SOFIA -- Bulgaria, under pressure from international lending organizations to tighten monetary policy, is scraping around for a way to save at least two major banks from collapsing under the weight of non-performing loans.


An International Monetary Fund mission to Sofia has recommended tough restrictions on central bank refinancing to try to tame inflation.


But the mission and central bank officials agree that some banks might not withstand a liquidity squeeze without urgent stabilization measures.


Russel Kinkaid, who led the two-week IMF mission, said Friday that policy toward the banks had to change.


"These banks need to be restructured," he said. "That means the problems which incur losses must be addressed."


Kinkaid told a news conference the banks had to reduce current costs, close down unprofitable operations and sell branches and other fixed assets to improve their condition.


Finance Minister Stoyan Alexandrov listed further options now under consideration by the government and the central bank.


These include speeding the liquidation of bad debtors and making it easier for banks to convert government bonds issued to cover unperforming loans to state enterprises into equity.


Alexandrov also mentioned possible new share issues to attract fresh funds from local or foreign investors.


"We may invite the foreign creditors of our ailing banks to take equity in these banks," he said.


The Economic Bank, Stopanska Banka and Mineralbank had the most severe liquidity problems, he said.


Last week, Economic Bank -- Bulgaria's second biggest with overall assets of 39 billion levs ($722 million) -- announced a combined 1992 and 1993 loss of 189 million levs.


But Gancho Kolev, head of the Bank Consolidation Company, which holds the state share in the banking system, has said its real losses amount to 6 billion levs.


Official statistics show one-fifth of its loan portfolio is made up of bad loans to state firms stemming from the days when banks lent on the command of the communist regime.


Kolev, also deputy governor of the Bulgarian National Bank, or BNB, and chairman of Economic Bank since its entire board was sacked last year, said a stabilization program should come from executives of the bank. He would then press for revenue from the privatization of state firms to be spent in the first place on repaying bad loans to the banks which had extended them.


"We discussed the possibility of government subsidies for the bank, of lower interest rate BNB lending, of consolidating it with a healthier bank ... but we have not come to an acceptable solution to the problem so far," Kolev said.


Financial help to the bank has so far been provided by central bank lending at market rates, resulting in a monthly financial gap of some 1 billion levs.


Kolev said Mineralbank and Balkanbank also needed help due to liquidity problems caused by their bad loans.


The banks have assets of 35 billion levs and 23 billion levs respectively. Bad loans make up 7 percent of Balkanbank's portfolio while for Mineralbank they form around 5 percent.


They and other banks are pressing the government to increase interest rates on treasury bonds issued earlier this year to cover pre-1991 non-performing loans.


"We cannot afford to close down these giant state banks ... it would cause economic chaos," Kolev said.