IMF Tells Bulgaria to Curb Spending, No Talks on Loan

Business » FINANCE | April 22, 2009, Wednesday // 14:40
Bulgaria: IMF Tells Bulgaria to Curb Spending, No Talks on Loan The head of the International Monetary Fund (IMF) mission to Bulgaria Bas Bakker denied reports that Bulgaria might be the next in line after Hungary, Latvia, Serbia, Romania and Poland to seek IMF aid. Photo by BGNES

The Bulgarian government should sharply cut spending to avoid slipping into a 1% budget deficit at the end of this year. The warning was voiced by the head of the International Monetary Fund (IMF) mission to Bulgaria Bas Bakker as the global lender ended its regular week-long mission to Sofia on Wednesday.

The IMF has revised downwards its forecast about Bulgaria's economy, expecting that it will slow down by about 3.5% this year and another 1% the next year. The experts say the unemployment rate will climb by 4% to 11%. At the same time the inflation rate will further slow down and drop from the record-high 12% registered at the end of last year to about 1.5%.

Bulgaria's current account deficit will shrink more than twice from 25% to 12% of GDP in the wake of the global financial crisis, the IMF said.

According to IMF experts the 10% buffer envisaged in the budget spending is far from sufficient.

Commenting statements by a growing number of economists that Bulgaria might be the next in line after Hungary, Latvia, Serbia, Romania and Poland to seek IMF aid, Bas Bakker said Bulgaria is not in talks with the fund on getting a loan.

 

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