The European Commission has called on Bulgaria to moderate wages in line with productivity gains and continue tight fiscal policies to safeguard macroeconomic stability amidst rising external imbalances and high inflation.

The critique came as part of the annual assessment of the Convergence Program for Bulgaria.

At the end of each year, member states submit to the Commission their budgetary plans for the following years. These plans are the Stability Programmes, for those countries in the Eurozone, and Convergence Programmes for countries outside it.

The programs seek to outline the respective country's strategy to maintain or reach macroeconomic stability in order to allow the Commission and the Council to conduct the surveillance of economic and budgetary developments in all EU states.

The European Commission describes as sound Bulgaria's budgetary position throughout the period covered by the convergence programme 2007-2010

The commission says that safeguarding macroeconomic stability and sustaining catching-up in a context of rising external imbalances and high inflation will require the continuation of tight fiscal policies and further improvements in the quality of public spending, including in health care.

"Fiscal institutions and public sector wage policy need to contribute to overall wage moderation in line with productivity gains," the Commission sais.

Brussels recommends that the government continue avoiding a pro-cyclical fiscal stance to help contain existing external imbalances, strengthen the efficiency of public spending, in particular through full implementation of programme budgeting, reinforced administrative capacity, and a reform of the health care system.

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