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Bulgaria: No Need for IMF Bailout Talks by 2012
Date: 02/09/2010
Bulgaria: No Need for IMF Bailout Talks by 2012

Bulgaria's finance minister has assured that the country will have no need to hold talks with the International Monetary Fund over a bailout loan for its ailing economy in the next two years.

"There will be no need for a loan not only this year, but the next two years as well," Minister Simeon Djankov said on Thursday.

"In terms of its economic policy the Bulgarian government is doing just as fine as the bigger part of the EU member states," he said, adding that he expects to see a return to growth this year.

He stressed that Moody's rating agency recently rated Bulgaria as the only country in Europe and Middle Asia with a positive outlook of sovereign credit rating, while IMF forecast that the country will bottom out of the crisis by the end of the year.

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.

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

The consolidated budget deficit exceeded BGN 1.5 B in the first six months of 2010 due to a fall in revenues and a rise in spending for social payments.

The center-right cabinet increased earlier this year its 2010 target for deficit to 4.8% of GDP on a cash basis and 3.9% of GDP under EU accounting rules, far wider than initial estimates.

The cabinet midterm fiscal policy plans envisage that Bulgaria will cut twice its fiscal shortfall to 2.5% of gross domestic product next year.

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

The country has widely been seen as a a potential candidate for aid but has declined to take a loan from the IMF.

GERB, which swept the general elections last summer, first said they would immediately sign a stand-by agreement with the IMF to serve as a guarantee for the country's financial stability if they come to office.

Its tenure however has been marked by a series of u-turns on important issues, including IMF bailout loan.

While some of its neighbors are completely dependent on EU and IMF loans, such as Greece with its large bailout, Bulgaria's government has said the assessment of the options has shown aid is unnecessary.

According to it the country is better prepared to weather the global crisis in comparison to other European countries thanks to its prudent fiscal policy.

Bulgaria currently operates in currency board regime and the lev is pegged to the euro.

Topic: Financial

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Asenovgrad is one of he ancient Bulgarian towns. It is an important center for religious and cultural tourism. Its often called the little Jerusalem for its many churches, monasteries and chapels. An interesting fact is that it is also called the town of the wedding dresses because of the large number of wedding dresses stores for such a small town.

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