Bulgaria is susceptible to contagion risk from the expected economic problems in neighboring countries, according to the International Monetary Fund.

During a meeting with Bulgaria's Deputy Finance Minister Boryana Pancheva in Washington, IMF representatives assessed highly government's fiscal policy up to now and its readiness to press ahead with the structural reforms in the health care, education and pension systems.

The experts have confirmed their forecasts for a slight improvement in the fiscal and financial-economic situation in the country.

At the beginning of October the International Monetary Fund wrapped up its two-week review and projected Bulgaria's economy to grow from 0% to 0.4% in 2010 and 2% in 2011.

It said this year's inflation will be moderate, while the current account deficit is expected to fall below 3% of gross domestic product.

'Bulgaria is benefiting from stronger exports and the economy is poised to stage a gradual recovery,' the IMF said in a statement.

'Recouping the shortfall in tax collection seen through August by the year end will be challenging and shortfalls may occur. Safeguarding the 2010 deficit target will therefore require strong spending control,' the Fund said.

Bulgaria, the European Union's poorest country is currently going through its first recession in 12 years after a three-year lending boom stalled and foreign investments dried up.

The government adopted earlier this year a package of austerity measures, freezing public pays and pensions in a bid to reduce the bloating deficit.

It revised up to 1% its economic growth forecast for this year, pinning its hopes on a boost in exports.

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