In the past few days, a slew of international financial institutions, alongside local and international think-tanks, have voiced consonant concerns about the Bulgarian economy’s stability.

The main risks were risks to long-term macro-economic stability and slow growth in productivity, which all largely stem from a delay in structural reforms.

Albert Jaeger, director for Bulgaria and Romania for the International Monetary Fund (IMF), was among the experts to point to the above risks. At the close of the IMF regular mission ending October 16, he said Bulgaria’s topmost priority was to keep macro-economic parameters at bay.

For the sake of macro-economic stability this year, the country should keep as ceilings annual inflation of 10 per cent, a current account deficit of 20 per cent of GDP, and budget surplus of three per cent of GDP.

Fiscal stability in mind, Jaeger also sided with the Government in its resistance to striking teachers’ request for a 100 per cent wage hike. Public administration pay, he added, should be pegged to the increase of the sector’s efficiency, as well as to a healthy public spending surplus or else Bulgaria ran the risk of economic overheating.

Similar concerns were raised by one of Bulgaria’s most influential organisations, the Confederation of Employers and Industrialists (CEIB). In the “End of Transition – European Future” White Paper handed by CEIB chairperson Ivo Prokopiev to Prime Minister Sergei Stanishev on October 12, the confederation called for urgent reforms in the public sector, to be made after an open debate among employees, trade unions, government and business. The inevitable outcome of further delay would be the country bogging down in an economic crisis, the paper, focusing on economic and business achievements in 2006, said.

Further, despite the good economic growth and macro-economic parameters at present, sustainable growth for Bulgaria was contingent on speedy structural, administrative and institutional reforms, simplification of regulatory regimes and a smoothly working judiciary system.

In addition, a field of primary concern for CEIB was the job market, whose main deficiencies were the shortage of qualified workers and the low employment ratio, the White Paper said. For this reason, a flexible and secure market should be the long-term goal to pursue.

The Institute for Market Economics (IME), meanwhile, saw the risk of a financial crunch if the Government bent to requests for double increase in teachers’ salaries. At a news conference on October 16, the IME said that the public budget surplus would vanish in months as giving in to teacher unions’ demands would incite a chain reaction that would see railway and forestry workers, doctors and individuals of professions with perceived low budgetary pay go on strike as well.

The IME put forward several scenarios to resolve the crisis, of which the optimal option was a 70 per cent increase in pay with the simultaneous cut of teachers’ staff numbers by 30 per cent.

The opinions came up simultaneously with the release of the European Human Capital Index report, a report that saw Bulgaria among the countries whose economic sustainability was under threat. Reasons for negative developments included adverse demographic developments and insufficient utilisation of human capital. Author of the report, analytical outfit and policy-maker Lisbon Council, warned that Bulgaria and Central and East European nations should also hone efforts to stop brain-drain and spearhead investment in education and skills, to avert economic overheating and deterioration in competitive standing.