Milen Veltchev was sporting last week was not, he insists, the result of a run-in with a disgruntled taxpayer. Sure, Veltchev has had some awkward encounters during his 15 months as Bulgaria's Finance Minister. There was the time his barber, after haranguing him about a licensing-rate hike, left him sitting in the chair with his thick black hair dripping wet while the barber went next door to fetch his daughter, also a hairdresser, who gave Veltchev another earful. As one of the most recognizable figures in government and the architect of a series of unpopular reforms, Veltchev has become used to such situations. But impassioned as his critics can be, they've never slugged him. No, says Veltchev, the black eye was the result of some early morning hoops action.

Whatever obstacles he faces on the basketball court, Veltchev's task of restructuring Bulgaria's economy and helping prepare the country for eventual entry to the E.U. is proving equally bruising. Despite putting into place such measures as electricity and heating price hikes to meet imf and World Bank commitments, Bulgaria was not even given a date for accession to the E.U. in the round of expansion announced this month. With unemployment hovering around 17%, and 12.6% of people below the poverty line, Bulgaria is far from meeting the E.U.'s strict fiscal requirements.

Veltchev, 36, grew up in Sofia and did graduate business studies at the University of Rochester and M.I.T. He left Merrill Lynch in London for a cabinet post in the new government of Simeon Saxe-Coburg-Gotha in July 2001. Bulgaria was engulfed in a wave of nostalgia-tinged optimism inspired by the new Prime Minister — also the country's former child King. Within a year, the party's ratings had plummeted; Veltchev's decision to award a contract to reform Bulgaria's corruption-plagued customs service to a British firm — without open bidding — prompted calls for his resignation and a no-confidence vote in the government. Veltchev's explanation: "We solicited other proposals. We just shortened the process to save time, because we were losing an enormous amount of money." Most controversial, though, were Veltchev's moves to restructure Bulgaria's crippling foreign debt. Earlier this year the government shaved $330 million off its net debt by exchanging $1.3 billion-worth of Brady Bonds for newly issued Eurobonds. A second $800 millionswap was recently announced. Critics charge that the terms and the timing of both deals lose the state money. "Veltchev has burdened taxpayers with hundreds of millions of dollars," says Plamen Oresharsky, an ex-Deputy Finance Minister and deputy chair of the former ruling party. "He has acted in favor of the investment community against his own people. I don't believe in his good intentions."

Veltchev's intention, he says, is simply "to pursue the right economic policies." He is frustrated by what he calls the "socialist mentality still prevalent" among many Bulgarians. "Things like privatization and structural reforms are sometimes easier than the most fundamental change — getting people to start thinking in market- economy terms, to stop expecting the government to take care of them." Veltchev has the cour-age of his convictions, but some socialist-era habits die hard. He would never, he says, implement a policy just to court popular approval, but he concedes that "it would be wrong to pretend that any politician could survive with-out resorting to minor populist measures at times." How would he determine when such a measure was in order? That, says this otherwise staunch proponent of capitalist individualism, would be a matter for cabinet-level collective decision making.

TIME: What is your agenda? How should Bulgaria's finances look at the end of your term?
Veltchev: There are harder objectives and softer objectives. We have some numerical goals, like bringing the GDP-public debt ratio below 60%, which we should achieve in a very short time, and increasing Bulgaria's credit rating to investment grade. Other goals are less quantifiable, such as improving the well-being and the standard of living of the population.

TIME: Do you foresee Bulgaria becoming an investors' paradise?
Veltchev: I don't like too much hype, but I do expect Bulgaria to become a success story. All we need to do at this point is to complete the reform agenda, which I think we are on the way to doing. Hopefully Bulgaria will become a member of NATO and of the European Union in the not too distant future.

TIME: Do you have a clear mandate to implement all these changes, to make the moves you want?
Veltchev: It's not a personal mandate. It's the government's economic policy program, which I helped to write and we're now implementing. If the policy were very different from the program I would not have agreed to become Finance Minister.

TIME: Do you plan on remaining in politics when your term is up?
Veltchev: Most likely not. I'm trying not to make long-term plans for myself, only for Bulgaria.

TIME: Many people feel that the IMF keeps you straitjacketed.
Veltchev: I felt that was more the case last year than this year. These days, thanks to my reputation, the IMF is more lenient and gives me more freedom. But even last year, the straitjacket was a comfortable one, because they are acting for our own good and are recommending policies that they sincerely think are good for Bulgaria.

TIME: Do you sometimes feel like the most hated man in Bulgaria, especially when you announce new taxes or get into a cab and the driver complains about the taxes he's paying?
Veltchev: That's why I have the Ministry's cars, so I don't get into discussions of tax rates with taxi drivers.

• VIOLETA SIMEONOVA
• Finance Minister Milen Veltchev is hoping to pave the way for Bulgaria's entry to the E.U.