The economies of Bulgaria and Romania are the worst off in Eastern Europe, according to an article published on Thursday in the authoritative "Economist" magazine.

The global financial crisis is going to have the most negative effects in Bulgaria and Romania, the poorest and worst-governed new members of the European Union (EU), the publication explains.

The author explains that Bulgarians have their hands tied by a currency board that pegs the BGN rigidly to the EUR, ruling out devaluation to restore competitiveness, which is a concern as exports sag.

The current-account deficit worth a 25% of the Gross Domestic Products (GDP) looks alarming, according to the publication.

The article mentions Bulgaria's recent loss of EUR 220 ) in promised payments from the European Union because of its failure to tackle corruption as another negative factor.

Despite that fact that the biggest worries of the EU are now focused on Bulgaria and Romania, the author points out Bulgaria's strong fiscal position.

"The state has little foreign debt and runs a budget surplus. That should allow it to increase public spending as the economy slows. It can also borrow abroad (though the authorities say they have no plans to approach the International Monetary Fund (IMF). The loss of some EU money is embarrassing, but Bulgaria is still in line to get EUR 11 B in the years up to 2013. Oriens, a Hungarian-based merchant bank that specializes in the Balkan region, reckons that growth next year will be 2.3%: low but not awful," the article reads.

The author further points put that Bulgaria's politics are troubling as well because politicians' ties to organized crime remain scandalous; the main populist party seems to blame the country's Turkish minority as the economy slumps.

Meltdown may have been averted, but the eastern Balkans still face bleak times ahead, the publication concludes.

The article's full text can be found at: http://www.novinite.com/view_news.php?id=99338

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