The International Monetary Fund (IMF) said on March 1 that Bulgaria was likely to miss the Government target for Budget deficit in 2010. An IMF mission completed a regular Article IV review of Bulgaria's economy on March 1.

The mission's head, Bas Bakker, told reporters in Sofia that the Fund forecast the Budget deficit at 1.8 per cent of gross domestic product (GDP), compared to the 0.7 per cent Government target. Bakker said that meeting the Cabinet target would be "a real challenge".

Both the Government target and IMF's forecast were for the cash deficit, not taking into account the Cabinet's delayed payments in a number or sectors, Dnevnik daily said.

Bulgaria's Budget deficit in 2009 was 499 million leva, expected to fall within the 0.8 per cent Government target for the year. However, that figure did not take into account the money that the Government owed to private businesses, estimated to be more than two billion leva.

According to Dnevnik, the real Budget deficit was 1.9 per cent of GDP.

To avoid the deficit from rising above the IMF forecast, Bulgaria would have to avoid increased spending this year, Bakker was quoted as saying.

Bulgaria's Finance Minister Simeon Dyankov, speaking at a separate press conference, said that Bulgaria could afford a larger deficit, provided that the extra spending went to settle outstanding debts for services contracted by the state.

"We targeted a balanced Budget in 2010, but now the IMF is allowing us to have a small deficit, up to 1.8 per cent," Dyankov was quoted as saying.

"Within this minimal deficit we will continue payments under contracts. We were not certain how far we could go into deficit, which is why Prime Minister Boiko Borissov asked for the opinion of international institutions," Dyankov said.