“Bulgaria’s accession to the Eurozone is one of our targets, because this means stability, prestige, discipline and a state that is regarded highly”. In this way Bulgarian PM Boyko Borissov commented the International Monetary Fund analysis of the Bulgarian economy circumstances. Experts from the fund jointly with officials from the European Central Bank and the European Commission spent two weeks surveying information on public finances, crediting and the real economy. They praised Bulgaria for its adequate policy at the end of last year when it achieved a low budget deficit. “Indeed, this is a remarkable achievement and an acknowledgement of the government’s policy”, the prime minister added. “This is so, because such analyses travel the world overnight to tell investors that this is a stable country.” He also said that Bulgaria and Estonia served as examples of excellent financial discipline across Europe. Following the positive IMF report the prime minister and Finance Minister Simeon Djankov agreed that Bulgaria’s chances of running for the Eurozone had improved.
What do IMF analyses suggest?
The IMF has forecast a 0.2% growth of the Bulgarian economy this year. The prospect seems quite good against the background of other EU countries, as well as of the fund’s earlier forecast that predicted a drop in GDP. Despite expected GDP growth, domestic demand will shrink further given rising unemployment. In the forecast of IMF experts inflation in the country will come to 2.2% which coincides with the government’s estimate. The IMF has warned Bulgaria that the 2010 budget deficit should not exceed 1.8% of GDP. In this sense the experts advised the government to freeze all salaries in the public sector, as well as pensions. This will limit remuneration in economy and will raise its competitiveness. On the other hand, the business climate in the country will improve with cutting red tape, and with combating the growing grey sector and rampant corruption.
How does the government accept the advice coming from experts?
“We take into account IMF recommendations, because Bulgaria is part of the world family, and of the EU, so we want to be identified as a good example. We have had enough being fingered as corrupt and undisciplined”, PM Boyko Borissov commented with regard to the IMF analysis. “Other European countries tend to play the latter role, while we are making a turnaround. Together with Estonia we want to be the most disciplined country financially, and to be appreciated for this conduct and for the rest we do. In this way Bulgaria’s image will be cleansed.”
Finance Minister Simeon Djankov summed up the main conclusion of IMF experts:
“We are ready to enter ERM-2, the Eurozone anteroom. For me the most important part was the analysis of the foreign trade balance that prevented Bulgaria from applying for ERM-2 in 2007 and 2008. Back then the foreign trade balance had a deficit of close to 25%, and now the IMF has forecast that it will come to a mere 5%. This places us among the best performers in EU. This fact gives us an extra advantage in the talks with the European Central Bank and the European Commission. To make sure that we, and Europe too, are ready both for the Bulgarian ERM-2 candidacy, we have invited EC officials, and for the first time – ECB officials. Now they will report to the European institutions about Bulgaria’s progress. When the discussion of Bulgaria’s candidature starts they will already know that Bulgaria is ready and all requirements have been fulfilled.”
The man in charge of public finances, knows best when Bulgaria will push back from the bottom.
“We will start to push back from the bottom in March”, the finance minister said. “I expect that an enlivening of the Bulgarian economy will begin in March. So, I have been looking forward to March 1 with great hope”, concluded Finance Minister Simeon Djankov.
English version Daniela Konstantinova
