The International Monetary Fund will notify Bulgaria, Romania and Hungary that "external vulnerability is a rising concern", Financial Times reported.

"The lack of fiscal discipline in Hungary and rapid private sector credit growth in Bulgaria and Romania have contributed to a widening of current account deficits and increasing external debt," the IMF will say in a report to the Group of Seven finance ministers' meeting next week in Singapore.

The report on the three countries' vulnerabilities draws attention to the international concerns about the deterioration of the current account deficit. The IMF's report forecasts a current account deficit in Bulgaria of 12.4 per cent of gross domestic product. The figures for Hungary and Romania are 9.1 per cent of GDP, and respectively 10.9 per cent.

The report goes on to say that the "recent credit boom in Bulgaria and Romania has probably increased medium-term financial sector vulnerability, as have the steady increase in foreign currency lending and signs of worsening credit quality in Hungary".

The report adds: "While macroeconomic policy in Bulgaria has been prudent, uneven policy implementation remains a concern in Hungary, and Romania to a lesser degree."

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