What Assessment did the IMF Give Bulgaria in its Latest Report?
On March 20, 2019, the Executive Council of the International Monetary Fund (IMF) closed the Article IV consultation with Bulgaria. This is the final stage of the assessment of the economic situation of the state, which the IMF makes each year for each Member State of the Fund. The consultation ends with assessment and country-specific recommendations. For Bulgaria, the Executive Board of the IMF focuses on our bid to join the EU Banking Union and the two-year currency mechanism for the introduction of the euro - ERM II.
"The preparation for entry into ERM II and the Banking Union will be one of the key priorities of the government in 2019. The Bulgarian authorities and ERM II have agreed that Bulgaria will join both ERM II and the Banking Union at the same time. Maastricht accession to the euro area (with the exception of ERM II participation for at least two years), this has been achieved by the Currency Board, which has contributed to sustainable macroeconomic policies since 1997. ERM II will be the next logical next step in implementing the eurozone the final commitment to the EU to join the eurozone, "the conclusion of the Executive Board of the IMF.
It states that Bulgaria is likely to be the first country to join ERM II since the creation of the banking union and is expected to create a precedent for future candidates. The Fund draws attention to the fact that the application process will include an adaptation to the current form of monetary union that includes bank merger and anti-money laundering measures. After all these commendations, however, the IMF's announcement follows some sentences that create the feeling that our bid to enter ERM II will not get approval as fast as the Bulgarian government hopes. For example, there is a suggestion that the asset quality review of the six Bulgarian banks that is currently conducting the ECB may end with recommendations to them that they must meet before our country is eligible to join the bank Union. Recommendations - means oversight measures that may include a wide range of mandatory measures - from restructuring and selling assets to a substantial increase in capital.
Even if these recommendations are fulfilled and our country is invited to join the Banking Union, this does not mean that it will automatically receive an invitation to join ERM II. The IMF's announcement states that the representatives of eurozone countries have stressed that Bulgaria needs to carry out profound reforms in the judiciary and in the fight against corruption and organized crime. And there are no objective measures to impartially indicate whether these reforms are being made. Therefore, the assessment of whether our country has fulfilled its commitments in these areas fully depends on the subjective opinion and favor of the Eurozone member states.
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