PM Says Bulgaria in Touch with IMF on Loan

Business » FINANCE | June 21, 2009, Sunday // 08:00
Bulgaria: PM Says Bulgaria in Touch with IMF on Loan Bulgaria’s Prime Minister Sergey Stanishev spoke to Dow Jones on the sidelines of a meeting of socialist lawmakers from the European Union. Photo by EPA/BGNES

Bulgaria is in close contact with the International Monetary Fund on a possible emergency funding deal, but any major policy decisions are likely to wait until after the July 5 general election, Bulgarian Prime Minister Sergey Stanishev said in an interview with Dow Jones.

"We are in a permanent dialogue with our international partners and in permanent touch with the International Monetary Fund," the prime minister said on the sidelines of a meeting of socialist lawmakers from the European Union.

"It is the job of the next government to discuss and decide what is the development of the economy," he said.

Bulgaria, the newest and poorest member of the European Union, is holding a vote just as the economy slips into its first recession in 11 years.

Stanishev's Socialist Party is trailing in the polls and was thumped in the European elections earlier this month by Citizens for European Development of Bulgaria, a right-leaning populist movement led by Sofia Mayor Boiko Borissov.

Bulgarian media quoted Borissov Thursday as saying the country should "immediately" secure an IMF loan.

Stanishev cautioned that IMF funds came with conditions attached.

"Bulgarian citizens should know a few very simple things - that the IMF is not a basket full of money to be granted without any conditions," he said. "One of the conditions for the IMF for Romania is to reduce salaries in the public sector by 5% - so it means that Mr. Borissov is saying that salaries will be cut by 5%," he added.

Bulgaria is likely to run a current account deficit this year equal in size to a third of the central bank's official foreign-exchange reserves, said Kristofor Pavlov, an economist for Unicredit Bulbank in Sofia. That "should increase the focus on the role that a potential IMF-led support package could have in mitigating the severity of the ongoing downturn," Pavlov said.

 

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