Professor Steve Hanke, known in Bulgaria as the "father" of the Currency Board that protects the stability of local currency the lev, has spoken out against the idea of the country negotiating a new loan agreement with the International Monetary Fund.
 
Bulgaria adopted a Currency Board system after its 1996/97 financial meltdown, pegging the lev first to the Deutsche Mark and later to the euro.
 
In an interview with Bulgarian National Radio, Hanke, a US professor of applied economics, said that the layoffs in the public administration to which Prime Minister Boiko Borissov’s Government had committed itself were a correct step.
 
But signing for an IMF loan would mean weakness, and every new government wanted to show strength and the ability to deal with problems.
 
If the Government proves it can combat corruption, reform the judicial system, cut red tape and keep the Budget under control, this would generate trust that could help change the direction of Bulgaria’s development, Hanke said.
 
Bulgarian news agency Focus reported that UniCredit Bulbank chief executive Levon Hampartzoumian said that the IMF agreement was more of a safety measure and was not of crucial importance to investors.
 
"What matters to them is the right business environment, efficient administration and low corruption levels. Paradoxically, Bulgaria’s relations with IMF have been exaggerated throughout the years of transition. All these IMF requirements – conservative and yet rational – have been used by politicians as a shield for making hard decisions," Hampartzoumian said.