The fourth and final review of the stand-by agreement between Bulgaria and the International Monetary Fund (IMF) ended with mixed feelings on December 20.

Bulgaria and the IMF signed their last agreement in 2004, which will expire in April next year after Bulgaria joins the EU.

The round of meetings that ended on December 19 was held to discuss the performance of Budget 2006 and to review Budget 2007, which was approved by Parliament the same day.

At a news conference held at the Cabinet office, IMF mission chief for Bulgaria Robert Hagemann said that he was pleased with the continuing growth of the country’s economy but was worried by the large current account deficit. Bulgaria had done well in following the IMF’s programme, Hagemann said, despite some previous obstacles, which now had been overcome.

He noted some areas in which Bulgaria lagged behind such as the implementation of e-registers for companies and privatisation in the energy sector.

Finance Minister Plamen Oresharski said: “All our disagreements with the IMF through the years have been about numbers not about policies”.

Bulgaria had carried out all the IMF’s recommendations with a few small exceptions, he said.

“We will count on the IMF in the future for consultations and technical assistance,” Oresharski said.      

On December 19, Hagemann met Prime Minister Sergei Stanishev. Stanishev said that the IMF had acted as a bridge in the transition to Bulgaria’s EU membership.

Hagemann gave high marks to “the reasonable fiscal policy of the Government, which aims to provide a stable economic and political framework for the first years of Bulgaria’s full EU membership”.

The expected GDP growth of six per cent was more than encouraging, Hagemann told journalists after the meeting.

However, there were discrepancies between the official statements and some reports in the Bulgarian-language media.

Bulgarian-language Kapital weekly said on December 9 that the final agreement signed between Bulgaria and the IMF was about to end without producing major positive results. “The mission was unsuccessful as Bulgaria carried out some of the harmful IMF requirements and failed taking into consideration more useful recommendations,” the newspaper said. One of the differences between the IMF and Bulgaria was Parliament’s decision in October to cut corporate tax to 10 per cent as of January 1 2007. The IMF strongly disagreed with the step but the objection was not taken into account by MPs. In October, Stanishev defended the MPs’ move by saying that Bulgaria would be the country with the lowest corporate tax in the EU. The IMF also objected to the Government’s decision to raise public sector salaries by 10 per cent next year.