The International Monetary Fund has reportedly rushed to put together an unprecedented credit line worth billions of dollars to satisfy the urgent need for foreign capital among developing markets. Bulgaria could potentially feature among these credit markets.

The IMF will throw hefty three- or six-month dollar lines of credit at softer requirements to stave off economic and currency disaster in countries excluded from the safety nets of the Fed and the European Central Bank.

Sofia, on the other hand, was adamant it does not need foreign help and has denied reports, cited in the Economist, that it was in talks with the IMF.

Sources say Bulgaria may grab a two-billion-dollar credit line after Ukraine reached a 24-month agreement with the IMF on a $16.5 billion loan under a 24-month stand-by arrangement.

The IMF can lend about $240 billion to struggling economies and prop up withering currencies but major central banks can also join in.

Washington denied it is weighing a $1 trillion rescue package but Japan, a few oil production countries and the Fed have said they were ready to back the project.

The New York Times placed Bulgaria, Romania, Hungary, Ukraine, the Baltic States and Turkey on the list of countries threatened by the crisis but where leaders say there is no cause for concern.

The Economist reported that the crisis is posing a major threat to the EU's poorest countries, Bulgaria and Romania, and warned that a burst property bubble and a wave of corporate failures might jeopardise their banking systems. Bulgaria is also unlikely to receive foreign help because of its failure to stem organised crime, according to the publication.

The European Bank for Reconstruction and Development is mulling over giving loans or buying more shares of banks it has stakes in throughout the region, said president Thomas Mirow.

Bulgaria, Turkey, Romania and Croatia will fail to attract foreign funding over their low sovereign credit ratings.

Last week rating agency Standard & Poor's placed Bulgaria's BBB+/A-2 foreign and local currency sovereign credit ratings on credit watch negative and said the country's credit market is unstable and is facing a sharp slump in foreign funding.

The Bulgarian Government, on the other hand, is vigorously denying there is any trouble ahead.

The prudent macroeconomic and fiscal policy has equipped Bulgaria with sufficient reserves to avoid having to knock at the doors of the European Commission, the IMF, the ECB or any other institution, Finance Minister Plamen Oresharski said on October 24.

The Bulgarian economy should be stopped from cooling off or else foreign investments will fall and the economy may be in for a shock landing, according to Yordan Tsonev, chairperson of Parliament's economic policy committee.

Source: Dnevnik.bg