IMF Advises Bulgaria Prudence

Politics | June 15, 2004, Tuesday // 00:00

The International Monetary Fund advised Bulgaria to hold on to a sensible policy, curb credit expansion and current account deficit.

IMF Board of Directors approved on Monday the report on Bulgaria, which assesses positively relations with the Balkan country. The report recommends a new agreement with the IMF to assist the government's efforts in implementing the necessary measures en route to EU.

A mission of the International Monetary Fund (IMF) is to pay a brief visit to Bulgaria on June 28 to discuss the parameters of the forthcoming precautionary agreement and review the report on the country's economic development.

The precautionary agreement will amount to USD 300 M, Finance Minister Milen Velchev said.

Under the draft provisions the Bulgarian National bank is to be handed over the Funds for Bank Deposits guaranty, as well as the BGN 300 M account of the Finance Ministry's national fund, adopting the role of a commercial bank.

Bulgaria is expected to sign by September the two-year precautionary agreement with IMF. The agreement, to be the last for Bulgaria, will expire upon the country's accession to the European Union, scheduled for 2007. The funding under the agreement would be extended only when the payment balance of the country is at risk.

The previous visit of IMF mission to Bulgaria was held in March. Bulgaria's government and IMF mission have agreed 2004 consolidated budget deficit to be reduced to 0.4%-0.5% of the Gross Domestic Product, in case the current account deficit continues to grow. The budget deficit was initially set at 0.7% of GDP.

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