Bulgaria will refrain from renewing its agreement with the International Monetary Fund (IMF), Finance Minister Plamen Oresharski said on April 29.

Oresharski was interviewed by the local private Darik Radio.

The current agreement with the IMF expires in September.

The country would soon become a European Union member and all efforts of the Finance Ministry would focus on synchronising Bulgarian and EU economic policies, Oresharski said.

EU economic requirements are even stricter than the IMF's and all institutions should be prepared, he said.

The break-up with the IMF was widely anticipated as Sofia was looking to follow in the footsteps of other Central and Eastern European countries (most of them newly acceded EU members) that ceased the fund's loan-financing years ago.

Serbia-Montenegro, Romania and Turkey are the only countries in the region that will continue to maintain a close relationship with the IMF.

The expiration of the agreement also means that Bulgaria will terminate all loan-financing relations with the IMF.

Yet, Bulgaria does not face threat to its macroeconomic stability, said Oresharski. One problem on which institutions should work is the proper distribution of EU funds, he said. The ministry is already taking measures, including a new institutional framework and EU fund distribution offices.

Fund distribution will undergo internal auditing and specialised institutions in each ministry will monitor the process, he said.
The Finance Ministry is also working on Budget 2007. The draft budget will be submitted for Parliament's approval by the end of October, Oresharski said.

Responding to Oresharski's statement, IMF resident representative in Bulgaria James Roaf said on May 2 that the Bulgarian Government had not yet committed to a position before the IMF on whether it would continue working with the fund.

The Government could choose to extend the agreement for another six months if it wished to ensure IMF's support for its fiscal policy, said Roaf. In that case, the Cabinet would face no commitments regarding the 2007 macroeconomic framework, he said.

The IMF continues to view as problematic seniority bonuses, the delays in the privatisation of the thermal power stations and the reform of the education system, according to Roaf.

Not to Oresharski's knowledge, though. Taking a question as to whether he expects some problem areas after Bulgaria's EU accession, for which the Finance Ministry would be responsible, Oresharski said that he was concerned about third-party liability insurance. Bulgaria is ranked last in Europe in regards to the ratio of the number to cars to the number of insurance policies.

Every third Bulgarian driver did not have third-party liability insurance, he said.

Oresharski said that he does not expect any criticism regarding money laundering. More than 50 investigations have been launched under signals from the Financial Intelligence Agency and nine bills of indictment have already been issued.

There are no convicted persons yet, but the very fact that there are bills of indictment means that the system works, Oresharski said.