IMF Pleased with Bulgaria's Financial Reforms, Economic Growth

by Sofia News Agency www.novinite.com

The International Monetary Fund Board of Directors greenlighted the first review of the execution of Bulgaria's governmental program for economic and financial reforms within the two-year precautionary accord with the fund, the Finance Ministry reported Wednesday. The Board's positive decision comes as a result of the achieved stable macroeconomic indexes, the flexible fiscal policy and establishment of the necessary preconditions for an increased economic growth. During the Washington meeting the IMF representatives have agreed that despite the increased challenges and risks the country faced, Bulgaria has successfully stabilized its market-orientated economy and has carried out EU -orientated financial and economic reforms. The IMF Board of Directors has also pointed out that robust economic growth, favorable debt dynamics, and strong financial market confidence are "sending positive signals to the international economic elite" thus guaranteeing that the macroeconomic stability in Bulgaria will be further maintained and developed. The Executive Board of IMF approved on August 6, 2004 a 25-month Stand-By Arrangement for Bulgaria in an amount equivalent to USD 146 M to support the government's economic program for 2004-06. During the last IMF mission to Bulgaria and government and the IMF representatives managed to reach an agreement during the review of the two-year precautionary accord. Back then Finance Minister Milen Velchev and Hans Flickenschild, IMF mission leader agreed on a budget surplus accounting for 1% of GDP or BGN 400 M, to be formed by cuts in the government expenditures equaling BGN 327 M. It was also agreed that the inflation rate will be brought down to 3% of GDP by end of the year, while expenses in 2005 be up by 6% over the previous year rate due to the expected better performance of the economy. The current account deficit is expected to be up to 7.5% of GDP. The IMF projects GDP growth at 5.5%. After the government raised the minimum wage to BGN 150 despite the objections of the global lender, IMF has agreed on a 25% rise over the next two years.

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