Bulgaria would be better off in the present economic crisis if it maintained a fiscal deficit, according to a group of economists from Bulgarian universities.

The economists' recommendation can be found in a sizable report prepared at the initiative of the Confederation of Independent Bulgarian Syndicates, one of Bulgaria's two largest trade unions. Its main author is Yordan Hristoskov, a former director of the Bulgarian National Social Security Institute.

According to the report, the policies of maintaining a budget surplus exacerbate Bulgaria's situation because they took away money from the economy as well as funds needed for urgent improvements in infrastructure, education, and health care.

The report points out that all these public spheres are at a minimal level of quality, and their condition could not serve as a boost to the economic activity. At the same time, the increased public spending could not compensate the decline in foreign capital inflow, and the country's currency reserve was found to be shrinking.

The main recommendation of the report is that the government switch to fiscal deficit policies, and try more aggressively to attract foreign funds. The report stresses that this type of policy was not incompatible with the currency peg, and was actually applied up until 2001.

It also reminds that the IMF and the European Commission supported the increase of state spending through the accumulation of deficits as a lesser evil than the recession.

The other proposed anti-crisis measures are improving fiscal supervision, stabilizing internal crediting and capital market, and ways of additional capitalization of the banking sector, including through the state-owned Bulgarian Development Bank.

Additional measures should be directed towards promoting exports, and supporting small and medium-sized businesses, the report states.

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